There are more than 40 million student loan borrowers waiting in suspension, as the second Trump administration inches back to Washington. But borrowers can begin now to prepare for expected changes to student loan forgiveness and repayments.
The fate of key Biden administration-era student debt relief programs, including the new SAVE plan and mass loan cancellation, will likely be set. But other programs’ prospects, including some popular loan forgiveness ones, are murkier.
Borrowers have no obvious sway with court decisions, legislative agendas or policy demands. But, that is not to say awaiting the hurtling train of dismodeling student loans can be placidly accepted. Here is a list of actions to be taken before 2025.
Borrowers Seeking Loan Forgiveness Through PSLF that Apply Now
Borrowers on track for PSLF, which can offer full federal student loan forgiveness after as few as 10 years of payments, if they work in nonprofit or government-sector jobs. Here’s what PSLF borrowers can do to keep an eye on the path toward student loan forgiveness:
- You now have PSLF Tracking information on the StudentAid website. gov, as well, and ensure that your PSLF payment count seems to be correct.
- If you believe that there’s been an error, you could consider filing a dispute via the PSLF Reconsideration portal.
- If you have not certified your employment in a while, submit a new PSLF Employment Certification using the PSLF Help Tool.
- Now, according to NACIC, the entire process is digital and your form should be processed within a couple of weeks. This is to make sure your PSLF qualifying payment count is current.
- If you SAVE the plan forbearance but lost but are getting to the end of the 120 payments for loan forgiveness.
- Also, do some research on PSLF Buyback, as it can help you cross the loan forgiveness finish line in the non-qualifying forbearance period.
The SAVE Plan Is Not For First-Time Student Loan Borrowers Who Are New To Repayment
- Many borrowers who graduated this spring are coming to the end of their grace periods.
- Repayment should start in the next couple of months.
- New borrowers should take the view that the SAVE plan won’t be an option.
- So borrowers will need to review options around the clean slate of a repayment plan overhaul, including:
- Standard repayment plans
- Extended repayment plans
- Other income-driven repayment plans, including:
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- 1 Income-Contingent Repayment (ICR)
Others, such as Public Service Loan Forgiveness (PSLF), require borrowers to be enrolled in a specific type of repayment program like an IDR plan.
Borrowers can access their StudentAid. gov account, and use the Department of Education’s “loan simulator” to try out estimated monthly payments under different options.
Remove Your Student Loans From Default Before 2025
- Hundreds of thousands of borrowers are in default on federal student loans.
- The Covid-19 forbearance, which ran from March 2020 to September 2023, suspended collections against defaulted loans.
- The Biden administration renewed benefits via the Fresh Start program for another year.
- Dead on Arrival — Fresh Start is done, and collections will begin again in 2025 for those who are still in default.
- The government can seize wages, intercept tax refunds and offset federal benefits like Social Security to collect on defaulted loans.
Potential Solutions:
- Direct loan consolidation
- Rehabilitation
- Administrative discharge or loan forgiveness (if qualified).
Student loan borrowers: Plan for higher payments on IDR plans in 2025
For some people, the leap in the payment amount can be significant. There are a number of reasons for this:
- Because of the multiple extensions of income recertification requirements tied to the Covid-19 forbearance, many borrowers have an IDR payment that’s based on stale income information.
- If your income has gone up since you last applied for IDR, you may be staring at a big jump in your monthly payments next year.
- Likewise, borrowers who married in the past few years and have been filing tax returns jointly with their spouse may also see their monthly IDR payments jump on inclusion of spousal income.
- These borrowers should consider filing taxes separately next year, working with a tax advisor, and analyze whether any extra tax liability would balance out a reduced student loan payment.
- Borrowers enrolled in the SAVE plan could have to move to another IDR plan if the SAVE plan were to get struck down, all of which can be more expensive than SAVE.
