If you have any Federal Student Loans currently on repayment hold, you may be wondering what is happening with the Biden’s Administration’s plan to cancel loans and if the moratorium will be extended. Here is a good resource from Forbes for where these plans stand.
President Obama signed his Student Loan Debt Relief Order earlier this week. The plan opens up the availability of the Pay As You Earn Repayment option to those who have borrowed prior to 2007. An estimated 5 million student loan borrowers will be effected by this Executive Order. They will be able to limit monthly payments to no more than 10% of monthly income. It is not clear when the change will actually go into effect. The Washington Post is reporting officials as stating December 2015 is probably the earliest that borrowers can take advantage of this expansion of Pay As You Earn.
Watch President Obama sign and discuss his plan.
There are over a half dozen repayment options for Federal Student Loans. Most borrowers will be eligible to use several of these options. Deciding which is best for you takes considerable thought. You are only allowed to Consolidate your Federal Student Loans once.
Consider the following:
What is your potential for salary increase and advancement in your job or career?
Do you understand the ramifications of taking a lower monthly payment on the overall cost of your loan and the increase in length of repayment?
Do you have other options such as employer repayment programs, federal or state loan forgiveness plans or profession specific repayment plans?
Wading through your loan repayment options can be confusing and overwhelming. If you would like help determining your options, schedule a Student Loan Debt Counseling appointment with me. Call 507-365-7330 or email me at email@example.com.
In the last year I have begun working with recent college grads who are struggling under the burden of their monthly federal student loans. Consolidating the loans in many instances can lower monthly payments by 2/3 in my experience. There a few things to consider when consolidating.
1. You can only consolidate federal student loans.
2. There are 7 different repayment options and you may not be eligible for all of them, but you should be eligible for 3-4.
3. With consolidation your interest rates on existing loans will be averaged, so some of your interest rates will be reduced, while others will increase.
4. While your monthly payments will be reduced with consolidation, you may owe more overall.
5. You can only consolidate federal student loans once.
6. You can pay off you federal consolidated loan early without penalty, which woul reduce the overall loan debt.
Choose your consolidation option wisely for the greatest benefit. If you need student loan debt counseling, contact me at firstname.lastname@example.org.