Latest news with #forbearance
CNET
a day ago
- Business
- CNET
Student Loan Update: Here's What SAVE Borrowers Should Do Before Aug. 1
Interest will restart for SAVE borrowers whose loans remain in a general forbearance on Aug. 1. Viva Tung/CNET Starting on Aug. 1, borrowers who are enrolled in the Saving on a Valuable Education plan will begin accruing interest charges on their loan balances. The Department of Education is encouraging borrowers to pick a new payment plan, but you also have the option to leave your loans where they are. The Department of Education "urges all borrowers in the SAVE plan to quickly transition to a legally compliant repayment plan -- such as the Income-Based Repayment Plan," Secretary of Education Linda McMahon said in a statement in early July. While moving to a new payment plan before August could make sense for some borrowers, it's not a requirement. Payments for borrowers in SAVE will remain on hold in a general forbearance. Whether you decide to move to a new repayment plan or not this month depends on your forgiveness options and financial situation. "It's crucial for borrowers to act based on their own personal situation," said Elaine Rubin, a student loan policy expert and director of corporate communications at Edvisors. "A borrower who chooses to stay in the forbearance or who is waiting for their payment plan application to be processed will have their loan remain in good standing." SAVE borrowers have been through years of unprecedented policy changes. The SAVE repayment plan was officially shot down by the courts earlier this year, but borrowers' payments are expected to remain on hold until mid-2026 unless an upcoming court decision speeds up the timeline. If you're enrolled in SAVE and not sure what to do next, here's what experts suggest. What should PSLF borrowers enrolled in SAVE do before Aug. 1? If you're working toward Public Service Loan Forgiveness and are enrolled in SAVE, you can either stay in forbearance or switch to another repayment plan. "For borrowers pursuing PSLF this won't mean very much," said Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. "They can still either ride out the forbearance and plan on using what's called buy-back to get the months to count for PSLF purposes or switch plans now to another qualifying plan." If you decide to stay in forbearance, you'll be able to claim the months your loans were on hold using a process called PSLF buy-back. This allows you to pay for the months when your loans were in an administrative forbearance, to help you reach 120 on-time payments to receive forgiveness. If you decide to move your loans to another repayment plan, your payments will restart after your application is processed. Application processing is experiencing delays, and experts say not to expect your first payment under the new plan for a month or two, at the soonest. Although your payment may be higher on another income-driven repayment like IBR, this monthly amount would be the same amount you'd be charged when you went to "buy back" those months. Either way, you'll pay roughly the same amount. I'm pursuing income-driven repayment forgiveness. Should I switch to a new payment plan? Although you're not required to switch repayment plans by August, you should review your options to see what the best fit is for your financial situation. "For those pursuing income-driven plan forgiveness they should strongly consider switching to another income-driven plan," said Mayotte. She noted that there's no buy-back option for IDR forgiveness, and the months that your loans are sitting in forgiveness won't count toward your total number of payments. Waiting would drag out your forgiveness timeline. You can look at your other income-driven repayment plan options using the Federal Student Aid loan simulator. When you're ready to switch to a new plan, you can apply to change your IDR on the FSA website. You can also continue to stay in SAVE until the forbearance period ends and you're placed on another repayment plan. You can pay the monthly interest that accrues, but those payments won't count towards forgiveness, Mayonette said. I don't qualify for forgiveness. Should I switch to another repayment plan? If you don't qualify for student loan forgiveness options, you can switch to another IDR or continue to wait out the forbearance. Either way, you should count on making payments again soon -- whether that's a new monthly payment or paying off the interest that accrues each month during the forbearance period. Since there are a few weeks left before interest charges start again, Mayonette suggests making larger lump sum payments while your interest is frozen, if you can. Will all borrowers on SAVE qualify for another IDR plan? SAVE borrowers should qualify for another income-driven repayment plan. However, it's possible you may not right now. "The 'Big Beautiful Bill' has eliminated the requirement of a partial financial hardship for IBR," said Rubin. "However, the forms and the Loan Simulator have yet to be updated. It may take the department and the servicers some time to update their systems and information." In the meantime, look for the most affordable repayment option available, or you can choose to keep your loans in forbearance. Will my payments increase if I move from SAVE to another income-driven repayment plan? Many borrowers should brace for higher monthly payments after moving to a new repayment plan. Although income-driven repayment plans are generally more affordable than the standard repayment plan, SAVE was the most affordable student loan repayment plan to date. Many low-income borrowers had $0 or near $0 payments each month. CNET estimated that a single borrower earning $60,000 a year with $30,000 in student loan debt would have paid approximately $217 on SAVE. Switching to another income-driven repayment plan like IBR could increase their monthly payment by nearly $100. You can use the Federal Student Aid Loan Simulator to estimate what your new monthly payment will look like. If I switch repayment plans, will my payments start in August? If you switch to IBR or another repayment plan, that doesn't mean your first monthly payment will hit in August. "The US Department of Education still has a backlog in processing the forms to request a change of repayment plan, so they might not have to make payments for a few months until their request to switch repayment plans is processed," said Mark Kantrowitz, a financial aid and student loan expert. Still, it's smart to prepare for repayment right away, just in case. I can't afford higher student loan payments. What should I do? Many borrowers will see higher payments on another payment plan, even an income-driven repayment plan like IBR. If you need more time to prepare for repayment, you can also wait to switch repayment plans until the forbearance period ends. "Borrowers will have the option to stay in the general forbearance, for now," said Rubin. "However, borrowers who decide to stay in the forbearance need to stay informed. The Department has indicated that borrowers will remain in the forbearance until the legal challenges are resolved, or until the student loan servicer can send them a bill for the proper repayment amount." If you need more time to prepare for repayment, leaving your loans on hold can give you extra months to plan. During this time, you should consider making interest-payments, if possible, to prevent your account balance from rising. "There are no prepayment penalties on federal and private student loans, so nothing stops you from making interest-only payments," said Kantrowitz. "You can manually calculate the interest on your loans and make a prepayment in that amount each month." While the forbearance period won't last forever, it is currently expected to last until mid-2026. However, an upcoming court case could change that and end forbearance sooner. If you're facing financial distress, you might consider economic hardship deferment, unemployment deferment or general forbearance, said Kantrowitz. But he warned that interest may continue to accrue, which could dig you into a deeper hole. You can reach out to your servicer or review financial hardship options on the FSA website.
CNET
2 days ago
- Business
- CNET
Interest Restarts for SAVE Student Loans on Aug. 1. Should You Switch to Another Payment Plan by Then?
Interest will restart for SAVE borrowers whose loans remain in a general forbearance on Aug. 1. Viva Tung/CNET Starting on Aug. 1, borrowers who are enrolled in the Saving on a Valuable Education plan will begin accruing interest charges on their loan balances. The Department of Education is encouraging borrowers to pick a new payment plan, but you also have the option to leave your loans where they are. The Department of Education "urges all borrowers in the SAVE plan to quickly transition to a legally compliant repayment plan -- such as the Income-Based Repayment Plan," Secretary of Education Linda McMahon said in a statement in early July. While moving to a new payment plan before August could make sense for some borrowers, it's not a requirement. Payments for borrowers in SAVE will remain on hold in a general forbearance. Whether you decide to move to a new repayment plan or not this month depends on your forgiveness options and financial situation. "It's crucial for borrowers to act based on their own personal situation," said Elaine Rubin, a student loan policy expert and director of corporate communications at Edvisors. "A borrower who chooses to stay in the forbearance or who is waiting for their payment plan application to be processed will have their loan remain in good standing." SAVE borrowers have been through years of unprecedented policy changes. The SAVE repayment plan was officially shot down by the courts earlier this year, but borrowers' payments are expected to remain on hold until mid-2026 unless an upcoming court decision speeds up the timeline. If you're enrolled in SAVE and not sure what to do next, here's what experts suggest. What should PSLF borrowers enrolled in SAVE do before Aug. 1? If you're working toward Public Service Loan Forgiveness and are enrolled in SAVE, you can either stay in forbearance or switch to another repayment plan. "For borrowers pursuing PSLF this won't mean very much," said Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. "They can still either ride out the forbearance and plan on using what's called buy-back to get the months to count for PSLF purposes or switch plans now to another qualifying plan." If you decide to stay in forbearance, you'll be able to claim the months your loans were on hold using a process called PSLF buy-back. This allows you to pay for the months when your loans were in an administrative forbearance, to help you reach 120 on-time payments to receive forgiveness. If you decide to move your loans to another repayment plan, your payments will restart after your application is processed. Application processing is experiencing delays, and experts say not to expect your first payment under the new plan for a month or two, at the soonest. Although your payment may be higher on another income-driven repayment like IBR, this monthly amount would be the same amount you'd be charged when you went to "buy back" those months. Either way, you'll pay roughly the same amount. I'm pursuing income-driven repayment forgiveness. Should I switch to a new payment plan? Although you're not required to switch repayment plans by August, you should review your options to see what the best fit is for your financial situation. "For those pursuing income-driven plan forgiveness they should strongly consider switching to another income-driven plan," said Mayotte. She noted that there's no buy-back option for IDR forgiveness, and the months that your loans are sitting in forgiveness won't count toward your total number of payments. Waiting would drag out your forgiveness timeline. You can look at your other income-driven repayment plan options using the Federal Student Aid loan simulator. When you're ready to switch to a new plan, you can apply to change your IDR on the FSA website. You can also continue to stay in SAVE until the forbearance period ends and you're placed on another repayment plan. You can pay the monthly interest that accrues, but those payments won't count towards forgiveness, Mayonette said. I don't qualify for forgiveness. Should I switch to another repayment plan? If you don't qualify for student loan forgiveness options, you can switch to another IDR or continue to wait out the forbearance. Either way, you should count on making payments again soon -- whether that's a new monthly payment or paying off the interest that accrues each month during the forbearance period. Since there are a few weeks left before interest charges start again, Mayonette suggests making larger lump sum payments while your interest is frozen, if you can. Will all borrowers on SAVE qualify for another IDR plan? SAVE borrowers should qualify for another income-driven repayment plan. However, it's possible you may not right now. "The 'Big Beautiful Bill' has eliminated the requirement of a partial financial hardship for IBR," said Rubin. "However, the forms and the Loan Simulator have yet to be updated. It may take the department and the servicers some time to update their systems and information." In the meantime, look for the most affordable repayment option available, or you can choose to keep your loans in forbearance. Will my payments increase if I move from SAVE to another income-driven repayment plan? Many borrowers should brace for higher monthly payments after moving to a new repayment plan. Although income-driven repayment plans are generally more affordable than the standard repayment plan, SAVE was the most affordable student loan repayment plan to date. Many low-income borrowers had $0 or near $0 payments each month. CNET estimated that a single borrower earning $60,000 a year with $30,000 in student loan debt would have paid approximately $217 on SAVE. Switching to another income-driven repayment plan like IBR could increase their monthly payment by nearly $100. You can use the Federal Student Aid Loan Simulator to estimate what your new monthly payment will look like. If I switch repayment plans, will my payments start in August? If you switch to IBR or another repayment plan, that doesn't mean your first monthly payment will hit in August. "The US Department of Education still has a backlog in processing the forms to request a change of repayment plan, so they might not have to make payments for a few months until their request to switch repayment plans is processed," said Mark Kantrowitz, a financial aid and student loan expert. Still, it's smart to prepare for repayment right away, just in case. I can't afford higher student loan payments. What should I do? Many borrowers will see higher payments on another payment plan, even an income-driven repayment plan like IBR. If you need more time to prepare for repayment, you can also wait to switch repayment plans until the forbearance period ends. "Borrowers will have the option to stay in the general forbearance, for now," said Rubin. "However, borrowers who decide to stay in the forbearance need to stay informed. The Department has indicated that borrowers will remain in the forbearance until the legal challenges are resolved, or until the student loan servicer can send them a bill for the proper repayment amount." If you need more time to prepare for repayment, leaving your loans on hold can give you extra months to plan. During this time, you should consider making interest-payments, if possible, to prevent your account balance from rising. "There are no prepayment penalties on federal and private student loans, so nothing stops you from making interest-only payments," said Kantrowitz. "You can manually calculate the interest on your loans and make a prepayment in that amount each month." While the forbearance period won't last forever, it is currently expected to last until mid-2026. However, an upcoming court case could change that and end forbearance sooner. If you're facing financial distress, you might consider economic hardship deferment, unemployment deferment or general forbearance, said Kantrowitz. But he warned that interest may continue to accrue, which could dig you into a deeper hole. You can reach out to your servicer or review financial hardship options on the FSA website.
Yahoo
3 days ago
- Business
- Yahoo
Education Department restarts interest accrual for borrowers on SAVE plan
The Education Department announced Wednesday interest accrual for student loan borrowers on the Saving on Valuable Education (SAVE) plan will restart Aug. 1. The SAVE plan, created under the Biden administration, was struck down as illegal by the 8th U.S. Circuit Court of Appeals. Since the ruling, millions of borrowers have remained in forbearance with no interest accrual, with the possibility this forbearance could last until summer 2026 before borrowers were forced to switch out. 'Millions of borrowers enrolled in the Biden Administration's SAVE Plan based on the false promise of loan cancellation and zero monthly payments, despite multiple federal courts striking down such policies. The Biden Administration also invented a zero percent 'litigation forbearance,' forcing taxpayers to foot the bill and leaving borrowers without clear direction on how to legally repay their loans,' the press release from the department states. The SAVE plan became a popular option for its ability to offer some borrowers monthly payments as low as $0. While borrowers will not be responsible for making payments on the SAVE plan until forbearance ends, their balance will rise with the restart of interest accrual. The Education Department is urging these borrowers to choose a new repayment plan before restarting payments. In the 'big, beautiful bill,' congressional Republicans eliminated SAVE and other repayment options, leaving borrowers with only two plans: a standard repayment plan and a new Repayment Assistance Plan. Borrowers will have to switch to one of these plans by 2028. 'For years, the Biden Administration used so-called 'loan forgiveness' promises to win votes, but federal courts repeatedly ruled that those actions were unlawful. Congress designed these programs to ensure that borrowers repay their loans, yet the Biden Administration tried to illegally force taxpayers to foot the bill instead,' Secretary of Education Linda McMahon said. 'Since day one of the Trump Administration, we've focused on strengthening the student loan portfolio and simplifying repayment to better serve borrowers. As part of this effort, the Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan – such as the Income-Based Repayment Plan. Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress,' she added. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
3 days ago
- Business
- Yahoo
Student loan borrowers navigate new landscape as options dwindle under Trump
Student loan borrowers' options are dwindling and time is not on their side as the Trump administration turns up the heat to get all borrowers back in repayment. The recently passed 'big, beautiful bill' will take the bevy of choices away from borrowers by 2028, leaving only two options for repayment. Those on the Biden administration's Saving on Valuable Education (SAVE) plan who have been in forbearance have even less time, with interest accrual restarting next month. Student loan advocates are encouraging borrowers to reach out for help in understanding their options as they fear many will not be able to afford their monthly repayment plans with the plans left for them. 'It feels like a flood-the-zone type situation where confusion is part of the intent,' said Natalia Abrams, president of the Student Debt Crisis Center (SDCC), adding, 'the hits just keep coming.' The slate of changes rolled out, she said, 'feels reckless in terms of treatment towards student loan borrowers and for Americans at large.' After years of pauses, on-ramps and forbearances from the start of the pandemic in President Trump's first term through the Biden administration, the White House is now requiring all borrowers to begin repaying their loans by the end of Trump's second. The millions of borrowers on the SAVE plan have been in forbearance with no interest since that Biden program was ruled illegal by the 8th U.S. Circuit Court of Appeals last year. The SAVE plan made it so some borrowers had to pay as low as $0 a month. The government said those in the SAVE plan will have to switch to a different option for payments to start counting towards their loan forgiveness, but people can stay in the plan and just pay interest potentially until summer 2026. An analysis from the Student Borrower Protection Center found the typical borrower will pay more than $3,500 in interest charges per year due to the policy change. The decision to switch out of the plan by Aug. 1 or just pay the interest is a personal one. 'Every single borrower's financial situation is so different. For borrowers who are truly unable to afford to make payments, remaining on the SAVE forbearance might be their best option,' said Aissa Canchola Bañez, policy director for the Student Borrower Protection Center. 'But for borrowers who are on the SAVE forbearance' but want to take advantage of the Public Service Loan Forgiveness Program, 'it's been our advice that folks should try to get off of SAVE so that they can begin making payments and begin earning credit towards' forgiveness, she added. Experts also advise those leaving SAVE to wait until the Aug. 1 deadline so the interest is taken care of 'throughout the entire month of July' and a borrower does not get on the hook for it with a new plan, Abrams said. Over the next three years, all borrowers will be forced into the two repayment options that were passed under Trump's 'big, beautiful bill.' The act only leaves borrowers with a standard repayment plan, which includes 10-25 years of repayments depending on the loan amount, and a new Repayment Assistance Plan (RAP), which takes into account a person's income but lengthens the amount of time spent on repayment. RAP is 'based on their income. Low-income borrowers can make payments as low as $10 a month, but unlike past income driven repayment plans, they're going to have to repay on their loans for longer. The span soon will be 30 years … So [the department is] making things simpler, they're trying to make things easier and they're trying to prevent students from being burdened with excessive debt,' said Angela Morabito, spokesperson for the Defense of Freedom Institute. The Trump administration and conservatives argue the policy changes are 'compassionate,' saying borrowers agreed to these loans and have to pay them back. 'No one should be panicking over this. This is a really thoughtful and strategic and compassionate way to try and solve the student loan crisis that the past administration, quite frankly, made so much worse,' Morabito said. 'The fact of the matter is, whenever you take out a loan, no matter what loan it is, you agree to pay it back. Borrowers made that agreement. They need to pay their loans back. They've had a long break, if anything, should make repayment easier that they've had so much time to plan and prepare,' she added. 'But if anyone was under the impression that they would just never have to pay loans back, that's because they were lied to by people who don't have the best interests of students and taxpayers at heart.' Others advocates, however, predict the changes will devastate some borrowers, with more defaults on the horizon and misinformation making it hard to navigate the situation. One of the biggest concerns for borrowers is the backlog of almost 2 million applications for the income-driven repayment programs as the administration pushes students to sign up for these options. The backlog began under the Biden administration, and resumption of application processing only restarted in April of this year. 'The Biden Administration failed to process income-driven repayment applications for borrowers, artificially masking rising delinquency and default rates and promising illegal student loan forgiveness to win points with voters. The Trump Administration is actively working with federal student loan servicers and hopes to clear the Biden backlog over the next few months,' said Ellen Keast, deputy press secretary for the Education Department. Student loan advocates are encouraging borrowers to reach out to nonprofit organizations and the federal government when figuring out their next steps, as scams abound. Even experts on the issue have struggled to understand the new landscape as the federal government said other student loan repayment options will phase out between the summer of 2026 and the summer of 2028, but it isn't clear what those two years will look like for borrowers or when it would be most advantageous for borrowers to leave their current plans. 'Borrowers are feeling so much anxiety right now. The bill makes ginormous changes to our student loan system. It very much feels like there's no clear answer on what borrowers can or should be doing right now,' Bañez said. While those advocating for broader student loan forgiveness don't see much cause for hope under the Trump administration, they were encouraged the GOP legislation did not take away the future possibility of debt relief, potentially under a different administration. 'The only other small silver lining … is they were able to get rid of the piece [in the Senate bill] where they were trying to take away the secretary's ability to cancel student loans or make big changes to the student loan program. That got thrown out in the bird bath and so … [there is] a little bit of hope that we can pull to actually change these very bad policies that have been done' in the future, Abrams said. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
CNET
4 days ago
- Business
- CNET
Should Student Loans Borrowers in SAVE Switch to Another Repayment Plan? It's Complicated
Interest will restart for SAVE borrowers whose loans remain in a general forbearance on August 1. Viva Tung / CNET Starting Aug. 1, borrowers enrolled in the Saving on a Valuable Education plan will start accruing interest charges on their loan balances. The trouble is, their payments remain on hold in a general forbearance. Now they're being encouraged to choose a new payment plan or face interest charges. The Department of Education "urges all borrowers in the SAVE plan to quickly transition to a legally compliant repayment plan -- such as the Income-Based Repayment Plan," Secretary of Education Linda McMahon said in a statement in early July. You aren't actually required to switch payment plans right now, though it might make sense in certain scenarios. Ultimately, what you should do depends on your forgiveness options and financial situation. "It's crucial for borrowers to act based on their own personal situation," said Elaine Rubin, a student loan policy expert and director of corporate communications at Edvisors. "A borrower who chooses to stay in the forbearance or who is waiting for their payment plan application to be processed will have their loan remain in good standing." SAVE borrowers have already been through unprecedented policy changes that have left many without a student loan payment for over five years. The SAVE repayment plan was officially shot down by the courts earlier this year, but borrowers' payments are expected to remain on hold until mid-2026 unless an upcoming court decision speeds up the timeline. If you're a borrower enrolled in SAVE and you're not sure what to do next, here's what experts suggest. What should PSLF borrowers enrolled in SAVE do? If you're working toward Public Service Loan Forgiveness and are enrolled in SAVE, you can either stay in forbearance or switch to another repayment plan. "For borrowers pursuing PSLF this won't mean very much," said Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. "They can still either ride out the forbearance and plan on using what's called buy-back to get the months to count for PSLF purposes or switch plans now to another qualifying plan." If you decide to stay in forbearance, you'll be able to claim the months your loans were on hold using a process called PSLF buy-back. This allows you to pay for the months when your loans were in an administrative forbearance, to help you reach 120 on-time payments to receive forgiveness. If you decide to move your loans to another repayment plan, your payments will restart after your application is processed. Application processing is experiencing delays, and experts say not to expect your first payment under the new plan for a month or two, at the soonest. Although your payment may be higher on another income-driven repayment like IBR, this monthly amount would be the same amount you'd be charged when you went to "buy back" those months. Either way, you'll pay roughly the same amount. I'm pursuing income-driven repayment forgiveness. What should I do? Although you're not required to switch repayment plans by August, you should review your options to see what the best fit is for your financial situation. "For those pursuing income-driven plan forgiveness they should strongly consider switching to another income-driven plan," said Mayotte. She noted that there's no buy-back option for IDR forgiveness, and the months that your loans are sitting in forgiveness won't count toward your total number of payments. Waiting would drag out your forgiveness timeline. You can look at your other income-driven repayment plan options using the Federal Student Aid loan simulator. When you're ready to switch to a new plan, you can apply to change your IDR on the FSA website. You can also continue to stay in SAVE until the forbearance period ends and you're placed on another repayment plan. You can pay the monthly interest that accrues, but those payments won't count towards forgiveness, Mayonette said. I don't qualify for forgiveness. Should I switch to another repayment plan? If you don't qualify for student loan forgiveness options, you can switch to another IDR or continue to wait out the forbearance. Either way, you should count on making payments again soon -- whether that's a new monthly payment or paying off the interest that accrues each month during the forbearance period. Since there are a few weeks left before interest charges start again, Mayonette suggests making larger lump sum payments while your interest is frozen, if you can. Will all borrowers on SAVE qualify for another IDR plan? SAVE borrowers should qualify for another income-driven repayment plan. However, it's possible you may not right now. "The 'Big Beautiful Bill' has eliminated the requirement of a partial financial hardship for IBR," said Rubin. "However, the forms and the Loan Simulator have yet to be updated. It may take the department and the servicers some time to update their systems and information." In the meantime, look for the most affordable repayment option available, or you can choose to keep your loans in forbearance. Will my payments increase if I move from SAVE to another income-driven repayment plan? Many borrowers should brace for higher monthly payments after moving to a new repayment plan. Although income-driven repayment plans are generally more affordable than the standard repayment plan, SAVE was the most affordable student loan repayment plan to date. Many low-income borrowers had $0 or near $0 payments each month. CNET estimated that a single borrower earning $60,000 a year with $30,000 in student loan debt would have paid approximately $217 on SAVE. Switching to another income-driven repayment plan like IBR could increase their monthly payment by nearly $100. You can use the Federal Student Aid Loan Simulator to estimate what your new monthly payment will look like. If I switch repayment plans, will my payments start in August? If you switch to IBR or another repayment plan, that doesn't mean your first monthly payment will hit in August. "The US Department of Education still has a backlog in processing the forms to request a change of repayment plan, so they might not have to make payments for a few months until their request to switch repayment plans is processed," said Mark Kantrowitz, a financial aid and student loan expert. Still, it's smart to prepare for repayment right away, just in case. I can't afford higher student loan payments. What should I do? Many borrowers will see higher payments on another payment plan, even an income-driven repayment plan like IBR. If you need more time to prepare for repayment, you can also wait to switch repayment plans until the forbearance period ends. "Borrowers will have the option to stay in the general forbearance, for now," said Rubin. "However, borrowers who decide to stay in the forbearance need to stay informed. The Department has indicated that borrowers will remain in the forbearance until the legal challenges are resolved, or until the student loan servicer can send them a bill for the proper repayment amount." If you need more time to prepare for repayment, leaving your loans on hold can give you extra months to plan. During this time, you should consider making interest-payments, if possible, to prevent your account balance from rising. "There are no prepayment penalties on federal and private student loans, so nothing stops you from making interest-only payments," said Kantrowitz. "You can manually calculate the interest on your loans and make a prepayment in that amount each month." While the forbearance period won't last forever, it is currently expected to last until mid-2026. However, an upcoming court case could change that and end forbearance sooner. If you're facing financial distress, you might consider economic hardship deferment, unemployment deferment or general forbearance, said Kantrowitz. But he warned that interest may continue to accrue, which could dig you into a deeper hole. You can reach out to your servicer or review financial hardship options on the FSA website.
