Find out what to expect with student loans in 2024. Get tips on managing payments and learn about new repayment plans.
As we move through 2024, understanding the current student loan system is more important than ever. With payments resuming and some changes to repayment plans, staying prepared is essential for anyone with student loans. Here’s a look at what you can expect this year and some practical strategies for managing your payments effectively.
Student Loan Payments are Back
After a 42-month break, federal student loan payments are back. During the pandemic, borrowers were given a break on their payments, and missed payments didn’t impact credit scores. However, that grace period officially ended on September 30, 2023. Now, missed payments can be reported to the major credit bureaus, including Equifax, Experian, and TransUnion, after 90 days. For anyone with student loans, being consistent with payments will now be key to avoiding potential credit score issues.
New Payment Plan Options
This year brings a new option for repayment—the Saving for a Valuable Education (SAVE) plan. This plan, based on income, is designed to reduce the amount borrowers need to pay. For undergraduate loans, borrowers will now pay just 5% of their disposable income, instead of 10%. Graduate loans will continue at 10%, but the change for undergraduates can help reduce monthly payments starting in July 2024. Exploring these options can help borrowers find a plan that fits their needs.
Help for Loans in Default
For those whose loans were in default before the pause, the Fresh Start program provides an opportunity to get back on track. This program lets borrowers bring their loans current, helping them avoid further issues such as wage garnishment or collections. Contacting the Education Department’s Default Resolution Group can be an essential step to getting out of default and improving one’s financial outlook.
Addressing Missed Payments
Some borrowers may have missed payments during the on-ramp period. Although these missed payments were put into forbearance, interest continues to add up. Being proactive by contacting your loan servicer and reviewing your repayment plan can help prevent any sudden increases in future payments. Maintaining regular communication with your loan servicer is crucial to stay on top of your situation.
Legal Matters and What Might Happen Next
The student loan repayment system faces some legal challenges. Lawsuits have affected applications for repayment plans like SAVE. The Biden administration is expected to announce details on a potential “Plan B” later this year, which could offer relief for borrowers who’ve been paying for decades or whose balances have grown significantly. However, these proposals may face legal challenges, so keeping up with student loan news is a wise step for borrowers.
Tips for Managing Your Student Loans in 2024
- Stay Up-to-Date – Follow updates on student loan policies from trusted sources. Knowing the latest news helps you stay prepared for any changes.
- Review Repayment Plans – If your current plan feels overwhelming, income-driven repayment plans like SAVE can help by lowering your monthly payments.
- Stay in Touch with Your Loan Servicer – If you’re having trouble making payments, reach out for assistance. They can offer guidance on options like forbearance, deferment, or even consolidation.
- Budget Wisely – Plan for your student loan payments as part of your monthly budget. This can help you avoid missed payments and keep your finances in good shape.
- Use Financial Tools and Resources – Many online resources can help you manage your student loans more effectively. Taking advantage of these tools can make it easier to stay on track.
Student loans may feel like a major responsibility, but by staying informed and managing your payments, you can navigate through 2024 and beyond.
