![Tyson Foods Plant [Photo: Food Manufacturing]](https://southarkansassun.com/wp-content/uploads/2023/08/iStock_1185520857__1_.5e441daa51cca-600x337.jpg)
![Silverado Senior Living Management Inc. [Photo: Los Angeles Times]](https://southarkansassun.com/wp-content/uploads/2023/10/download-6-4-600x337.jpg)
![China's Wuhan Institute of Virology [Photo: Nature]](https://southarkansassun.com/wp-content/uploads/2023/09/d41586-021-01529-3_19239608-600x337.jpg)
Federal student loan changes have made borrowers hard to cope with the pandemic’s effects and political issues. Here’s what you need to know and what you need to prepare for the federal student loan changes.
Federal Student Loan Changes (PHOTO: GOBankingRates)
Federal Student Loan Changes
Here are changes to federal student loans for the past years. First, the decision of the Supreme Court on the cancellation of student debt, the second is the payments will resume in the late summer of this year, third is other loan forgiveness pathways have expanded, fourth there is a new IDR Plan, lastly, switches to the student loan servicer, this is according to an article in NerdWallet.com.
We will discuss first the decision of the Supreme Court on the cancellation of student debt, it was announced last year in August 2022, the plan of President Biden to erase federal student loans up to $20,000 to more than 40 million borrowers but the plan was put in the hands of the Supreme Court.
- What do you need to do and prepare?
Experts advise that one way to prepare is to pay your student loans as soon as possible by moving the estimated loan payment from a checking account into your monthly savings account.
Next are the payments that will resume in the late summer of 2023. The Supreme Court’s decision will take effect when student loan payments resume after three years or more of a federal payment pause interest-free, also known as forbearance.
- What do you need to do and prepare?
Do not wait for forbearance to end. Contact your servicer because you may encounter delayed responses and long hold times.
READ ALSO: Discharge Of Student Loan Debt: 615,000 Borrowers Will Receive Public Service Loan Forgiveness
More Federal Student Loan Changes
Another is the expansion of other loan forgiveness pathways. A few changes were proposed by the Department of Education to IDR plans. These plans cap monthly federal student loan bills at a fixed percentage of income.
- What do you need to do and prepare?
If you have FFEL or the Federal Family Education Loan program or HEAL, Health Education Assistance Loan, you need to apply and consolidate them at StudentAid.gov to get full benefits by the end of 2023. The consolidation process takes time, so start sooner.
Next is a new IDR plan. The plan had a major revision. If students borrowed less than $12,000, they will see their remaining balances brushed away after payment of 10 years, rather than 20 or 25 years under the old IDR plan.
- What do you need to do and prepare?
Call your servicer and ask about signing up for it, once the new IDR is finalized.
Lastly is the switch to a student loan servicer. In the next couple of years, the company that manages your student loans could change. The Department of Education has signed contracts with five federal student loan servicers.
- What do you need to do and prepare?
You make sure that your contact information is updated with your current servicer. Download a copy of your payment history.
READ ALSO: Will Student Loan Payment Pause Be Extended?
