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Federal Student Loan Repayment Trends: Only 33% Resume Payments, SAVE Plan Offers Relief

(photo: Louisiana Illuminator)

Federal Student Loan Repayment Update

Trends, Options, and the SAVE Plan

Federal student loan repayments were suspended from March 2020 to September 2023 to alleviate financial strain caused by the pandemic. Although repayments resumed last October, more than 30% of Americans do not intend to repay their loans, a figure that climbs to 50% among those with lower incomes. Only 33% have restarted making regular payments.

The SAVE Plan provides a ray of hope by forgiving loans after 10 years of consistent payments for borrowers who took out $12,000 or less. It has gained popularity, with over half of borrowers either seeking or receiving loan forgiveness. Defaulting on loans carries significant risks, including damage to credit scores and potential legal consequences. Deferment or forbearance can provide assistance during periods of financial hardship, as reported by Money Wise.

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(photo: Federal Student Aid)

Student Loan Repayment Strategies

For those able, aggressive loan repayment reduces interest and speeds up debt payoff. Refinancing federal loans at lower rates can save money, especially for those with good credit. Income-driven repayment plans adjust payments based on income offering forgiveness after 20-25 years, depending on the loan type.

Navigating student debt involves considering repayment strategies and forgiveness options amidst ongoing financial challenges.

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