Monday, July 15, 2024

American student loan debt surpasses $1.6 trillion, with half of borrowers yet to restart repayment

Student Loan Borrowers in the US Face Challenges as Repayment Resumes

Student loan borrowers in the US are facing a dilemma as they navigate the end of the repayment pause that was put in place during the COVID-19 pandemic. According to data from the Department of Education, almost 20 million borrowers have resumed making payments on their student loans, while roughly 19 million have not, leaving their accounts in a state of delinquency, default, or otherwise paused through deferment or forbearance.

With the deadline looming in September for borrowers to take advantage of the on-ramp that allows them to hold off on payments without affecting their credit score, many are weighing their options. However, interest continues to accrue during this time, adding to the total amount owed.

President Biden’s efforts to address student loan debt have faced legal hurdles, with courts rejecting or putting on hold various forgiveness plans. The latest program, the Saving on a Valuable Education (SAVE) Plan, met resistance from federal courts in Missouri and Kansas. Despite these challenges, the administration continues to explore ways to provide relief to borrowers.

Under the SAVE Plan, borrowers’ monthly payments are based on income and family size, with forgiveness granted to those who took out $12,000 or less in loans after 10 years. The plan also includes an interest benefit to prevent balances from growing due to unpaid interest.

As the student loan repayment landscape continues to evolve, borrowers are left wondering about the best path forward for managing their debt. With uncertainties surrounding government forgiveness programs, many are seeking guidance on how to navigate their financial obligations effectively.

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