Frustrated student-loan borrowers brace for payments to resume, but they have repayment options

SALT LAKE CITY — People with student debt have spent the last several years in a political tug-of-war.

First, they were told not to worry about it during the COVID-19 pandemic, then the White House wiped out $400 billion of federal student debt for some students, only to have the U.S. Supreme Court say, no.

Now, payments will start again, but with all the twists and turns surrounding forgiveness, you might see why folks could develop financial malaise.

But with student loan payments scheduled to resume next month, we asked CNET senior editor Nick Wolny to help us make heads or tails of it.

“For many Americans, it’s been over three years since they’ve had to deal with any sort of loan payment,” Wolny said.

Let’s start with the good news for those who worry about whether they can afford to resume paying: If you miss a payment between now and next September, you will still accrue interest, but it won’t hurt your credit.

“There will be a one-year grace period after student loan repayment restarts, in which not paying or requesting deferment or forbearance isn’t going to impact your credit score,” Wolny said.

But most importantly, if you have student debt, you must look into the Saving on a Valuable Education or SAVE plan.

It may “cut in half” what many student-loan borrowers owe. For others, they may owe nothing per month – a $0 monthly payment. It will forgive some loans “after ten years of payments, instead of 20 years.” And it will not charge borrowers with unpaid monthly interest.

Wolny describes this as the SAVE plan’s crown jewel.

“That really prevents any future horror stories of people paying their loans on time, paying the amount that the government told them to pay and their IDR (income-driven repayment) plan and then just watching their loan balance go up and up and up,” he said.

It’s an income-driven repayment plan, meaning the more you make, the less it helps you. But that shouldn’t deter people who are making a good living from signing up, Wolny says.

“I can speak for myself,” he said. “I signed up for the SAVE plan. I have a student loan. And my new student loan payment was less than half of what my previous student loan payment was.”

But a significant factor is that you need to sign up for the new SAVE plan to get the benefits. Because while it’s a law for now, there are opponents in Congress trying to block the plan.