Millions of Americans Discover Half-Payment IDR Plans for Student Loan Debt Relief as Pause Ends
After a three-year pause caused by the coronavirus pandemic, student loan providers are finally resuming collections, leading to significant changes in the budgets of 43 million Americans. The end of the moratorium has left many individuals concerned about their debt burdens. However, there is some good news for those feeling overwhelmed – income-driven repayment (IDR) plans offer a way to save while paying off student loans.
Fox 16 News recently interviewed former students who have benefited from IDR plans, and they shared their experiences of having their loan bills cut in half. Eden Cameron, who resides in Bryant, Arkansas, explained that she was paying $250 per month towards her 25-year graduate plan three years ago. However, due to the pause in collections, she and her husband diverted that money towards other expenses such as their mortgage, car note, and caring for their two-year-old daughter. Now that payments have resumed, they have turned to the Saving on a Valuable Education (SAVE) plan for assistance.
The SAVE program, a new federal initiative, bases monthly payments on the borrower’s income and family size. For Cameron, this has resulted in her payments being cut in half compared to before the loan hiatus. She is not alone in seeking relief through IDR plans, as the U.S. Department of Education reported that in Arkansas alone, nearly 400,000 borrowers collectively owe $13.4 billion in student debt as of June.
Another borrower, Wes Henry from Little Rock, carries a debt of $70,000 from graduate school. He recently applied for the SAVE program and discovered that he was accepted just days ago. According to Henry, the program calculates an affordable payment amount, allowing borrowers to cover necessary expenses while still making progress on their loans. What’s more, after 25 years of consistent payments, the remaining balance is forgiven, which can be achieved even quicker for smaller loans.
To help borrowers navigate the resumption of student loan payments, Arkansas Federal Credit Union has reminded its customers about the reintroduction of loans and encouraged them to explore IDR plans like SAVE. Dustin Cole, Senior Vice President of Consumer Living at Arkansas Federal Credit Union, advised those feeling overwhelmed to consider income-based repayment plans, as they can provide some relief. Cole also emphasized the importance of budgeting to better understand one’s financial situation and future trajectory.
Cameron urged others not to dismiss the possibility of qualifying for an IDR plan, even if they think they wouldn’t be eligible. She encouraged individuals to give it a try, noting that the worst outcome would be a rejection. Cameron shared that some of her classmates had accumulated six-figure debts, and when they qualified for the SAVE program, their monthly payments dropped significantly. She reassured others that even though her husband is working extra hours to find additional funds, the SAVE plan gives her confidence that they will smoothly transition back to making loan payments.
SAVE is not the only IDR plan available – it is simply the newest one. Borrowers seeking more information can visit StudentAid.gov to explore their options for managing their student loan debt.
In conclusion, the end of the student loan pause has prompted millions of Americans to reconsider their repayment plans. IDR plans such as the SAVE program offer a lifeline by cutting monthly payments in half, making them more manageable for borrowers. For those feeling overwhelmed, refinancing other payments or exploring alternative repayment plans may also help alleviate the burden. As individuals navigate the resumption of loan collections, financial institutions are encouraging borrowers to seek assistance and explore IDR programs for debt relief.
