As Student Loan Payments Restart, Borrowers Have Repayment Options

By: Erica Romero, VP, Education Policy and Advocacy

After a 3-year COVID payment pause student loan payments have restarted, which can be challenging for many student loan borrowers, especially Latino borrowers. Latino students historically take out more loans than their peers, take longer to repay those loans, and are hindered by debt for longer periods of time. Latinos for Education wants you to be aware of the various student loan repayment options and particularly those options for borrowers whose loan payments are high compared to their income. 

Public Service and Teacher Loan Forgiveness

Some borrowers may be eligible for loan forgiveness. For example, if you work in public service (government or non-profit), you could be eligible for Public Service Loan Forgiveness (PSLF). Under PSLF, your loans could be forgiven after working in public service for 10 years while making ongoing monthly payments on student loans. Or, under the Teacher Loan Forgiveness (TLF) Program, if you teach full time for five complete and consecutive academic years in a low-income school or educational service agency, and meet other qualifications, you may be eligible for forgiveness of up to $17,500. 

Income-Driven Repayment Plans

It is also important to understand your repayment options. You can pick a plan that gives you a fixed monthly payment or a repayment plan that bases your monthly payment on your income, such as Income-Driven Repayment (IDR) Plans. IDR plans base your monthly payment amount on how much money you make and your family size. And, after satisfying a certain number of months of qualifying payments on an IDR plan, you can get the remaining balance of your loan(s) forgiven. The U.S. Department of Education offers four IDR plans

Saving on Valuable Education Plan 

The newest plan is the Saving on Valuable Education (SAVE) plan. SAVE lowers payments for almost all people compared to other IDR plans because your payments are based on a smaller portion of your adjusted gross income (AGI). For some borrowers, the monthly payment might be as low as $0. And, SAVE has an interest benefit; If you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month. This means that SAVE prevents your balance from growing due to unpaid interest. See here to learn more about SAVE.

Temporary On-Ramp Period

For borrowers who still can’t make their monthly payments, the Department of Education created a temporary on-ramp period through September 30, 2024 and will not report you as delinquent during the on-ramp. Borrowers do not need to request or enroll in the on-ramp period. If your loans were eligible for the payment pause, you are automatically eligible for the on-ramp.

Fresh Start for Defaulted Loans

Finally, if you have defaulted on your student loan, the Department of Education is offering a Fresh Start to get out of default. Fresh Start offers numerous benefits to borrowers in default, but you need to act to take advantage of the program. See here for more information.

For additional tips and recommendations for repaying your student loans, see here.

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Erica Romero serves as Vice President of Education Policy and Advocacy at Latinos for Education in Washington, DC.  She is responsible for providing thought leadership, policy analysis, policy development, and cultivating key partner relations with decision makers and influencers in the federal education space. She previously served as Assistant Vice President of State Advocacy at the Hispanic Association of Colleges and Universities, as well as Vice President of External Relations at the Association of Independent California Colleges and Universities. She is a graduate of both UC Berkeley and the Harvard Kennedy School of Government.