What is “Savoring” and How Can it Help You Build Wealth?
Back to school this year takes on a new meaning as interest on federal student loans resumed Sept. 1, 2023, and the Education Department will begin collecting monthly payments from borrowers starting in October. Nearly 44 million Americans held student loans valued at more than $1.6 trillion at the end of March (source: New York Federal Reserve). Here are some key dates to mark on your calendar:
September 1, 2023: Interest begins to accrue again on your loan. If you choose not to pay in September, you will be charged interest for this month. Also in September: Many people will get their bill, with the payment amount and due date, at least 21 days before your due date.
October 2023: Your first payment is due this month, but the dates your actual payments are due can vary depending on your loan administrator. You can expect to get your bill sometime in late September or early October and you’ll have at least 21 days before your due date once it’s sent to pay the bill.
December 31, 2023: Deadline for borrowers with commercially-held Federal Family Education Loans, Perkins loans held by a school or Health Education Assistance Loans, to consolidate their loans and be considered for an adjustment. Additionally, borrowers who have federal student loans will automatically be considered for the Income Driven Repayment Account Adjustment plan after this date.
Sept. 30, 2024: When unpaid student loans become delinquent.
The Big Benefits:
The Department of Education has launched a new repayment plan: Saving on a Valuable Education or SAVE. The SAVE Plan replaces the Revised Pay As You Earn (REPAYE) Plan and provides multiple new benefits, including lower monthly payments.
Payments on the SAVE plan – are based on income and family size, rather than loan balance. After a set number of years, your remaining balance is forgiven! Apply for SAVE here. Psst you can explore a demonstration of the application here.
Explore additional income-driven repayment (IDR) plans, which can wipe away student loans after 20 or 25 years of repayment. There’s also Public Service Loan Forgiveness (PSLF), a program that forgives student loans for workers in public service after 10 years of payments.
Want to pay down student loan debt more quickly? Pay attention to the details. Understanding the available repayment programs can help you find the most cost-effective option. For those planning to repay their loans in full, finding your loan’s interest rate can help determine if refinancing would be beneficial. Consider whether paying them down quickly is the right thing to do. When forgiveness is the goal, you want to have them forgiven after paying the least amount of money towards them as possible.