SAN DIEGO — According to financial experts, the government shutdown will not impact student loan repayments.
After a three-year pause, borrowers will need to start paying their student loan debts next month.
For nearly 7 million federal student loan borrowers, next month will be their first time making a student loan payment.
The federal government says nearly four million Californians have an average loan debt of $37,000.
CBS 8 is Working for You so if you're a borrower, you won't have to spend your days on hold trying to get answers about repaying student loans.
“You can't just wait for the month to show up and start making payments. Everybody really needs to be paying attention,” said Armen Kurdian, a personal financial expert.
The retired Naval captain located in Vista says what borrowers need to do first is log on to the Federal Student Aid portal.
Borrowers will find all the information about their loan and servicers. It's important to update contact information there and with the servicer.
“Go back and find your last statement, find your emails, it's entirely possible that your servicer has changed as well,” said Kurdian.
CBS 8 also spoke with Lending Tree expert, Michael Kitchen, about the government's SAVE plan.
“There are things might be a little bit easier for student loan repayment than they were before COVID,” said Kitchen, Lending Tree Senior Managing Editor.
Starting in June 2024, the government will implement a SAVE plan which can lower monthly payments based on the borrower’s income and family size which will count towards loan forgiveness, and it will also help cover interest as long as payments are made on time.
- For example, a single person making $60,000 a year will pay $227 a month. But a parent in a family of three making $50,000 pays zero.
- Those zero payments count toward total loan forgiveness which kicks in at anywhere from ten to 25 years depending on the type of loan and loan amount.
- SAVE also treats interest differently: For example, if a borrower qualifies for a low monthly payment of $30, but their interest is $50, they won't be charged that additional $20.
“After making ten years of payments under that, the rest of it would be forgiven. So that's, that's a really big deal,” said Kitchen.
The government is also offering what they call an On Ramp program, which won't affect borrowers credit if they miss a payment between now and September 2024 but be cautious that interest will add up.
“If you are in an extreme situation, you will definitely want to contact your servicer,” said Kitchen.
Borrowers can also save by avoiding scammers who are promising to lower student loan debt. By using auto-pay, providers may offer a 0.25 percent cut from the interest rate amount but experts say the best way to stay out of the red is budget.
“What am I required payments, what are my optional payments, do I need to get rid of some of my streaming services, in order to pay some of these, these required loans?” said Kurdian. “Your most valuable of all resources, you have time to solve problems, you have time to plan.”
To learn more about student loans go to the Federal Student Aid website.
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