OMAHA, Neb. (KMTV) — Federal student loans began accumulating interest on Sept. 1. In October, monthly payments will be due for the first time in 42 months.
That's a surprise to some with federal student loans. A 3 News Now reporter asked a mom with students loans if she was aware.
"Absolutely not," said Atianna Ragger.
She says she has just under $10,000 in federal student loan debt from trade school at the Omaha School of Massage Therapy.
That debt would've been wiped out if the Biden Administration's student loan forgiveness plan stood. Instead, the U.S. Supreme Court ruled this year the president doesn't have that authority.
"I have a kid that I'm working to take care of on my own," Regger said, "on top of just paying for costs just to live. So, the extra money having to come out ... I wouldn't like that at all."
But coinciding with the end of the student loan pause is a new repayment option that U.S. Department of Education Undersecretary James Kvaal called "the most affordable student loan repayment plan ever."
Called SAVE, for "Saving on a Valuable Education," the new income-driven repayment option "decreases monthly payments by increasing the income exemption from 150% to 225% of the poverty line." The U.S. Department of Education says that means a single person making less than $32,800 won't need to make any payments at all.
Under the plan, unpaid interest won't add up. That means if your payment doesn't cover all the interest due, the extra interest is forgiven. In that case, though, the principal balance doesn't decrease either.
The SAVE plan is set to have lower payments on undergraduate debt in the summer of 2024, when the proportion of discretionary income that must go to student loans drops from 10% to 5%.
The plan is a reworking of what was known as the REPAYE plan. Borrowers enrolled in that plan automatically go onto the SAVE plan. Otherwise, borrowers can learn more and apply here.
For what it's worth, Kvaal, the undersecretary, said his father is from Omaha and went to Westside High School.
See the full, five-minute interview with Kvaal below:
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