For many people, student loans are an unavoidable part of higher education. With the ever-increasing cost of tuition, it can be difficult to achieve a degree without borrowing money. Fortunately, the government has recently implemented new student loan rules that aim to make repayment easier and more manageable. In this blog post, we will break down the most important changes and what they mean for borrowers.
No Interest During Forbearance: One of the most significant changes to student loan rules is that borrowers will no longer be charged interest during forbearance periods. Previously, borrowers often found themselves accruing interest while they were unable to make payments, which only made repayment more difficult once they were ready to resume payments. This change can mean significant savings for those who need to pause payments due to financial hardship.
Flexible Repayment Plans: Another key change is the expansion of Income-Driven Repayment (IDR) plans. Under these plans, borrowers can choose to make payments based on their income, rather than a fixed amount. This can be especially helpful for those who experience sudden changes in income, such as job loss or reduced hours. Additionally, IDR plans are now available for Parent PLUS loans, which can be a significant help for families.
Forgiveness for All: For years, only certain types of student loans were eligible for forgiveness. However, the new rules allow for forgiveness of all federal student loans after 20 years of payments. This can be an incredible relief for borrowers who have been struggling with debt for many years. Additionally, public service employees may be eligible for forgiveness after only 10 years of payments.
No More Default Fees: Defaulting on a student loan can have serious consequences, including wage garnishment and damage to credit score. Previously, borrowers who defaulted on their loans also faced significant collection fees. However, those fees have now been eliminated. While defaulting is never the ideal option, this change can make it less financially devastating for those who find themselves in that situation.
Simplified Application Processes: Lastly, the government has also made efforts to simplify the application processes for certain types of loans. For example, the Free Application for Federal Student Aid (FAFSA) is now available earlier in the year, which can make it easier for families to plan for the upcoming academic year. Additionally, the application processes for some loan forgiveness programs have been streamlined, which can help borrowers avoid unnecessary paperwork and delays.
Student loan debt can be a major challenge for many Americans, but the recent changes to student loan rules offer hope for a brighter future. By eliminating interest during forbearance, expanding flexible repayment plans, and offering forgiveness to all borrowers, the government is making strides to make repayment easier and more manageable. Additionally, eliminating default fees and simplifying application processes can help borrowers avoid further financial stress. If you are struggling with student loan debt, it’s worth investigating these changes to see if they can offer you some relief.
