Interest on students loans set to resume accruing on Friday
SPRINGFIELD, MA (WGGB/WSHM) - It’s something on top of mind for millions of Americans. Interest on student loan payments is set to resume Friday for the first time since early 2020 after a fight by the Biden Administration to get some student loans forgiven.
“I took the loan out as an investment into my education, so I always knew that I would have to pay it back,” said Christian Ferrarie of Boston.
For the first time in over three years, interest on student loan payments will resume on Friday and former college students are weighing in.
“The interest not accruing has actually been very beneficial to create a financial foundation for my future, so I have been able to save more and invest more,” Ferrarie added.
According to the Office of Federal Student Aid, about 44 million borrowers owe more than $1.6 trillion dollars in federal student loans, not including private loans. Interest will start accruing on education loans Friday and payments are set to resume in October, but local certified financial planner David Fedor told Western Mass News that it’s best to not let that interest add up and start paying loans now.
“It all comes down to the amount of interest you are going to end up paying. If you end up stretching it out over time and you pay a lot of money in interest, that loan is going to cost you far more than what your education actually cost you,” Fedor said.
Borrowers can log onto their federal student aid account to check to see how much they owe and when their first payment is due as it varies by person.
“I recommend that you pay as much as you can,” Fedor added. “If you haven’t already created a budget, now would be a great time to start. You need to look at your income versus expenses and now you have to factor this in.”
We checked out the student aid website ourselves and found numerous payment plans available based on your income level. For those who may be confused on which plan to pick, Fedor shared this advice.
“An income driven repayment plan, so that would enable you to maybe lower the amount you have to pay monthly to 10 or 20 percent of your discretionary income and the government will give you a repayment plan over time, which potentially 20 or 25 years after paying, they could forgive the remaining balance if any,” Fedor explained.
He added that there are also some professions, such as teaching and nursing, that already qualify for student loan forgiveness. Despite the U.S. Supreme Court shutting down the Biden Administration’s proposal to cancel up to $10,000 for borrowers.
“You have to pay back loans, you have to have a roof over your head, you maybe have to have transportation, but there’s certain things like maybe going out to eat or vacations that you might need to relook at and you might need to restructure,” Fedor said.
He also recommended consolidating your loans to help lower your interest. A free website from the Massachusetts government can be found here.
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