CUT OR LOWER INTEREST RATES
Federal student loan borrowers haven’t had to make payments since March 13, 2020, and they won’t again until Oct. 1. During this pause, zero interest is accruing. That means loans won’t grow and, if you can afford to make payments, you can pay off your debt faster.
Making zero interest permanent or lowering interest on existing debt could help borrowers pay off their debt without growing the principal, says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors.
Many borrowers Mayotte hears from say their biggest gripe is growing interest.
“They say, ‘I feel like I should pay (my loans) back, but I don’t feel like I’m on a level playing field because of the interest,’” Mayotte says.
CONDENSE INCOME-DRIVEN REPAYMENT
Income-driven repayment plans, federal options that set student loan payments at a portion of a borrower’s income, are a strong safety net. But experts say the four income-driven options — in addition to the three other federal repayment plans — should be streamlined into one new program. Some suggest automating enrollment.
“There’s no rhyme or reason for the variety of programs that exist in this space other than they were developed over time,” says Beth Akers, resident scholar at the American Enterprise Institute, a conservative public policy think tank, where she focuses on the economics of higher education. “We need to simplify the safety net for students and make it so simple that they can understand it exists and what benefits it can provide for them.”
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