LEE COUNTY, Fla. — People who owe federal student loans will soon get their first bill since the pause in 2020. This time around, there's a new repayment plan intended to lower your payments and save you money.
Payments, including interest, will start back up on Oct. 1.
Adam Bruno, a financial adviser with Evolution Retirement Services, says it's going to be hard on families.
"I think it will be a challenge for people to add something new to the bill," Bruno said. "It’s always hard when you have a new bill that comes up on the budget all of a sudden."
The new program is called Savings on a Valuable Education, or SAVE. Payments will be based on your adjusted gross income, family size and the U.S. Poverty Guidelines.
"If their adjusted gross income is $60,000, but 250% of the poverty level is right, that’s going to make that payment a little lower," Bruno explained. "I think that levels the playing field for everybody."
Some will have payments as little as $0 a month.
"The fact that they might not have the ability to pay for a while their situation gets straightened out, I don’t think there’s anything wrong with that," Bruno said.
However, this doesn't wipe the debt away, even the payment is $0.
Under the plan, interest also won't add up if you make your monthly payment on time. With less interest, Bruno says the organization holding the loan will lose money.
He believes the government is likely subsidizing it to the companies.
"They just want all of this behind them," Bruno believes.
When payments do start back up, Bruno says there are things you should not do.
"It’s a big, big price tag if you continue to take out as much as you can here," Bruno said. "They shouldn’t refinance their house and take it out and pay the student loan that way."
Bruno says there are ways to get ahead of your loan. After you make your payment, see if you have money leftover to stash away. Stock away what you can for loans, then at the end of the year, take that money and pay it towards the principle loan.
"Those are all good tips to handling those big balances when you have them and trying to avoid that high interest rate," Bruno said.
Starting in July 2024, if your loan is originally $12,000 or less, it will be forgiven after making payments for 10 years.
"It is worth it in that regard, Bruno said. "It theoretically should have a benefit to everyone, no matter what your income is."
