COLUMBIA, Mo. (KMIZ)
The pandemic-era break from repaying federal student loans is coming to an end, but the SAVE Repayment Plan could help borrowers save money.
The COVID-19 Federal Student Loan Relief ended, meaning that interest rates on loans will start Friday, with repayments beginning in October.
"So people who were in repayment before, now will have to start back repayment by October of this year," Jim Green, University of Missouri director of the Office of Financial Success, said.
In February, the federal government launched an application for a new student loan repayment plan.
SAVE Repayment Plan is an income-driven repayment plan, and calculates monthly payments based on income and family size, according to its website.
The SAVE plan would decrease monthly payments by increasing the income exemption from 150% to 225% above of the poverty line, according to the student aid website. The new repayment plan is considered to be the plan that will significantly "decrease your monthly payment amount compared to all other income-drive repayment plans."
Single borrowers earning $32,800 or fewer and families earning $67,500 or fewer could save at least $1,000 per year.
"So all the income-driven plans are based on income inputs, not necessarily the amount that the student borrower owes," Green said. "So, the income then will go through a calculation... but what they do is they will calculate a repayment for you that you do each month, and then you do that for perhaps a year, and then you do a recertification of your incoming and your family status, and they recalculate that payment for your monthly payment."
Green advises anybody who is looking at SAVE or any other income-drive plan to do your research.
"Make sure you understand which student loan servicer you have and then go to that student loan servicer's website and do that all over again and make sure that they know your contact info," Green said.
"They need to make sure that they update all their contact information, they may have changed their cell phones," Green said it's also important to make sure all of your contact information is up to date as well.
Green added he believes this is, "probably the best option if you are going to go into the income-driven repayment plans."