Significant changes are happening with student loans in 2024. We’re talking about Student Loan Changes in 2024 that will impact millions of borrowers. From slashed monthly payments to new employer benefits and potential debt cancellation, this year will be a game-changer. Let’s dive into all the student loan changes you need to know about.
The SAVE Plan: Cutting Monthly Payments in Half
One of the most significant student loan changes in 2024 is introducing the SAVE (Saving for a Valuable Education) plan. This new income-driven repayment plan is designed to make student loan payments more affordable for borrowers.
Here’s how the SAVE plan works:
- If you initially borrowed $12,000 or less for undergrad or grad school, your loans can be forgiven after ten years of payments (instead of 20 or 25 years).
- For every additional $1,000 you borrowed over $12,000, you’ll have to make payments for one extra year before qualifying for forgiveness.
- Starting in July 2024, your required payments for undergrad loans will be cut in half, from 10% of your disposable income to just 5%.
- Grad school loan payments will remain at 10% of your disposable income.
But that’s not all! The SAVE plan also has some other incredible benefits:
- As of July 2024, loan consolidation won’t wipe out your previous payment history.
- You’ll get credit for payments made during periods of forbearance.
In simpler terms, the SAVE plan aims to make your monthly student loan payments way more manageable. It’s a relief for anyone struggling with high monthly bills.
Also Read – Best Student Loan Refinance Rates for 2024
New Employer Retirement Benefits for Student Loan Borrowers
Here’s an excellent student loan change that could boost your retirement savings: starting in 2024, employers can “match” your student loan payments by contributing the same amount to your workplace retirement account.
You pay $100 towards your student loans each month. Your employer could choose to put $100 into your 401(k) or other retirement plan. Whoa!
Even better? This benefit also applies to student loan payments you make for your spouse or dependents. Talk about a win-win!
Of course, it’ll be up to each employer whether they offer this perk. But it’s an incredible opportunity to pay down student debt and build up retirement savings simultaneously.
The End of the Student Loan Payment On-Ramp
Unfortunately, not all student loan changes in 2024 are positive. One big downside is the end of the “payment on-ramp” period that has been in place during the pandemic.
What does this mean for borrowers? Only now has the Department of Education reported late payments to credit bureaus. They also haven’t been placing loans in default or delinquency.
But come October 2024, that protection disappears. From then on:
- Late, partial, or missed payments could lead to loan default, debt collection, and garnished wages. Ouch.
- Any interest accrued during the on-ramp must be paid before payments go towards your principal balance.
In other words, the consequences of falling behind on student loans will return in full force. No more free passes. This change will require borrowers to stay on their payments to avoid severe penalties.
Also Read – Student Loan Debt Forgiveness: Texas Borrowers Get Biggest Debt Pardon
Biden’s Potential New Student Loan Forgiveness Plan
One of the most significant student loan changes that could happen in 2024 is the unveiling of President Biden’s “Plan B” for student loan forgiveness.
You may recall that the Supreme Court struck down Biden’s original plan to cancel up to $20,000 in federal student loan debt per borrower. But the administration hasn’t given up yet.
While details are still hazy, we know Biden’s team is working on a new forgiveness plan that could target specific groups of borrowers, like:
- Those who have been paying for 20+ years
- Borrowers whose loan balances have grown over time due to interest
- Several other potential categories to be determined
The announcement of this new plan is expected to come sometime around the November 2024 elections. Of course, there’s no guarantee it will take effect if legal challenges arise again.
But millions of borrowers hope meaningful student loan forgiveness could still become a reality in 2024.
Other Notable Student Loan Changes Coming Soon
Here are a few more quick-hit student loan changes to be aware of:
- The redesigned FAFSA form for the 2024-2025 school year was launched in late 2023 to simplify the aid application process.
- During his presidency, Biden has already canceled $138 billion in student loan debt for 3.9 million borrowers through various programs and initiatives.
- More piecemeal debt cancellation for specific groups of borrowers is also expected to continue throughout 2024.
As you can see, 2024 is a year of massive transformation in the student loan landscape. Some changes will save borrowers money, while others could create new hurdles. The best advice? Stay informed and be prepared to adjust your repayment strategy accordingly.
Conclusion
There you have it – all the significant student loan changes coming down the pipeline in 2024. This year, from the new SAVE plan and potential forgiveness to the resumption of payment penalties, is bringing a whirlwind of updates.
The bottom line? While some changes will provide significant financial relief, others will require borrowers to be more diligent than ever about making payments on time and in full.
No matter your situation, it’s crucial to understand how these student loan changes could impact you. Reevaluate your budget, explore new repayment plan options, and get prepared. Intelligent planning allows you to navigate 2024’s student loan shakeup while minimizing stress.
Of course, more changes and surprises could always arise. The student loan world is anything but predictable these days. But knowing what’s coming will help ensure you’re ready to tackle 2024 head-on as a student loan borrower.
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