As of July 1 there are big new student loan rules to add to the hellmouth.
In summary:
- There are annual and lifetime loan limits for students and parents → this means the caps are going to affect the total cost of school borrowers can afford, and the total income schools can expect [eg expensive schools are going to see less students who require loans to attend, all schools are bracing for reduced income]
- There are new repayment rules and plans: RAP replaces SAVE as the income-based payment plan → this means aside from PSLF, which is forgiveness based on where you work, there are no longer plans that get rid of your payment in less than 30 years
As far as I can tell, the RAP plan + setting up autopay is the current route to the smallest payment, though what that will be specifically for any person will take some digging. Here’s the official site describing payment options.
Table of monthly cost for a single person repaying loans on RAP:
Here’s a site that will do the math on your payment for you based on your income: for example this tells me if you make $50k a year and file single on your taxes, your RAP payment is $167; if you make $80k the payment on $200k is $467.
| I owe…. | I earn $30k/ year | I earn $50k/ year | I earn $80k/ year | I earn $100k/ year |
| $25k | $50 | $167 | 10 yr plan is cheaper @ $265 | 10 yr plan is cheaper @ $265 |
| $50k | $50 | $167 | $467 | 10 yr plan is cheaper @ $530 |
| $100k | $50 | $167 | $467 | $750 |
| $200k | $50 | $167 | $467 | $750 |
Making the call to get right with student loan repayment
I do think signing up for a payment plan is better than ignoring student loans, since the downside of not paying them is severe. I am sorry to report these downsides include:
- Short term, reported on your credit report which makes it harder to get a loan or apartment, and after 8ish months you lose the ability to apply for forbearance or RAP [eg have to pay a potentially higher amount to get out of delinquency]
- Long term, potentially having tax refunds seized, social security or wages garnished at 15%, and being disqualified for state-administered licenses, housing, or public assistance.
The bad christian dad / punishment mindset behind these repercussions is so messed up! But since they’re also currently true … I think getting on a payment plan is a better path forward than ignoring student loans.
If you are not in a payment plan, or were on the SAVE plan, and you want to start up income-based sliding scale repayment, here’s where you apply for RAP [according to nelnet.studentaid.gov]: https://studentaid.gov/idr
Additional, more detailed resources explaining the new rules:
- start here: National Consumer Law Center: Student Loan Borrower Assistance summary
- I thought this IG was a helpful visual summary [and is a great account to follow!]
- SoFi’s summary
Again, I’m not a student loan expert and probably don’t have answers to your specific questions.
It is so reasonable to be frozen and scared when it comes to student loans, and I feel you on the pain of them – I went through the pain of having and defaulting on student loans years ago, and I understand the body fear and stress they can cause. It might be annoying to hear this but it DID get emotionally better once I got on a plan and started digging out <3