In 2024, significant shifts are on the horizon for student loan borrowers. The year kicked off with a flurry of changes, including the revamped FAFSA and President Biden’s pledge to cancel more student loan debt. However, the ride is far from over, as additional alterations loom on the horizon.
February marks the implementation of the Saving for a Valuable Education (SAVE) plan, promising relief for millions. Under this plan, borrowers who initially borrowed $12,000 or less for their education can qualify for loan forgiveness after a decade, rather than the typical 20 or 25 years. Additionally, borrowers enrolled in SAVE will witness a reduction in their required payments, offering some much-needed financial respite.
Come June, borrowers can anticipate more benefits, with loan consolidation no longer erasing payment history
Come June, borrowers can anticipate more benefits, with loan consolidation no longer erasing payment history and the ability to accrue credit for payments made during forbearance periods. Furthermore, required payments for undergraduate loans will be halved, easing the burden on borrowers’ wallets.
In addition to the impending changes for student loan borrowers, the onset of 2024 heralds a promising development in retirement planning. Thanks to the SECURE Act 2.0 provision, employers now have the option to match employees’ student loan payments with contributions to their retirement accounts. This innovative perk offers a dual benefit, empowering borrowers to tackle student debt while simultaneously bolstering their retirement savings. Moreover, the inclusivity of this provision extends to student loan payments made on behalf of spouses or dependents, further amplifying its impact.
in October, the safety net shielding borrowers from the consequences of missed payments will vanish
However, amidst these favorable updates, a less welcome reality looms on the horizon. With the conclusion of the Biden administration’s on-ramp period in October, the safety net shielding borrowers from the consequences of missed payments will vanish. This cessation means that late, partial, or missed payments could trigger dire outcomes, including loan default and wage garnishment. Additionally, borrowers who deferred addressing their student loans during the on-ramp period will need to address accrued interest before payments are allocated to the principal balance, underscoring the importance of proactive financial management.
Looking forward, speculation abounds regarding the Biden administration’s potential unveiling of a new student loan forgiveness plan, colloquially dubbed “Plan B.” While details remain nebulous, the proposed plan aims to offer relief to long-term borrowers and those grappling with escalating loan balances. Yet, the specter of legal challenges looms large, casting uncertainty on the timeline and efficacy of these proposed measures. As the landscape of student loan policy continues to evolve, borrowers must remain vigilant and informed to navigate these shifting tides effectively.