Five ways to save on student debt
Three-and-a-half years ago, we breathed a collective sigh of relief as the federal government paused all federal student loan payments. It was the beginning of a pandemic that is still plaguing us, and people were losing jobs, facing unforeseen medical costs and mourning loved ones. We were grateful for the small break this pause offered. But now it’s ended. Payments on federal student loans resume Oct. 1, 2023.
There is no denying the hardship that student loan payments present: Scraping together those payments every month is one more thing to worry about in a world already full of strife. And it’s hard not to resent having to borrow money to attend college in the first place — higher education should be accessible to everyone, without the “debt sentence” of student loans.
The AFT wants to help and is offering a number of ways to ease the burden of student debt.
Income-driven repayment: New SAVE plan slashes monthly payments by half
After the Biden administration’s proposal to cancel up to $20,000 in student loans across the board was rejected by the Supreme Court, they didn’t give up. Instead, they’re clearing alternative pathways to debt relief. The Saving on a Valuable Education plan, or SAVE, is one of the most significant. It takes income-driven repayment — which is exactly what it sounds like, a repayment plan based on income rather than on loan amount — and cuts monthly loan payments in half. With SAVE, payments will be based on just 5 percent of a borrower’s income, rather than on the 10 percent that has been used in the past. Result? Borrowers who earn less than $15 an hour, or about $33,000 a year, will qualify for $0 payment, and those who earn more will still save more than $1,000 a year. The plan also will prevent balances from growing because of unpaid interest. Check out the details here.
Public Service Loan Forgiveness: A reward for public service
One of the most effective ways to alleviate student debt for educators, healthcare workers, some nonprofit employees and other people who work for the public good is the Public Service Loan Forgiveness program. Anyone who works in public service and makes 10 years’ worth of student loan payments should qualify to have their remaining student debt canceled. While byzantine rules and regulations once made this program impossible to navigate — 98 percent of applicants were denied — the AFT and others fought for changes, and now PSLF is a valid pathway to loan relief, saving borrowers tens of thousands of dollars. Loans that once did not qualify for PSLF are now included. There are retroactive policies that sometimes wipe out a borrower’s entire debt just by adding up the payments that should have been counted toward forgiveness. You can learn more about your particular qualifications for this kind of loan relief at one of our student debt clinics, through the online resource Summer (see below) or on the Department of Education’s student loan webpage.
AFT’s student debt clinics: friendly clinics are a boon for thousands
There are a lot of opportunities to save on student loan payments, but the details can be confusing. AFT staff can untangle it all and help you take advantage of every program that could lead to debt cancellation and/or the fastest, least-costly repayment plan. We know what jobs qualify for Public Service Loan Forgiveness — when, if you show 10 years’ worth of payments you get the remainder of your loan forgiven — and we know how to get you there. We know you can save 0.25 percent on interest if you sign up for autopay, that you can avoid default and that those old Federal Family Education Loans, which were excluded from loan relief programs, can now qualify, if you consolidate them by the end of 2023. If this sounds like a foreign language to you, sign up for an AFT debt clinic to find out how we can help you move toward loan repayment and cancellation.
Online resource Summer: Navigating the student debt journey
We hear about it all the time in our student debt clinics: Members are struggling to pay off their student loan debt and simply don’t know who to turn to for help. If you’re not ready for an AFT student debt clinic, check out Summer, an online resource started by student loan borrowers who wanted to help others avoid bad information. Its experts know the ins and outs of how to reach student loan relief fast, and the AFT has made their services free to AFT members. Summer has already saved AFT members $389 million — for individuals, that’s an average of $236 a month, or $53,623 over the life of their loans. Behind the figures are real-life stories of members finally able to breathe easy and escape the weight of lifelong student debt. Check out Summer here.
Policy change: Advocating at every level
The AFT has been fighting student debt for years, not only helping individual members find debt relief but also pushing policymakers to change a system that has afflicted our nation with a total of $1.7 billion in student debt. We filed an amicus brief with the Supreme Court, supporting President Joe Biden’s proposal to cancel up to $20,000 in debt for borrowers. We sued former Secretary of Education Betsy DeVos and her department over a PSLF programs so poorly handled that just 2 percent of its applicants won relief. We sued loan servicers who were milking borrowers for interest when they should have been helping them toward relief. We supported and celebrated the “borrower defense” win for borrowers who were swindled out of their money at shady for-profit colleges that took their student loan money and left them with no viable education. And we’ve supported elected officials who have been pushing for debt relief legislation for years. We’ve also participated in the more esoteric but just as important rulemaking process at the Department of Education, where our leaders and members have testified about the burden of student debt and the importance of making higher education available to anyone who wants to access it — without having to take on a “debt sentence” to do it. In this testimony, AFT President Randi Weingarten lays out the argument for student debt relief to the rulemaking committee in charge of policy at the Department of Education.
This story was written by AFT communications specialist Virginia Myers. Want to read more stories like this? Subscribe to AFT e-newsletters.
