Consumer Alert: No more student loan forgiveness — here’s how to prepare for repayment

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The U.S. Supreme Court struck down President Joe Biden’s student loan forgiveness program. That ruling affects about 43 million Americans. Those borrowers will start paying back their student loans in October. And the interest begins to accrue again on Sept. 1. According to the Education Data Initiative, the average borrower will have paid $27,000 in interest at the end of a 20-year payment plan. And the average monthly student loan payment is $503.

Here in New York, according to the Institute for College Access and Success, in 2020, 54 percent of college graduates were burdened with debt when they crossed the stage. The average student loan debt in New York state was just under $31,000. Twelve percent of New York graduates have private student loans, and their debt averages $40,470. Forty-nine percent of New Yorkers attended public colleges, and 51 percent attended private colleges where costs and loan debt are generally higher.

So I sat down with Jarrett Felton, News10NBC’s finance expert and owner of the wealth management firm Invessent.

He says the first step in addressing student loan debt is taking a hard look at your budget. How much money is going in, and how much is going out? For example, the average household income in Rochester and its suburbs is just over $65,800, so a $500 monthly student loan bill would be almost 10 percent of the household income. You need to know that so you can budget for it. That’s the first step.

“Second step, I would say call your loan servicer and ask about the different payment plans that are available to you,” said Felton. “Whether it’s the typical standard, whether it’s the graduated payment plan, whether it’s the extended repayment plan for student loans, do any of the loans you have qualify for being discharged? Or maybe even public service loan forgiveness. So there’s a number of different options that people can consider, but it all starts with you understanding the income coming into the house, the income going out, and the money left over because when that bill kicks in, it’s real.”

Felton says you should ask your loan servicer whether you have several loans combined into one payment. If so, you want to ask about the terms of each individual loan. Which ones have the highest interest rates? You can then prioritize the loans that are costing you more and knock them out first. Click here for information about your options for repayment plans and use its loan simulator to estimate monthly payments.