Consumer Reports: Navigating student loan repayment

CHARLOTTE — If you have federal student loans, there are some big changes you need to know about. Interest has started up again for millions of borrowers, and for many, the first step is just figuring out where your loans stand.

Consumer Reports breaks down what to do and how to stay on track.

ALSO READ >> How to reduce student loans

Nearly 8 million Americans are enrolled in the SAVE repayment plan. Interest on those loans has resumed, ending a yearlong pause, while monthly payment are still on hold.

“What this means is that a lot of people are going to see their loan balances grow again,” Consumer Reports’ Chuck Bell said. “And if you’re already struggling with repaying your student loans, that’s just going to make things harder in the future.”

The Student Borrower Protection Center estimates the new interest costs for a typical borrower will be $300 per month or $3,500 a year.

The Department of Education says once the payment pause ends, borrowers will be responsible for monthly payments, including interest and principal. It says anyone enrolled in the SAVE Plan should transition quickly to an Income-Based Repayment Plan to avoid missing out on important loan benefits.

“There’s a lot of concern about affordability,” said Carolina Rodriguez, the director of the Education Debt Consumer Assistance Program at the Community Service Society of New York.

Rodriguez runs a program helping people with student loans manage their debt. She says many people haven’t updated their income or repayment plan.

“The best strategy is to figure out what is your current situation and ability to repay and explore the repayment plan options,” she said.

Consumer Reports says:

First, log in to the federal student loan portal at studentaid.gov. You can check your balance, interest rate, repayment plan, and find out who’s servicing your loan.
Then, go to your servicer’s website. You can update your income, change plans, or apply for a more affordable option.
Nonprofit organizations and state programs like student loan help centers can help guide you through the process for free.

Consumer Reports says if you stop making payments, it can hurt your credit and cause serious financial problems down the road, so it’s important to stay on top of your student loans.

VIDEO: Paying off debt: The ‘avalanche’ vs. ‘snowball’ methods