UPI

Betsy Mayotte, president and founder of the Institute of Student Loan Advisors, told UPI that the borrowers her organization hears from are more frequently expressing confusion over which plan is best for them.

“We’ve seen borrowers whose SAVE payment was $40 and their next lowest payment on a new plan is $400,” Mayotte said.

For many borrowers, they will be able to switch plans directly on the Federal Student Aid website. In most cases, this will be the simplest way to switch, Mayotte said. However, in some cases, this can create problems with unduly high payment requirements due to a glitch in the Department of Education’s website.

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“This is like the perfect storm,” said Betsy Mayotte, the President of the Institute of Student Loan Advisors, a nonprofit that offers free student loan advice. “Gas prices are huge, healthcare costs have gone way up and now their student loan payment is likely at a much higher payment than they’ve had in the past.”

“There’s a lot of confusion. People are angry, they’re anxious,” Mayotte said.

Ultimately, Mayotte says to find a plan where you can pay the least amount out of your own pocket in the long run.

“Most people are going to pay their loans off in full themselves,” Mayotte said. “So, with that in mind, you shouldn’t necessarily be looking for what’s the lowest payment I can possibly get. You should be looking for what’s the highest payment I can afford to pay, because the faster you pay the loans off, the less you’re going to pay in interest.”

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The changes also affect future borrowing. Mayotte said Congress reduced the amount parents and graduate students can borrow through federal loan programs, potentially requiring families to plan further ahead when financing higher education.

She said the new limits mean families should consider the cost of an entire degree program rather than focusing on one academic year at a time.
“You need to plan for that whole degree program to make sure you don’t run out of federal funding,” Mayotte said.

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Families really need to project how they’re going to pay for the full degree, all four, five or six years,” Mayotte said. “For borrowers that are currently in repayment … they need to start looking at the repayment plans that are going to be available to them and that will best fit in, not only short-term budget, but long-term student loan management strategy.

For people that owe high debts, I use that old expression: “How does one eat an elephant? One bite at a time.”

What I find is helpful to the majority of the borrowers we work with is just being able to educate themselves on what their options are.