After a couple weeks of extensive online research, going through my student loan account with a fine-tooth comb, and spending about 45 minutes on the phone with a representative from my new student loan servicer, Nelnet, I took the leap and applied to switch my income-based repayment plan from PAYE (“Pay As You Earn”) to the SAVE Plan. My goal: to keep my interest from growing and capitalizing on my loans.
Before the COVID repayment pause, I owed close to $228,000 in student loans as a result of attending law school in New York City. By the time the payment pause ended in September of 2023, I managed to pay down approximately $37,000, but sadly, only about $10,000 of this amount went toward my principal. Today, I still owe Uncle Sam about $29,000 in accumulated, capitalized interest, down from ~$52,000.
Although the SAVE Plan, if my application is approved, may lower my monthly payments and keep the interest that has already capitalized on my student loans from increasing, I do not believe the SAVE Plan goes far enough to provide debt relief to borrowers. Under any plan, I still have to pay the interest BEFORE I can make payments toward my principal. We need legislation that goes further and tackles the real issues concerning student loan debt:
- Our government is profiting on student loans at the expense of borrowers;
- Schools are not taking any accountability for the massive amounts of student loans disbursed with minimal due diligence;
- Mounting interest will keep borrowers paying forever; and
- If borrowers can’t make progress paying down their student loans, they simply won’t pay them.
The Student Loan Interest Elimination Act is a much more efficient debt relief plan for student loan borrowers because it deals directly with the high-impact problem areas of how student loans currently work. Here’s how:
- It will allow current borrowers to refinance the interest on their student loans down to 0%;
- It will cap interest rates for future borrowers at 4%; and
- It will create a Trust Fund to replace interest payments and cover administrative costs associated with student loans, which are currently paid by the borrower.
For more information on this critical issue, please visit the following links: https://courtney.house.gov/sites/evo-…