Debt Management
It’s natural and expected that many educators and students get "butterflies" each fall. Everyone gets a little nervous about starting the new school year, and those feelings can last for weeks until we all get comfortable again with our daily routines. But this year, another kind of unease won’t fade so easily, in fact, it may stick around all year – and this is our anxiety about personal debt.
Starting in the spring of 2020, when then-President Donald Trump suspended student loan payments at the onset of the pandemic, and continuing with a series of extensions approved by the Biden administration, many consumers used the money that would have gone to those loan payments to help meet other expenses, such as rent or mortgage payments, car loan payments and utility bills.
The nearly three-year payment holiday was really a form of stimulus, and it worked. Default rates on loans have been remarkably low for several years. But as the student loan payments began to resume in October, we face a great unknown – are family budgets actually in good shape?
During the pandemic, and especially over the last 18 months, consumers began spending more on credit cards. In fact, card balances have increased roughly 17 percent over that period. That’s putting a terrible strain on budgets. Default rates on many types of loans are rising again, recently topping pre-pandemic levels. The collision of debts and strained income is arriving.
Rather than carrying the anxiety of indebtedness with you, take action now. MTA Benefits, through a partnership with Cambridge Credit Counseling, can help MTA members understand how to effectively manage debt, allowing them to pay it down in a way that can result in significant savings without damaging credit worthiness by settling accounts or taking out additional loans.
Instead of paying interest rates that can exceed 25 percent, Cambridge clients can pay down their accounts at an average rate of just 8 percent, creating room in their budget that allows them to meet other expenses. Goodbye anxiety.
Gather your bills and statements and pick up the phone to talk with a Cambridge counselor. They won’t make judgements about your budget or tell you what you can or can’t spend your money on. You set your priorities. Cambridge’s holistic approach works, and it will keep your butterflies at bay.
To talk to a Cambridge counselor, call 888.254.0398
Student Loans
Have you taken advantage of the Income-Driven Repayment adjustment for your student loans, which expires on Dec. 31?
Here’s a quick checklist to ensure you’ve done everything that needs to happen:
- The IDR adjustment period that expires on Dec. 31, 2023, is quite similar to the waiver that ended Oct. 31, 2022, and it’s life-changing for many federal loan holders. The adjustment period is giving retroactive credit for payments made through any plan on any type of federal student loan.
- First determine what kind of student loans you have. Go to your account at studentaid.gov. (If you have federal loans, you have an account waiting for you there.) Create log-in credentials and explore your dashboard. It will tell you what type(s) of loans you have.
- If you only have Direct Loans, your payment count will be automatically updated by the end of 2024, even if you were paying through an ineligible payment plan. If you haven’t reached 120 qualifying payments yet, that’s OK, as long as you make any remaining payments through an income-driven plan.
- The new federal SAVE plan probably will require the lowest monthly payment for your loans. You can apply for the SAVE plan online at studentaid.gov.
- If you have Parent PLUS loans and your child will graduate by the spring of 2024, you might consider the "double consolidation loophole." (It’s real, we swear!)
- If you discover that you still have even a single FFEL loan, you must consolidate it to bring it into the Direct program, making it eligible for forgiveness. Do so before Dec. 31, 2023.
- If you only have Direct Loans but they’re spread over a long period and have very different payment counts, consolidation can still be a benefit. Consolidating two loans, one with 100 payments and one with 35 payments, will result in a Direct consolidation loan with at least 100 payments. (This opportunity expires on Dec. 31, 2023.)
If you’re unsure of the next steps, tune into a live webinar, presented by Cambridge Credit Counseling. Info can be found at www.mtabenefits.com/webinars.
