How student loan borrowers can prepare by end of June
With the July 1 deadline approaching for federal student loan borrowers, experts recommended actions they can take before the changes are implemented.
Although many of the changes will occur over the next few years, some aspects of the reform will take effect on July 1, according to a news article from Yahoo Finance. The experts explained that borrowers enrolled in the Saving on a Valuable Education plan will begin to receive notices from their student loan servicers of the plan’s termination. Upon receipt, borrowers will have 90 days to switch to a new repayment plan, after which they will automatically be migrated into a different plan. As other repayment options — including the Income-Contingent Repayment plan and the Pay As You Earn plan — are phased out over the next two years, borrowers were advised to switch to either the Standard Repayment Plan or Repayment Assistance Plan.
While borrowers on the Parent PLUS plan making repayments may be able to remain on the plan until July 1, 2028, those seeking Public Service Lean Forgiveness will need to consolidate their loans prior to this year’s July 1 deadline and enroll in a new income-driven repayment option. Parent PLUS loans that are funded prior to the July 1, 2026, deadline, can continue their loan for three years.
In addition, students should expect to face annual and lifetime borrowing limits of up to $20,500 and $100,000 for students in graduate programs and $50,000 and $200,000 for students in professional programs, respectively.
By July 1, 2027, the experts stressed that deferment and forbearance programs will be eliminated or limited for loans taken out after this date.
Read more: Yahoo Finance
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