WPBN: The moment to take charge of your student debts and prepare for the new year financially is now, as 2025 draws near. Being ahead of your student debt can help you succeed and reduce stress due to changes in interest rates, repayment schedules, and other things that may affect your loans.
Taking proactive measures today can have a big impact on your financial future, whether your goal is to refinance for better terms, pay off debts more quickly, or just plan your payback schedule.
You may begin the year with a clear strategy and a greater sense of financial stability if you take care of your college loans before 2025.
An overview of student loans in the United States
With more than $1.7 trillion in outstanding student loan debt from federal loans, student loans have grown to be a major financial burden for millions of borrowers in the United States. These loans are usually used to pay for living expenses, tuition, and other costs associated with higher education.
Borrowers can choose between private student loans, which might have more stringent terms and higher interest rates, and federal student loans, which provide more flexible repayment alternatives and lower interest rates. Student loans facilitate access to higher education, but they also come with the burden of repaying substantial debt, which frequently begins soon after graduation.
Currently, 43 million Americans have outstanding federal student loan debt. The student debt crisis has grown in importance due to rising tuition costs and an increase in the number of borrowers.
This has led to calls for reform, including calls for student loan forgiveness and more affordable educational options. But for the first time, federal student loan debt decreased in 2023. The average amount of federal student loan debt is $38,000, but depending on the school and program, this can be significantly more.
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Resolving your student loan debt before to 2025
Having to deal with another year of student loans may feel overwhelming, especially because the Trump administration is expected to enter office in 2025 and make changes to student loan programs. The new year is only a few days away.
Borrowers may find themselves largely on their own when it comes to understanding their options and determining eligibility for student loan forgiveness and reduced payment programs, especially given the high likelihood of funding cuts, a possible decline in borrower-focused communication, and a reduction in oversight of loan servicers and other federal contractors.
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Actions to take prior to the new year
Proactive measures can be taken by borrowers pursuing Public Service Loan Forgiveness (PSLF), which provides complete federal student loan forgiveness in as little as 10 years for people working in government or nonprofit organizations.
Since PSLF is a statutory program, Congress would need to take action to completely dismantle it, even though the incoming Trump administration may make changes.
Verify the correctness of your PSLF payment count on StudentAid.gov and, if necessary, submit a challenge using the PSLF Reconsideration site.
Use the digital PSLF Help Tool to submit a new PSLF Employment Certification if it has been a while since you last certified your employment. If you are approaching 120 payments but are in forbearance, consider PSLF Buyback for possible forgiveness during the forbearance term.
Given the high likelihood that SAVE will be repealed once the Trump administration assumes office, borrowers in the plan forbearance should begin planning for alternatives, such as the Income-Based Repayment (IBR) plan or the forthcoming Pay-As-You-Earn and Income-Contingent Repayment plans.
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Since many people could have to make larger monthly payments, it’s critical to assess your options for repayment and adjust your budget accordingly.
With the expectation that SAVE will no longer be an option, newly graduated borrowers should take action to repay their loans. After Trump enters office, current debtors should begin creating a financial plan with the assumption that their monthly payments would rise. Additionally, before 2025 begins, make sure that the debt on your student loans is out of default.
