With so much information floating around about student loans, and an uncertain federal plan to forgive a significant amount of debt, Cheddar News brought in an expert to help you sort through what's going on. 

<div class="block">With so much information floating around about student loans, and an uncertain federal plan to forgive a significant amount of debt, Cheddar News brought in an expert to help you sort through what&#39;s going on. </div>
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Stretching Your Dollar

The Importance of Timely Loan Repayment 

Welcome back to stretching your dollar here on news of the Stock Exchange. And as we reported earlier this year, the pandemic era freeze on federal student loan payments is coming to an end payments will restart in October and interest on those loans begins to accrue September 1st. Well, it's left millions of student loan borrowers worried about how they're going to pay their loans. But the Department of Education shared, it's going to automatically forgive more than 800,000 borrowers student loans as an effort to fix the income driven repayment plans does also come after the Supreme Court struck down President Biden's student loan forgiveness plan last month. So joining me now is Mark Kowitz, author of how to appeal for more college financial aid to show us how to best prepare. Mark, how should borrowers get ready for this? Well, the first thing they should do is update their contact information with the loan servicer and student aid dot gov. That way they'll learn about when their payment due date is and what their payment amount is when repayment restarts. I'd also suggest signing up for auto pay where your monthly payment is automatically transferred from your bank account to the lender. Not only will this help you avoid the chaos and confusion, but you'll get a quarter of a percentage point interest rate reduction as an incentive which will save you money. So what if payments are too high mark? What's a borrower to do in that scenario? Well, there are a couple options for continuing a personal pause. Now, interest will continue to accrue but there are a variety of deferments and forbearance that can suspend your payments for a period of time. Um And these are often used for medical or maternity leave. There are also the income driven repayment plans which base your payment on your income as opposed to the amount you owe. What are the biggest mistakes mark that borrowers make on this journey? Well, the biggest mistake is not making payments when you can afford to make the payments because the interest is going to continue to accrue and that will just dig you into a deeper hole if you start making payments. Now, you may make some progress in paying down your debt. What about paying taxes on student loans that are forgiven mark? Is that something that the borrower should expect to pay? Not for the present time? Uh There was some legislation that suspended the taxes on loan forgiveness and loan discharge through December 31st of 2025. So if your loans are forgiven this year, you will not have any taxes associated with it. So what if you find out, let's say that your loans are forgiven, but that you already paid. Is there a way to redeem that money? Well, in some cases, if you've already made payments on loans that are, then forgiven, you may get a refund of payments that have already been made. That's with the Barrow defense repayment that occurs. And if you made payments during the pandemic, those payments can be refunded to you when your loans are forgiven. What about federal programs for borrowers? Mark? How can they find out if they qualify for one of these? Well, the 804,000 borrowers who are having their loans forgiven, uh, they'll get notified by the US Department of Education. It's mostly borrowers who are in the income contingent repayment plan because these repayment plans after you made uh, 20 or 25 years of payments, depending on which repayment plan you're in the remaining debt is forgiven. So that's after 240 or 300 payments. And based on the timing, it's mostly going to be borrowers who are or were in an income contingent repayment plan. So, with the news out of Washington here from the Biden administration today, mark that we've been discussing, I mean, is there a relief, do you think borrowers can feel good about that? President Biden has forgiven through existing loan forgiveness programs that have been previously authorized by Congress more student loan debt than any previous President, he's over $100 billion so far and he's trying to make the entire process more efficient as far as the President's plan to forgive 10 or $20,000 of student loan debt that was shut down by the US Supreme Court. They are going to try to do it through, uh, the waiver Authority in the Higher Education Act, but that's even weaker than the Heroes Act. So I don't think it's going to be successful. All right, Mark Kowitz, thank you so much for joining and sharing your expertise.