How the Supreme Court student loan decision affects you

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The court’s decision means, barring an act of Congress, many Americans are on the hook for payments starting in October.

after 10 years of regular payments, and some income-driven repayment plans cancel the remainder of a borrower’s debt after 20 to 25 years.Borrowers who have beenThese programs aren’t be affected by the Supreme Court ruling.An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size.

Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. If your income is low enough, your payment could be as low as $0 per month..— If you sign up for automatic payments, the servicer takes a quarter of a percent off your interest rate, Mayotte says.

— Income-driven repayment plans aren’t right for everyone. That said, if you know you will eventually qualify for forgiveness under the , it makes sense to make the lowest monthly payments possible, as the remainder of your debt will be cancelled once that decade of payments is complete., when you already have all your financial information in front of you. “Can you afford to increase it? Or do you need to decrease it?” Mayotte said.

— Break up payments into whatever ways work best for you. You could consider two installments per month, instead of one large monthly sum.The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

 

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