- The Debt Collective is asking borrowers to strike on September 1 if the student loan payment pause ends.
- You are not being encouraged to default on your student loans. If you’re already in default, you can reframe it as a strike.
- Get your payment down to $0 by signing up for an income-driven repayment plan, if you’re eligible.
Americans are waiting with bated breath for President Biden to announce whether the federal student loan payment pause, set to end on August 31, will be extended. And one group has a plan to take action if the pause ends and payments resume.
The Debt Collective, an organization that empowers borrowers buried in student loan debt to take back their power from federal student loans, is encouraging borrowers to strike on September 1 if the payment pause is not extended.
At the time of this writing, 1,762 student loan borrowers nationwide have signed up to join the group’s debt strike. A debt strike, the Debt Collective explains, is a refusal to pay monthly student loan payments to send a message to the federal government in support of widescale student loan cancellation.
“To be clear, we are absolutely not encouraging people to default on their student loans,” says Debt Collective press secretary Braxton Brewington. “If you default on your loans, it’s going to hurt you, not the federal government.”
On their website, the Debt Collective acknowledges that some people won’t be able to join the student debt strike because missing payments on federal student loans can hurt your credit, which, by domino effect, can hurt your ability to get a house or an apartment, to get a job, and to access other forms of credit. In other words, if you can’t get your payments down to $0 without hurting your credit, you shouldn’t join the strike.
However, the Debt Collective wants to inform as many Americans as possible that there are ways to significantly lower your monthly student loan payments, in some cases as low as $0 per month. Here are two ways to do it.
1. Get on an income-driven repayment plan
REPAYE, PAYE, and IBR plans are all income-driven repayment plans that can lower your monthly payments significantly. Monthly payments are calculated based on your discretionary income, your monthly income minus your fixed expenses each month.
Your monthly payment will drop to $0 if your adjusted gross income, or AGI — i.e. your gross income minus adjustments — was less than 150% of the federal poverty line of $12,880 in 2021, meaning your total income is under $19,320.
Here’s what you should know about each income-driven repayment plan, according to the Federal Student Aid website:
Each year, you have to recertify your income and household size in order to qualify for an income-driven repayment plan. Additionally, the following loans are not eligible for an income-driven repayment plan:
- Defaulted loans
- Direct PLUS loans made to parents
- Direct Consolidation Loans that repaid PLUS loans
- FFEL PLUS Loans made to parents
- FFEL PLUS Loans that repaid PLUS loans
2. Dispute your student loans if you went to an eligible college
On June 1, the Biden administration wiped out $5.8 billion in student debt for borrowers defrauded by Corinthian Colleges. And on August 4, a federal judge granted preliminary approval to the class action lawsuit Sweet v. Cardona that will cancel the student loan debt of 200,000 borrowers who went to colleges that defrauded their students, eliminating about $6 billion in student loan debt.
Students who attended other colleges that defrauded their students, such as ITT Technical Institute, have also had their debts wiped out.
Borrowers who attended Corinthian Colleges don’t need to take additional action to have their debt wiped out. Borrowers who attended a school listed in the Sweet v. Cardona settlement have to apply for Borrower Defense Loan Discharge on the Federal Student Aid website before the court gives final approval to the settlement. You must also provide supporting documentation.
Check out the Education Department’s Borrower Defense Updates page for information about other schools. If you have applied for borrower defense and now qualify for loan discharge, the Education Department will most likely email you to let you know.
According to a press release from the US Department of Education issued on April 8, you can continue to stay on forbearance after August 31 if:
- You have a pending borrower defense loan discharge application
- You choose not to make payments while the Education Department reviews your application
- You received a denial letter on or after December 1, 2019; or
- You sent in a reconsideration request that is still pending.
If you fall under these criteria, your payments will still be paused even after the national payment pause ends on August 31.
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