Finance

Many student loan borrowers missing opportunity to find debt relief in SAVE plan: survey

Published

1 year ago

April 16, 2024

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Many student loan borrowers remain unaware of the benefits of income-driven repayment plans, a recent survey said. (iStock)

Many borrowers currently struggling with student loan payments would benefit from enrolling in an income-driven repayment plan, according to a recent Student Debt Crisis Center (SDCC) survey.

Roughly three out of four borrowers who make $75,000 or less annually and would benefit from the SAVE plan are not currently enrolled in the plan, the survey said. Moreover, 38% of these borrowers are at risk of defaulting on their student loan payments six months from now and could be missing an opportunity to find debt relief in existing programs.

President Joe Biden’s Saving on Valuable Education (SAVE) plan could lower borrowers’ monthly payments to zero dollars, reduce monthly costs in half and save those who make payments at least $1,000 yearly. This new IDR plan was announced after the Supreme Court struck down Biden’s student loan forgiveness plan.

“These survey results are a reflection of what borrowers have experienced these past six months since repayment restarted,” SDCC President and Founder Natalia Abrams said. “We have come so far in advocating for necessary relief to millions of borrowers, and seeing the Biden Administration act is great. However, communication of these vital resources is crucial so borrowers know help is available for them right now. If borrowers do not know the available resources, they will miss relief that can lower their monthly payments, cancel their debt entirely, and so much more.”

If you have private student loans, you could consider lowering your monthly payments by refinancing your loans to a lower rate. Visit Credible to speak with a personal loan expert and get your questions answered.

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Student loan servicers remain inaccessible

More than half of borrowers contacting their student loan servicers with questions about resuming payments came away with unanswered questions, according to the SDCC survey. Moreover, a quarter of borrowers don’t trust the information they get from their servicer, and 75% said the information they got was inaccurate or incomplete.

Every student loan borrower is assigned a loan servicer to help them navigate repayment options, including income-driven repayment (IDR), which can make payments more affordable.

In November, the Department of Education withheld $7.2 million in payment to student loan servicers over several billing errors that triggered a delinquency status for borrowers as repayments picked up again at the start of October. The department said that loan servicer MOHELA failed to send billing statements on time to 2.5 million borrowers, with some receiving them within only seven days of their payment date. Servicers are required to send billing statements to borrowers at least 21 days before their due date.

“I regularly hear from borrowers that they are experiencing inaccurate information or none at all from their loan servicers,” SDCC Managing Director Sabrina Calazans said. “As a student loan borrower myself, I know firsthand how frustrating and harmful these communication errors can be. Borrowers need more communications coming directly from the Department of Education, given their lack of trust in their respective service providers.”

If you’re having trouble making payments on your private student loans, you won’t benefit from federal relief. You could consider refinancing your loans for a lower interest rate to lower your monthly payments. Visit Credible to get your personalized rate in minutes.

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Billions in loans forgiven and a relief plan underway

Over $136 billion of student loans have been forgiven to more than 3.7 million Americans, even as the Supreme Court blocked Biden’s original plan for forgiveness.

The latest block of forgiveness impacts borrowers, such as teachers, nurses, firefighters, and other individuals who earned forgiveness after 10 years of public service, the White House said in a statement. As much as $5 billion of student debt will be forgiven under the latest announcement, bringing the total number of people who have gotten their debt erased to over 3.7 million Americans.

Starting in February, borrowers with as few as 10 years of payments who initially took out $12,000 or less for college had their remaining debts zeroed as long as they were enrolled in the SAVE plan. As many as 6.9 million borrowers have already enrolled in the SAVE Plan as of early January, with more than 3.5 million receiving at least $130 billion in student loan relief.

Additionally, the Biden Administration has doubled down on a new forgiveness plan. The plan seeks to bring relief for borrowers whose balances exceed what they originally borrowed, who first entered repayment long ago, who are eligible for relief but have not applied for it, or who attended programs or institutions that failed to provide sufficient financial value and financial hardships. Regulation for this plan could be ready by May, with enrollment opening as soon as this summer or fall, according to a recent Forbes article.

If you’re struggling with private student loan debt, you could consider refinancing to a lower interest rate. Visit Credible to speak with a student loan expert and get your questions answered.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

9 hours ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

12 hours ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”