New student loan plans: what borrowers in Alabama need to check now

The federal government has just replaced the old SAVE plan with two fresh repayment options under the RISE program, and anyone with a federal student loan has about three months to pick one. Instead of the SAVE plan’s promise of smaller payments and no extra interest, borrowers now face a simpler choice: an income-linked plan that adjusts payments based on how much they earn and how many dependents they have, or a fixed plan that stretches payments over 10 to 25 years depending on the total debt. The income-based option lets people pay less when money is tight, but it also keeps the loan balance growing unless they cover the full amount each month, which speeds up payoff.Behind the switch is a major cost-cutting goal: officials say the new rules will save taxpayers more than $342 billion over the next ten years. To reach that number, the government is also ending a special graduate loan that let students borrow without limits, capping lifetime borrowing amounts, and cutting back on other professional-degree loan programs. Critics argue these changes could make graduate school harder to afford for middle-class students who rely on loans to finish their degrees. In Alabama alone, nearly 660, 000 people carry student debt, with the average balance close to $38, 000. That means thousands of Alabamians must now decide whether to sign up for the new income plan or lock in a steady payment schedule. The government has sent out notices, but many borrowers still wonder if the fixed plan’s longer timeline will cost them more interest in the long run.