The Student Loan Repayment Scramble: Fidelity Bank can help.

By now you’ve likely heard some murmurings of the federal government’s Student Loan Forgiveness Plan that’s been abuzz in the news. If not, here is a quick summation: the plan promised to erase up to $20,000 of federal student debt per applicant, but was quickly met with opposition and left with the Supreme Court to determine its fate. In late June, the Court’s ruling invalidated the plan, leaving many in a scramble to refinance their loans before interest and payments resume.

Come this fall, the three-year pandemic pause that prevented interest from accruing on any student loans will end, and beginning in October, payments will be due. Now is the time to be prepared and to educate yourself on the best repayment options.

Whether you’re a recent graduate, someone who has been making loan payments for a while, or a parent or guardian supporting a child’s education, there are valuable insights to gain from reading on.

Before you dig in, remember, debt is temporary, and with consistency and discipline, you can pay it off, regardless of your income level. Lastly, Fidelity Bank is here to help. Connect with a banker today for personalized advice and support based on your specific situation.

What you need to know (right away!):

• September 1, 2023: Interest on all student loans resume (public and private). Your interest will begin accruing at a fixed or variable rate, depending on your loan terms.

• October 1, 2023: Payments begin. Again, depending on your loan terms, your payment amounts will vary.

• Be aware of scams: Unfortunately, they are alive and plentiful. Scammers are taking full advantage of marketing to student loan holders, so be wary.

Where you should start:

• Assess your current loan situation: Gather all the details about your student loans, including the type of loans (federal or private), outstanding balances, interest rates, and repayment terms. If your federal loan servicer has changed and you don’t know who they are, click here for an easy way to locate them.

• Keep an eye on developing backup plans. The federal government recently announced there may be another path to student loan forgiveness through the Education Act of 1965. Though, many experts believe this path will take much longer if it is realized – long after interest and payments on loans resume.

• See if you are eligible for any federal initiatives. Several federal initiatives are available to assist borrowers in obtaining relief. Most of these programs come with specific deadlines and require active participation for enrollment.

• Check with your employer to see if they offer a student loan payment match. More and more institutions are now offering this benefit and if you have it, be sure to take full advantage of it. It’s free money.

Unlocking your home’s equity may be in your best interest.

If you own a home, it can potentially save you thousands of dollars in interest. If you have private loans or have federal loans that don’t qualify for any of the programs listed above, consolidating debt using a low-interest home equity loan or line of credit could be your best option. Fidelity Bank offers two home equity products:

1. Home Equity Installment Loans
2. Home Equity Line of Credit (HELOC)

Home Equity Installment Loans:
If your student loans have variable interest rates, utilizing a Home Equity Installment Loan allows you the opportunity to transition from a variable rate to a fixed rate, providing greater stability and predictability in your monthly payments. Home Equity fixed rates are often the lowest interest rates available to borrowers.

HELOC:
Using a Home Equity Line of Credit (HELOC) allows you to benefit from a variable interest rate, which can be advantageous in a scenario where interest rates remain low. This may result in a lower overall interest rate for you. With a HELOC, you have access to a revolving line of credit that you can utilize as required within a designated timeframe, typically ranging from 5 to 10 years. This flexibility empowers you to borrow the necessary funds whenever the need arises.

Home Equity Installment Loan vs. HELOC ^1,2,3

The main objective is to reduce your debt efficiently and affordably. When deciding between a Home Equity Line of Credit (HELOC) and a Home Equity Installment Loan, it’s essential to consider your individual needs and circumstances. Let’s take a closer look at how each product works:

	Home Equity Installment Loan	Home Equity Line of Credit
Brief Product Description	A Home Equity Installment Loan allows you to borrow against the equity in your home. It provides a lump sum of money that can be used for various purposes, including home improvements, debt consolidation, or financing major expenses.	A HELOC is a flexible line of credit that allows you to borrow against the equity in your home. It offers a revolving source of funds that can be used for various expenses. Interest is typically variable, and repayment is based on the amount borrowed.
Interest Rate	Offers fixed interest rates and often the lowest rate when compared to other products.	Offers variable rates, so the interest rate you pay will fluctuate with the market.
Payments	To repay the loan, you make monthly payments that are divided equally between the principal amount and the interest accrued.	During the draw period (usually 10 years), you make interest-only payments, but you can choose to make principal payments to lower the remaining balance for the repayment period.
Pros	A Home Equity Installment Loan provides fixed repayment terms, including a fixed rate, and allows for a higher budget for projects or debt consolidation.	A HELOC differs from other loans by allowing multiple withdrawals within the draw period as needed. Additionally, the interest on a HELOC may be tax-deductible.
Cons	A potential drawback of a Home Equity Installment Loan is the risk of owing more than the value of your house if the housing market experiences a decline.	In addition to owing more than your home is worth due to market fluctuation, HELOCs have variable interest rates, which can make it harder to budget and plan for your expenses.

¹Offer is subject to credit approval. ²Applicant should consult a tax advisor. ³Consolidating student loans may disqualify you from any future federal forgiveness plans.

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Fidelity Bank has built a strong history as a trusted financial advisor and continues its mission of exceeding client expectations through a unique banking experience. It operates 20 full-service offices throughout Lackawanna, Luzerne, Lehigh, and Northampton Counties, along with a limited production commercial office in Luzerne County and a Fidelity Bank Wealth Management Office in Schuylkill County. Fidelity Bank provides a digital banking experience online at www.bankatfidelity.com, through the Fidelity Mobile Banking app, and in the Client Care Center at 1-800-388-4380.