Nori Hilton, 23, graduated from Bennington College with $30,000 in student loans, but because of the federal SAVE plan and her low income, around $25,000 a year, she doesn’t have to pay student loans right now, owing $0 a month, even as the pandemic pause on payments has ended. Ben McCanna/Staff Photographer

Graduating from college with $30,000 in student loans, Nori Hilton figured she would spend most of her life slowly paying down her debt.

“I didn’t think it would be something I would ever see the end of,” she said.

So when the 23-year-old saw that under a federal loan repayment plan her $200 a month payment would be wiped down to $0 and that in 10 years her loans could be forgiven, she was in disbelief.

“I refreshed the page,” she said. “I thought it was wrong. Like a cruel trick.”

It wasn’t.

The federal government’s SAVE plan ties student loan payments to income and family size. Because she makes $20 an hour working 25 hours a week at a bakery – equal to around $25,000 a year – Hilton qualifies for a $0 per month payment.

Student loan borrowers like Hilton are assessing their options after a 42-month break in payments prompted by the COVID-19 pandemic ended this month, restarting monthly payments. Interest on federal loans began accumulating in September.

Those like Hilton, who knew about and signed up for government payment plans, have still been able to find relief. But not everyone is in that boat. Some are getting conflicting notices from lenders telling them to pay up. And for many, it is a particularly challenging time to begin repaying loans.

Since the pause began in March 2020, inflation has skyrocketed, making everything from housing costs to food to other basic necessities more expensive.

Around 45 million Americans owe a total of $1.8 trillion in student debt, according to the United States Federal Reserve. Most of that debt – $1.6 trillion – is owed to the federal government.

The average amount of debt owed by individual borrowers is around $40,000, according to the Education Data Initiative, a research group that collects independent and government education data. Young adults 25 to 34 years old are the most indebted group, but adults of all ages have student loan debt.

The 187,100 Mainers with student debt owe a lower than average amount of money, $33,137, compared to other New England states, also according to data from the Education Data Initiative. Those borrowers make up almost 14% of the state’s population and owe a total of $6.2 billion. Just over half of those borrowers are under 35.

The average student loan debt is $34,146 in Massachusetts, $34,085 in New Hampshire and $37,516 in Vermont.

Both the Maine and federal governments have introduced loan repayment plans and relief measures for borrowers. Those include the Maine Student Loan Repayment Tax Credit, the fresh start program for borrowers who fell behind on payments, a promise of flexibility for missed payments until Sep. 30, 2024, and the federal government’s SAVE plan, the one Hilton chose to pay back the loans she took out to attend Bennington College, a small, private school in Vermont.

The federal programs come after a failed attempt by the Biden administration to implement a sweeping student loan forgiveness plan to forgive up to $20,000 in student loan debt for around 40 million borrowers. The plan was struck down by the U.S. Supreme Court in June.

UNDERSTANDING THE PROGRAMS

Through Maine’s Student Loan Repayment Tax Credit program, student loan borrowers can receive tax credits of up to $2,500 per year and $25,000 in total. The credits are available to anyone who lives and works at least part-time in Maine and has an associate, bachelor’s or graduate degree in any area of study from any accredited college in or outside of Maine. Part-time is defined by the state as working a minimum of 936 hours annually, making minimum wage or more and earning at least $12,000 in a year.

Borrowers can claim the credit by itemizing student loan payments on their tax return, with credit for both principal and interest paid on loans.

While most states have student loan support programs, they are usually tied to working in a certain fields, including education and health care, or living in rural areas.

Maine’s tax credit program is one of the most, if not the most, comprehensive student loan borrower support policies in the country, based on an analysis of other states’ programs.

Since student loan payments have resumed, federal policy says borrowers will be allowed to skip a monthly payment if they can’t afford it without being reported to credit bureaus or debt collectors or being placed in default. Loan servicers will add missed payments to the end of the borrower’s loan payment term, and interest will be taken on the skipped payments.

Borrowers also can sign up for the Biden administration’s SAVE plan, the one Hilton is using, to link monthly repayment amounts to income level and family size. The program also can provide interest payment support for those who make full monthly payments.

There also is relief available for anyone who, prior to the pandemic, fell more than 270 days behind on student loan payments and went into default. Going into default can affect credit scores and allows the government or an employer to withhold  tax refunds and wages in order to repay the debt.

Those borrowers can get a fresh start and be considered current on their payments if they contact the U.S. Department of Education’s Default Resolution Group before September 2024 and request that their loans be taken out of default.

‘REALLY CONFUSING FOR BORROWERS’

Not everyone knows about the new programs, and even for those who do, enrolling in payment plans can be complicated and time consuming.

“Overall, the past few months have been really confusing for borrowers,” said Sophie Laing, a student loan and consumer attorney at Pine Tree Legal, a nonprofit legal aid firm in Portland. “There has been an understanding that there was a looming deadline (for payments to resume) but not a lot of understanding about what to do next,” she said.

Borrowers are receiving inaccurate notices about payments being due from their loan servicers and contacting those servicers can take up to three hours, Laing said. And those who aren’t aware of what payment plans are available might end up using money they need to pay for essentials like rent, utilities or food to pay their student loan bills.

“Families and borrowers are struggling more than ever and don’t have extra money. And now all of a sudden they have this extra bill,” Laing said. “They have to make difficult decisions about whether to pay rent or student loans, pay for child care or student loans, pay for gas or student loans.

“It’s a difficult time for borrowers to be going back into repayment.”

Navigating the end of the student loan payment hiatus has been easier for borrowers like Hilton, who learned about the new programs and took advantage of them.

The cost of college was the deciding factor in where Hilton went to school. She knew since she was a young child that she wanted to go to college. She also knew that paying for it was going to be a challenge.

“We had been talking about it since I was a kid,” Hilton said.

When she received financial aid packages from all the colleges (both public and private) that she got into, she sat down with her family and weighed the cost of attending each one. They looked at the financial aid provided, the travel costs to and from the school, and other factors before landing on Bennington.

Hilton is relieved that she doesn’t have to start paying her student loans just yet. But the $30,000 she owes hangs over her head. She doesn’t know what her payments will look like if she starts making more money. She’s confused about how to handle the incentive to stay in a low-paying job that doesn’t feel meaningful and is concerned that something will happen, like a change in the federal program, that will mean her loans aren’t actually forgiven in 10 years.

Despite those worries, she’s cautiously looking forward to a future without student debt.

“The idea of living debt free never seemed like a possibility,” she said. “Who knows what that would change about how I live my life, but I think it would make a huge impact.”