There's no need to take a wait-and-see approach on parts of Hillary Clinton's "debt-free college plan." Struggling borrowers can — and should — take action now.
As part of the candidate's higher education plan unveiled last week , the presumptive Democratic presidential nominee said that if elected, she would impose a three-month moratorium on federal student loan payments via executive action.
"With dedicated assistance from the Department of Education during this moratorium, borrowers will be able to consolidate their loans, sign up quickly and easily for income-based repayment plans, and take direct advantage of opportunities to reduce monthly interest payments and fees," according to a briefing about her plan.
Implicit in those "opportunities" are other elements of Clinton's college plan, which include the ability for borrowers to refinance their student loans at current rates and interest-free loan deferrals for aspiring entrepreneurs. Borrowers who are behind on debt would also get help during the hiatus to rehabilitate their loans.
Experts say the three-month loan-payment moratorium stands a better chance of happening than the headline of Clinton's plan — tuition-free education at in-state public colleges for families earning as much as $125,000 or less. That's because it doesn't require the cooperation of Congress or a major funding initiative.
"It's allowing people to take advantage of programs already in place," said certified financial planner Evelyn Zohlen, president of Inspired Financial in Huntington Beach, California. "The only people quote, unquote hurt are lenders, who may not see as much profit if people refinance to lower rates."
No doubt, consumers could use the help managing their student loan debt. Student loan delinquencies have been growing. More than a third of borrowers have been late on a payment at least once in the past year, and a quarter of them, more than once, according to the Financial Industry Regulatory Authority Investor Education Foundation's 2015 Financial Capability in the United States report. (See chart below for more details on demographic breakdown.)
Despite borrowers' struggles to pay, loan management options — from hardship deferrals to income-based repayment plans and refinancing — remain under the radar. Fewer than half of millennials have looked into options to reduce their monthly student loan payments or improve the terms of their loans, according to a recent Citizens Bank survey.