Struggling With Student Loan Debt? Credit Karma’s New Payment Relief Experience Could Help
Credit Karma seeks to help Americans who are sacrificing necessities to make their federal student loan payments through personalized debt relief options and potential loan forgiveness
Credit Karma, the consumer technology platform with more than 120 million members in the U.S., Canada and U.K., is launching this month, a new, personalized debt relief experience for Americans carrying federal student loans, which accounts for 92% of all student loans in America. Now, Credit Karma can help federal student loan borrowers who are struggling to make on-time payments, apply for two potential forms of relief that could lower their monthly payments or help them understand if they qualify for loan forgiveness.
Credit Karma found that many borrowers with outstanding student loan debt have had to sacrifice necessities like groceries and making rent payments in order to maintain their student loan payments. Borrowers like these may benefit from extending their loan term and right-sizing their loan payments according to their income, in order to stay on top of their other bills and expenses. Doing so keeps them from slipping backwards and ultimately maintains their ability to be approved for favorable financial products down the line. With unique insight into members’ financial profiles, Credit Karma can help federal student loan borrowers who are struggling financially find a payment plan that enables them to pay down their debt in a more manageable way.
Credit Karma will present eligible borrowers with personalized estimates as to how much they could reduce their monthly payment with a government income-driven repayment (IDR) plan, including potential trade-offs that come with extending a loan term. From there, at no cost and no impact to their credit, borrowers can start the application process, directly from the Credit Karma app, before they are seamlessly handed off to Summer to complete the application process. Credit Karma has partnered with Summer, the digital solution for helping student loan borrowers reduce their debt, to power this new product for its members.
“Around 22 million Credit Karma members hold about 53% of the total student loan debt in America, amounting to $850 billion, making student loan debt a significant financial burden for many of our members,” said Josh Dockery, product lead for student loans at Credit Karma. “Data from FSA and our partner Summer shows average Public Service Loan Forgiveness (PSLF) savings of $90,699 and average IDR monthly payment reductions of $192, respectively, and I’m confident our product can help our members find impactful payment relief solutions that work for them.”
The other form of relief Credit Karma can help connect qualifying federal student loan borrowers to is loan forgiveness. Federal borrowers who visit Credit Karma might qualify for Public Service Loan Forgiveness, and can confirm whether or not they qualify directly through the Credit Karma app before beginning the application process.
On the backend, Credit Karma sorts through members’ student loan types and relief program combinations to determine which plans members qualify for, and which could be most beneficial for their situation, so they can apply with more confidence. Credit Karma’s student loan relief hub also provides educational materials and resources to help borrowers on their journey to paying off their student loans.
“We founded Summer to provide every borrower with the advisory support they need to successfully navigate the complex student loan repayment system,” said Will Sealy, Founder and CEO of Summer. “Today marks a major milestone in this effort. In partnership with Credit Karma, millions of borrowers can have free access to best-in-class support, and could obtain meaningful savings with regard to their student loans.”
Originally published on Business Wire, March 10, 2022