The time has come: Student loan payments are set to resume in October.
During the pandemic, federal student loans and interest were suspended by the CARES Act, providing relief for millions facing financial uncertainty. Despite efforts for student loan forgiveness, the final payment pause has ended, and repayments are due in October.
The US carries a student loan debt of $1.766 trillion, with over 43.6 million individuals burdened by an average debt of $37,718. If you are feeling anxious about the return of payments, you are not alone. Here’s a look at what you should understand about loan forgiveness, impending payments, and how to prepare.
Biden’s Student Loan Forgiveness Updates
Although an initial plan for $20,000 debt relief was rejected by the Supreme Court, 800,000+ borrowers in repayment for 20-25 years have benefited from reductions or complete debt writes under existing programs. This figure is anticipated to grow to 3.6+ million. If you think you qualify, explore these programs and contact your loan provider for details.
If you don’t meet the criteria for existing plans, keep a lookout for Biden’s alternative plan, which aims for more comprehensive debt relief. However, this new plan’s implementation may face delays until at least July 2024. Meanwhile, here are tips for managing the return of payments:
Budgeting Tips for Student Loans
Review Your Loan Details
Understand your loan specifics, interest rates, and repayment options to stay informed and in control of your financial situation. Check your loan provider’s website for your current balance, updated contact information, and repayment details.
Utilize Budgeting Apps
Employ budgeting apps like You Need a Budget (YNAB) to monitor expenses, identify areas for savings, and adjust your finances to accommodate loan payments effectively.
Timely Payments
Ensure your student loan payments are a priority by setting them aside immediately upon receiving your paycheck. Consider automating payments to avoid missing due dates.
Explore Side Hustles
Side jobs can offer extra income to make loan repayments more manageable. While beneficial, balance work commitments with personal time to avoid burnout.
Make Additional Payments
If possible, contribute more than the minimum payment to reduce your overall debt and save on interest charges in the long run.
Is Refinancing a Consideration?
Refinancing entails replacing existing loans with new ones at lower interest rates. Evaluate refinancing options if it can lead to significant interest savings and favorable repayment terms, keeping in mind the loss of federal loan benefits upon refinancing.
Additional Assistance
For further support, explore federal aid programs, loan forgiveness options, employer repayment assistance, and resources like the National Consumer Law Center’s Student Loan Borrower Assistance site.
