“How to Manage Your Finances When Student Loan Payments Resume”

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When Do Student Loan Payments Resume?

Student loan payments on most federal student loans are set to resume on October 1, 2023. The payment pause, which began on March 27, 2020, under the CARES Act, has been extended multiple times. However, with the recent debt ceiling agreement, the moratorium will not be extended further. Interest will start accruing again on federal loans on September 1, and payments will resume on October 1, though borrower due dates may vary.

The Supreme Court has also struck down the Biden administration’s student loan forgiveness program. Borrowers who were expecting forgiveness will need to prepare to start making payments again. The administration is offering a 12-month “onramp” period to help borrowers transition back to repayment without facing delinquencies or defaults, although interest will still accrue during this period.

How to Prepare for Student Loan Repayment

As you get ready for student loan payments to resume, here are some steps you can take to prepare:

Make a Budget

If you don’t already have a budget, now is a great time to create one. A budget helps you understand where your money is going and plan for upcoming expenses, including your student loan payments. Start by listing your income and expenses from the past few months. Break your expenses into categories to see where you can adjust your spending. Use a budgeting app, a spreadsheet, or any method that works for you. Confirm your payment amount with your loan servicer to ensure your budget is accurate.

Cut Costs

Since student loan payments have been paused for a while, your budget may have changed. You might need to cut back in some areas to accommodate your loan payments. If your financial situation has improved, consider paying more than the minimum required amount to reduce your debt faster and save on interest. Be honest but reasonable with your budget adjustments to achieve your debt payoff goals while managing other expenses.

Earn More Income

Consider finding ways to increase your income. This could include working overtime, taking on a part-time job, or starting a side hustle. Popular side hustles include driving for Uber or Lyft, delivering food or groceries, selling used items online, renting a room, performing odd jobs, tutoring, mystery shopping, or dog walking. Evaluate the time commitment, flexibility, and pay to find the best option for you.

What to Do if You Can’t Afford Your Student Loan Payments

If you anticipate difficulty in making your student loan payments, consider these options:

• Request forbearance or deferment: The federal government offers these options for those experiencing financial hardship. Contact your loan servicer for more information.
• Get on an income-driven repayment plan: The Department of Education offers plans that reduce your monthly payment to a percentage of your discretionary income. These plans also extend your repayment period, with any remaining balance forgiven after 20 or 25 years.

These options can provide immediate relief and help you manage your student loan debt more effectively. Student loan refinancing is another option, but be aware that private lenders may not offer the same benefits as federal programs.

Monitor Your Credit as You Pay Down Your Debt

As you resume student loan payments, it’s important to monitor your credit score and reports. Experian’s free credit monitoring service allows you to track your FICO® Score and review your credit report regularly. You’ll receive real-time alerts for changes to your credit report, helping you build a strong credit history and address issues promptly.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with expert advice and support.

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