With October marking the end of the Department of Education’s student loan forbearance program, borrowers will be required to start repayment. As of Sept. 1, interest started to accrue on student loans once again. This comes after more than three years since the program was launched to alleviate the financial burden on Americans during the pandemic.
If you’re one of the 45 million borrowers impacted, you might be wondering how you can continue to pay on your household expenses in addition to another bill. According to Experian data, the average student loan payment will hover around $200 per month—which can make or break a budget if you’re already in debt.
Experts advise borrowers to be prepared. Here’s three things you can do to get financially ready when repayment resumes this fall:
No. 1: Update Your Info
To ensure you don’t miss any important billing documents, visit the Department of Education’s student loan website. There, you can follow the directions to find out who your servicer is, so you can stay on track and aren’t surprised by any upcoming payments. Your servicer can then let you know how much you can expect to be billed each month going forward.
No. 2: Budget
Budgeting is an important step in making sure you have the funds to pay toward your student loan each month. If you don’t have a budget or need help, consider talking to a certified credit counselor. When you make an appointment, they’ll help you create or tweak your budget so it’s manageable for your specific situation.
No. 3: Pay Off Credit Card Debt
If looming student loan payments are making you wonder how you’ll continue to pay on your credit cards, consider a debt management program (DMP). If you enroll in a DMP, a certified credit counselor will negotiate work with your lenders creditors to consolidate your loans unsecured credit cards into one monthly payment, typically at a lower interest rate. This way, you can actively pay down credit card debt while freeing up funds for student loans.
While President Joe Biden’s student loan forgiveness proposal may not have passed, you may qualify for the Saving on a Valuable Education (SAVE) plan. Launched in August by the Biden-Harris Administration, the SAVE plan is slated to go into effect by July 1, 2024. For information or to fill out an enrollment application, visit the Department of Education website.
The resuming of student loan repayment may not be ideal, but by budgeting and getting help when needed, you’ll be prepared to take it on.