Student loans. So many people are talking about them and many are trying to avoid them. And when I say avoid them I don’t mean they are trying to avoid getting them, they are trying to avoid facing the fact that student loan repayments are restarting. After over three years of student loan repayment and interest being paused they are resuming on October 2023 and September 1, 2023, respectively.
If you have student loans, haven’t been paying them it’s time to stop avoiding them and start facing them!
I don’t have any student loans, never did because my parents’ cash flowed my college and steered me away from loans for college. So I’m not part of the millions, many of them millennials, who will be working on repayment. I have however spent some time thinking through how I would approach this if I did have student loans to pay back.
(I am not a financial expert. All information is based on my own personal experience and research.This information is not meant to be financial advice and is just for educational purposes.This post includes some affiliate links. Should you click an affiliate link and make a purchase I may receive a small commission at no extra cost to you.)
Related read: How To Go To And Graduate College Debt-free
I would start taking a look at my current financial state and reviewing my budget would be a great place to start. If I didn’t have a budget I would create one. This is important if you haven’t been making payments toward your student loans and even more important if you have taken on new debt as well.
Reviewing a budget will show how much money is coming in each month, how much money is going out each month, where money is being spent, and where you can shift things to fit in your student loan payments.
If you’re having a hard time figuring out how to fit these payments into your budget you may need to do one of two things
Generate more income: Whether or not I could fit the payments into my budget I would look for ways to earn more money to give myself more breathing room. I’d explore part-time jobs such as stocking retail shelves in the evenings or at night, or freelancing such as being a virtual assistant in the evenings.
Reduce expenses: Perhaps you’ve been going out more, got a gym membership, or been going to the hair or nail salon more. Or you may have taken on more debt as was discovered in this Transunion study: 53% of consumers with student loans opened credit cards, 36% got a car loan, and 15% took out mortgages. It may be time to look into eliminating and reducing what you can to free up those dollars to pay the student loans. When reducing expenses the bigger the expense you can cut the better.
I’ve been seeing several people talking online about their student loans have been transferred to another servicer. It seems to be pretty common. This happened to me with my home loan.
If your servicer changed you should get an email or a mailed letter with the information. Don’t worry if you can’t find this information as you can find it by logging into studentaid.gov.
Now if your loan has been transferred you’ll need to create an account with your new servicer so you can set up your payments and notification settings. The sooner you do this, the less stressed you’ll be when October rolls around.
It’s funny when I was putting this information together I initially didn’t even think about this. But it’s something I made sure to do with the mortgages I’ve had especially when they were transferred to a new servicer. Things happen and you can’t trust anybody. An incorrect balance amount could have been put in which would impact your monthly payment.
Monthly payments for loans are determined by the interest accrued on the principal amount or loan balance. So if you were one of the roughly 1% who was paying off their loans during the pause you’ve paid down a lot of the principal less of your monthly payment will be interest and more principal making your monthly minimum lower.
Or your monthly payment could have increased since the last time you looked at your account.
No matter what the potential reason could be for your monthly payment to change it’s good to know so you have a better idea of how to fit this in your budget.
Related read: 4 Different Budgeting Methods To Try
Once you’ve figured out how to fit the student loan payments into your budget and know where to send the payments start making them. I know this won’t be fun, and you may like to hold off till the last minute but doing this will help you get back into the habit of those making those payments again if you stopped. It could also help reduce the principal before the interest resumes in September so you’re paying a little less interest.
Making timely payments is vital to avoid penalties and late fees. Set reminders or enable auto-payment features through your loan servicers to ensure you never miss a payment.
Take advantage of tools and resources that can streamline your loan repayment journey. Various apps and websites can help you organize your finances, track your progress, and set financial goals. Check out my IG post with five budgeting app options
Consider working with a financial coach as they can offer personalized guidance and strategies to help you manage your loans effectively and build a solid financial future.
