Navigating Student Loan Repayment After the COVID-19 Payment PauseChelsea Rogers
Now that the COVID-19 pandemic temporary pause on student loan payments has ended, the time has come to resume repaying your student loans. In fact, your first payment is due in October 2023.
If the thought of making your student loan payment each month is overwhelming, we have a few tips and tricks on how to make this easier. We’ll take a look at the process of beginning your student loan payments and share important tips on how to budget while paying off your student loan.
The first step in navigating the restarting of student loan payments is understanding the terms of your loans. You should have received a notification outlining your payment amount and due date at least 21 days before your first payment is due in October 2023. Take the time to review this information carefully, as it provides all the necessary information about your repayment plan.
If you have multiple student loans, consider consolidating them to simplify the repayment process. Additionally, you may be eligible for income-driven repayment plans, which can make your monthly payments more manageable based on your income and family size. Contact your loan servicer for more information on these options.
Repaying student loans can be daunting, especially if this is your first experience with repayment. Fortunately, there are several actions you can take that will make this journey a little less stressful.
- Update Your Contact Information. Ensure your contact information is up-to-date on StudentAid.gov and your loan servicer’s website.
- Explore Affordable Repayment Plans. Compare repayment plans using the Loan Simulator tool and consider income-driven repayment (IDR) plans that adjust payments based on your income and family size.
- Recertify Your IDR Plan. If you were on an IDR plan before the payment pause, recertify your income, especially if it has decreased or your family size has increased.
- Enroll (or Reenroll) in AutoPay. Consider enrolling in autopay to save 0.25% on your interest rate. It’s also a convenient way to ensure on-time payments.
- Know Your Monthly Payment Amount. In October, your monthly bill will specify your payment amount. Visit your servicer’s website to access this information.
- Make Your Payment. If enrolled in autopay, ensure your linked bank account has sufficient funds. Otherwise, make your payment on your servicer’s website.
- Check for Loan Forgiveness Options. Explore forgiveness programs based on your unique circumstances, such as public service, disability, or school-related issues.
- Beware of Scams. All borrowers should be hyper-aware of scams and verify any information received about student loan relief independently. If you receive a suspicious phone call or email, do not respond. Instead, call your loan servicer using a number you find on their official website.
Now that you know the actions you need to take to repay your loan, let’s look at some practical budgeting tips to help you better manage paying your student loans.
- Create a Budget. Begin by evaluating your current financial situation and creating a budget that accounts for all your monthly expenses, including your student loan payments. Be sure to list all of your monthly bills and account for each dollar you spend each month. This will help you ensure that you can comfortably meet your financial obligations.
- Emergency Fund. Prioritize building an emergency fund to cover unexpected expenses. Scott Credit Union recommends having an emergency fund that covers three to six months of your living expenses. Having this safety net can prevent you from going into financial distress if you encounter unforeseen challenges.
- Avoid Missing Payments. The on-ramp period, which extends until September 30, 2024, provides a buffer if you miss payments. During this time, you will not be penalized or reported as delinquent for missing a payment. However, interest will continue to accrue. Utilize this grace period wisely, but aim to make on-time payments.
- Extra Payments. If you can afford it, consider making extra payments towards your student loans. This can help you pay off your loans faster and reduce the total interest you’ll pay over the life of the loan.
- Seek Guidance. If you’re struggling to make your payments, don’t hesitate to reach out for help. Student loan servicers and organizations like Scott Credit Union have resources and financial advisors available to assist you in finding the best solutions for your situation.
The end of the COVID-19 payment pause marks the beginning of a new chapter in your financial journey. While the prospect of repaying your student loans may seem daunting, with careful planning and informed decisions, you can successfully manage this responsibility.
Remember that you’re not alone in this journey. Scott Credit Union is here to support you, and our financial education videos can help. By taking proactive steps, setting up a budget, and exploring your repayment options, you can pave the way for a successful and stress-free student loan repayment experience.