Preparing for the End of the Pause on Student Loan Payments
For the past 3 years, borrowers with federal student loans have been granted a pause on their payments due to the COVID-19 pandemic. This pause has been a crucial lifeline for millions of Americans struggling to make ends meet. As per the latest federal debt ceiling bill, the payment pause period will expire 60 days after June 30. Starting September 1st, interest will start accruing on your loans, and you'll need to start making payments again by October. Please note that the deadline for your first post-forbearance bill may vary, but it's essential to have a strategy in place to tackle it effectively. The good news is that there are options available, and by planning ahead, borrowers can make the transition back to repayment as smooth as possible.
Assess Your Current Financial Situation
The first step in preparing for the end of the student loan payment pause is to assess your current financial situation. If you've experienced a reduced income or increased expenses, you may need to adjust your budget accordingly, such as cutting back on things like eating out, entertainment, or even moving to a less expensive apartment. You can use budgeting tools like Coastal’s budgeting calculator to help you make these decisions.
Understand Your Current Loan Servicer and Payment Plan
Before the pause on student loan payments ends, it’s important to understand your current loan servicer and payment plan. You can use Studentaid.gov to see a list of all your federal student loans and find out who your loan servicer is. Once you know your servicer, you can contact them to get information on your current payment plan, interest rates, and other details. Knowing this information can help you better prepare to restart payments.
Consider Your Repayment Options
Several repayment options are available if you're struggling to make your student loan payments. The standard repayment plan is the most common option, which involves making fixed monthly payments over a period of 10 years. This type of plan adjusts your monthly payments based on your income and family size, which can make your payments more manageable. You may also be eligible for a deferment or forbearance, which allows you to temporarily stop making payments or reduce your monthly payment amount.
Look for Opportunities to Save
If you're looking for ways to free up some extra cash to put towards your student loans, there are various opportunities to save. For example, you may be able to refinance your student loans to get a lower interest rate or better repayment terms. You might also consider consolidating your loans, which involves combining multiple loans into one loan with a single monthly payment. Another strategy is to look for opportunities to save money on everyday expenses, such as housing, groceries, and transportation.
Take Advantage of Tools and Resources
Various tools and resources are available to help borrowers manage their student loans. For example, many lenders offer free online account management advice and tools that allow you to view your loan balance, payment history, and repayment options. You may also find it helpful to consult with a financial advisor who can provide guidance on managing debt and budgeting.
Remember, you don’t have to tackle this alone. Plenty of resources are available to help borrowers manage their student loan payments. At Coastal, we understand that tackling student loan debt alone can feel overwhelming. That's why we've partnered with GreenPath Financial Services to offer free one-on-one counseling to help you manage your finances. GreenPath has the expertise to guide you through the process and help you reach your goals.