Weather you are just graduating from college, taking a break, or have been in the Covid twilight zone of student loan repayments, ready or not, here they come. Here are four easy steps to help you prepare for student loan payments to begin.
The deferment the fed put into place during the Covid emergency officially ends in October, and borrowers must once again begin making student loan payments. Next Month. Yep, you heard that right- the student loan vacation ends in October and payments are due again. Are you ready?
The Student Loan State of the Union
Most Americans have adjusted to life without student loan payments and are completely unprepared for repayment. To put it into perspective, the average student loan payment in the US is between $200 and $299 per month. If you have multiple student loans or several adults in the house making payments, that adds up to $500 to $600 per month. Y’all, that is a car payment! Ask yourself this question, do you have enough margin in your budget to take on another car payment next month? Because that is exactly what is fixin’ to happen.
For many Americans, it has been out of sight out of mind, as people have enjoyed the break in making payments. Are you ready for your payments to resume? If not, let’s get you ready!
How to Prepare for Student Loan Payments to Begin
Log in to your student loan providers website(s) and get your student loan balances for all of your student loans.
Get your monthly payment amount for all of your student loans and your next payment due date.
Create a budget (you can get one here if you need one) that includes these payments so that you know exactly how these payments are going to affect your bottom line. You need to know exactly where you stand so that you can make adjustments. Yes, you may need to look at ways to cut expenses or increase your income, but it is far better to be prepared and know that in advance.
Look at your options. If you need margin in your budget, or can’t afford to make your payments in full, you need to contact your student loan provider for repayment options as soon as possible.
There are deferment options, forbearance options, and income driven repayment plans. It can take time to qualify for these options, so you do not want to put this off until the last minute or until after your payment has been drafted from your checking account leaving you short changed for the month.
Please keep in mind, the object of the game is to get you out of debt so you can get on your way to financial peace and building wealth. These repayment options can keep you stuck in student loan debt forever. Don’t do that to yourself! The longer you stay in debt, the more interest you are racking up, the longer you will be in debt. Make a plan to pay off your student loans as quickly as possible.
Your lender will usually give you a discount on your interest rate for signing up for automatic payments. Make sure that you are still enrolled in automatic payments if you were pre-pandemic, and make sure your bank account information is still accurate. Again knowing your due date will help prevent money misadventures such as bounced checks.
Caution on Consolidation
While it may be tempting to consolidate all of of your student loans, keep in mind that interest rates are incredibly high right now. If you have older student loans, your interest rate is likely far lower. Work with your lender to find a manageable payment option, but avoid the temptation to consolidate or refinance into a higher interest rate.
A Pep Talk
It is so tempting to just make minimum payments on student loans because they are often for so much money it seems like you’ll never get them paid off! (Trust me, I am in the slog, I understand) I urge you to avoid this expensive money mistake. Instead, work your student loans into your debt snowball and continue to sock as much money as you possibly can towards your debt so that you can become debt free, start saving, and investing that money you are working so hard for everyday. When you pay yourself instead of creditors, you can begin to build wealth and live life on your terms.
You’ve got this! If you need help, are unsure of where to start, or need one on one coaching, visit the website.
I’m cheering you on, Jenna
Jenna Dowell is the owner of Elevations Wellness & Financial Coaching, Nurse Exec, Mountain Girl, Dog Mama, Adventurer and Fellow Dreamer.