Are you a student loan borrower who is about to have their monthly payments resume? If so, you may be feeling a little overwhelmed. Don’t worry – we are here to help! In this article, we will discuss five things that you should do before your student loan payments restart. By following these tips, you can make the process a little easier on yourself and ensure that your payments go smoothly. Let’s get started!
Gather all your paperwork related to your student loans.
This includes your Master Promissory Note, loan statements, and contact information for your servicer. You’ll need this information when you begin all loan repayments.
Next, check to see if you’re eligible for any repayment plans. There are several options available, and you may be able to lower your monthly payment by switching to a different plan. If you’re not sure which repayment plan is right for you, contact your servicer for more information.
If you’re still in school or have recently graduated, you may also be eligible for a grace period. This is a period after graduation when you don’t have to make payments on your loans. Check with your servicer to see if you qualify for a grace period.
Once you know when your first payment is due, start planning how you’ll make it. If you can, set up automatic payments from your checking or savings account. This way, you’ll never miss a payment and you may even qualify for a lower interest rate.
If you can’t afford your monthly payment, don’t wait until it’s due to contact your servicer. They may be able to help you find a way to make your payments more manageable.
Review the terms of your loan agreement.
Federal student loans will go back into repayment as of January 31, 2022. Many of us were hoping for some kind of student loan forgiveness to follow this pause, but it does not look like we will see this kind of broad-based student loan forgiveness shortly.
If you’re unsure about when your payments are scheduled to resume, take a look at your loan agreement. This document will have all of the details about your repayment schedule. If you can’t find your loan agreement, you can usually get in touch with your lender to request a copy.
The freeze on federal student loan payments began in March 2020 under the CARES Act and has since been extended five times. The goal of the forbearance period was to provide federal student loan borrowers extra room in their budget to pay for necessities like housing—especially if their employment or income had been affected by the pandemic. Payments will resume on Feb. 1, 2022.
You can also talk to your employer as this year, more companies started offering assistance to their employees with student loan debt—whether it be providing information sessions about certain loan programs or offering to help pay off their employees’ debt.
Calculate how much you can afford to pay each month.
Before you begin making student loan payments again, it’s important to calculate how much you can afford to pay each month. This will help you create a budget and avoid falling behind on your payments.
To calculate your monthly budget, start by adding up your income from all sources. Then, subtract your fixed expenses like rent, utilities, and car payments. What’s left is your disposable income, which you can use to make student loan payments.
Interest on federal unsubsidized and private loans accumulates during college and is added to your overall loan sum, so starting to pay off this interest as quickly as possible might help you graduate with less debt.
If you’re not sure how much money you’ll have each month, consider using an online budget calculator like Mint or You Need a Budget (YNAB). These tools can help you track your spending and give you a better idea of where your money goes each month.
Contact your student loan servicer and update your info.
A lot of things have changed throughout the pandemic so far. Many of us have moved, some of us have taken different jobs, and some are still coping with unemployment. You’ll need to contact your student loan servicer to be sure that your information is up to date.
This can prevent you from accidentally missing payments if your bill is sent to an old address or paying too much for an IDR plan if your income has decreased. You should also check to see if auto payments are turned on so you aren’t surprised to see a payment come out of your account later on.
If you’re not already on an income-driven repayment plan, now could be a good time to look into it. Income-driven repayment plans base your monthly student loan payment on your current income and family size. If you’ve lost your job or taken a pay cut, you may qualify for a lower monthly payment. You can apply for an IDR plan online or by contacting your servicer.
Make extra payments when possible to reduce the amount of interest you’ll owe.
While payments aren’t due now, your main financial priority may be paying off your federal student loans. If you can’t make extra payments, try to at least pay the minimum amount due each month. This will help keep your account in good standing and avoid late fees.
If you’re struggling to make payments, contact your loan servicer to discuss your options. You may be able to temporarily postpone or lower your payments.
Whatever you do, don’t just stop making payments without talking to your servicer first. This could lead to default, which would damage your credit score and subject you to collection activities.
Take these steps before student loan payments resume to ensure that you’re prepared financially. With a little planning, you can manage your repayments and stay on track with your financial goals.
Student loan repayment can be a daunting task, but it’s important to be prepared. Taking these steps before payments resume will help you stay on track financially. If you have any questions about your student loans, contact your loan servicer for more information.