After a long three-year pause, student loan payments are officially back. That’s right, interest has resumed on your student loans as of September 1st, and they are set to resume payment in October. The US Department Of Education’s recent announcement on its website indicates that individuals with student loans will need to start making payments once again starting in October. Since borrowers have become so comfortable with the omitted payment for the last three years, it’s crucial for individuals with student loans to prepare themselves for the transition. So, let’s discuss some practical tips to help borrowers prepare for the resumption of payments and ways to fit the payment back in the budget.
So, you might be thinking to yourself, “How Do I Prepare for the Loan Payment to Resume?” Well, especially now that interest has begun accruing on your loans, a great starting point is to review and familiarize yourself with your loan terms and conditions. Maybe you have received an email or statement in the mail recently, or take a look at your old payment sheet to understand the interest rates, repayment plans, and any changes that may have occurred during the payment pause. Take note of the exact amount you owe and any upcoming changes that might impact your monthly payments so you can ensure that your existing repayment plan still fits within your financial capabilities.
Next you want to revisit your budget and re-assess your current financial situation. Take a close look at your current financial circumstances. Evaluate your income, expenses, and other financial obligations. Assessing your budget will help you determine how much additional savings you have each month that you can allocate towards your student loan payments without compromising your overall financial stability. If you find that currently there is no room in the budget for your student loan payment, then it’s time to make some adjustments where you can.
We know it’s hard to make theses adjustments on your own, which is why we work with individuals to tweak and set a realistic budget. With the upcoming student loan payments, it’s essential to create or update your budget to accommodate this new expense. Analyze your income and expenses, identifying areas where you can cut back or make adjustments to accommodate the loan payments. Write down your wants versus your needs to determine discretionary expenses that can be reduced temporarily.
While you’re trying prepping to begin re-payment, think about your emergency fund as well. In addition to your student loan payment bucket, try setting aside an extra portion of your income this month to build up your emergency bucket should the budget be tight once your payment resumes.
If you find yourself overwhelmed or unsure about how to proceed, seek guidance from a financial advisor or student loan counselor. We are working with borrowers to analyze their situation and provide personalized advice based on their specific circumstances. As the resumption of student loan payments approaches, it’s crucial for borrowers to proactively prepare. By reviewing loan terms, assessing your overall finances, and creating a realistic budget, you can effectively prepare and manage the transition. Remember, a financial plan and preparation are key to ensuring a smooth adjustment to the student loan repayment phase and maintaining overall financial well-being. If you have any questions, email us at info@shermanwealth.com or schedule a complimentary intro call here.
