Do you have student loan debt? Do these things before payments resume in October
With massive student loan forgiveness seeming less likely as President Joe Biden focuses on other priorities, the end of the government’s hiatus on student loan repayments looms on the horizon.
As of October 1, tens of millions of borrowers are expected to resume loan repayments, although a survey by interest group Student Debt Crisis shows 90% are not ready. There is a lot of speculation that Biden might agree to extend the freeze, but the administration has yet to make any announcements.
If you haven’t thought about your student loan since the suspension of payments in March 2020, you still have a little time to prepare. Here are seven steps to help you make the most of the next few months and ensure you get your loans back on track.
When your payments resume depends on when in the month you started paying off your loan. So if your payment was normally made in the middle of the month, this is when you should expect to start paying it again.
Have you even set up automatic withdrawals? If you’ve changed banks or accounts since the start of the pandemic, you’ll need to update your loan manager to make sure payments aren’t interrupted. The same goes for your mailing address if you have moved in the past 16 months.
Finally, using the next few months to set aside funds to cover your first payments will make the transition easier for your wallet. And, losing that spending money will help you determine whether you need to change your budget or reduce your expenses to incorporate the loan payment into your cash flow.
Preparing in advance is better than a loan officer knocking on your door.
Review the options if you are not working
If you still don’t have a job or think you won’t be able to pay your payments in October, you will have several options.
Now is the time to determine if this is the option you will want to pursue, as there will certainly be a huge influx of repayment plan requests in the fall.
Manage your other debts
While some people may have used the pandemic to pay off debts and increase their savings, others have struggled to cope.
A CreditCards.com survey earlier this year found that more than half of adults with credit cards added to their debt last year. And 44% of those who racked up additional debt specifically blamed the pandemic.
If you’ve relied on your credit cards to get through the COVID-19 crisis, you’re probably now dealing with a pile of expensive interest. You might consider repaying your balances more efficiently by grouping them into one low interest debt consolidation loan.
Once that is settled, you will find that your student loans are less overdone.
Make room in your budget
But if you need even more space to pay off your student loan, consider turning your attention to your insurance bills.
If you haven’t looked for a better auto insurance rate lately, you could overpay up to $ 1,100 per year.
Experts recommend comparing at least three deals before choosing one. Although it sounds like a lot of work, find the best offer these days it’s as easy as answering a few quick questions online.
And, if you own a home, you can use the same approach to save yourself hundreds of dollars per month on your home insurance.
Reduce these additional expenses
In addition to reducing monthly debt and insurance bills, finding a few hundred extra dollars per month may require cutting expenses.
But even if you’re running your household on a tight budget, you’ll still have to spend most of the essentials.
Make sure you always get the best price by downloading a free browser extension which will automatically search for better deals or coupons every time you shop online.
Earn a little extra
The above steps should help you find enough room to fit student loan payments into your monthly budget in October.
But if you’ve gotten used to having a bit of cash on hand, you might want to consider options to increase your income. Do you have a marketable hobby or talent? Turn it into a cost-effective lateral agitation and give your bank account a boost while doing what you love.
Otherwise, you can always consider making the most of the boiling stock market. You don’t need to understand all the Wall Street lingo or have thousands of dollars to build a successful portfolio. Download an app that lets you invest with just your “coin”, turning your pennies into major profits.
Refinance your loan
If you still have thousands of dollars to pay on your student loan, even after making room to accommodate resumption of payments, why wouldn’t you want to wipe that debt off your books ASAP?
Not only can you lower your monthly payments and reduce the amount of interest you will end up paying in refinance your student loan, you can also pay off your debts years earlier.
Once your loan is paid off and all that sudden extra space in your budget, you can move on to other financial priorities like buy your first home, start a family or simply take a long-awaited vacation.