Student Loans

How to prepare for student loan repayments

Female student studying

Federal student loan payments will resume after a three-year-long payment pause. Many were hopeful that their loans would be forgiven altogether, but with the forgiveness plan being struck down, this means most people will resume student loan payments come October 1st. With 43.6 million Americans having federal student loan debt, you aren’t alone if you’re worried about how this will affect your finances. We have a few helpful hints below for you to prepare for student loan repayments.

Determine your monthly payment

You should have received a bill from your servicer that contains your payment amount, payment due date, and upcoming interest. If you don’t know what your monthly payments will be, you can visit your servicer’s website to see your payment amount once your bill has been sent. However, many borrowers’ loan servicers changed during the payment pause. If you’re unsure who your servicer is, you can log in to

Rework your budget

Once you know your monthly payment, you can now account for your student loan payments in your budget. If it’s been a while since you last examined your budget, here’s your excuse to start!

A common budgeting method is the 50/30/20 method. Fifty percent goes towards needs, like a mortgage or rent, utilities, and loan payments, like credit cards and (you guessed it) student loans. Thirty percent goes towards wants, like going out with friends or other entertainment. Lastly, 20% should be allotted towards your savings, like an emergency fund.

Once you’ve mapped out your expenses, weave in your student loan payment. If you’re stretched too thin, see where you can cut unnecessary spending, such as unwanted subscriptions or unused gym memberships.

If your payments are too high…

Consider refinancing to get a lower monthly payment if it makes sense. If you would save money, or if you have loans with high variable rates, refinancing may be a good option. But, keep in mind that refinancing federal loans makes them ineligible for federal loan forgiveness programs, like Public Service Loan Forgiveness and Teacher Loan Forgiveness.

If refinancing isn’t the best option for you, see if you’re eligible for an income-driven repayment plan, like the new SAVE Plan. The SAVE Plan replaced the Revised Pay As You Earn (REPAYE) Plan.

Like most income-driven repayment plans, the SAVE Plan calculates your monthly payment based on income and size. Under this plan, single borrowers making $32,800 or less or a family of four earning $67,500 or less won’t owe loan payments, nor will interest accrue.

Eligible loans for the SAVE Plan include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans that did not repay any PLUS loans made to parents. You can apply for the SAVE Plan using the income-driven repayment plan application.

Enroll in auto pay

If you haven’t already, enroll in auto pay. Auto pay for student loans is optional, but it’s a great way to ensure you won’t miss payments. It also means more savings—borrowers enrolled in auto pay save 0.25% on their interest rate. With those savings, you could contribute more to your retirement plan or pay off high-interest debt.

Let’s say you have $30,000 in student loan debt at a rate of 5.75% APR with a monthly payment of $329—that would come out to $39,517 over 10 years (the standard loan repayment period), including $9,517 in interest. If you enroll in auto pay, your rate will be reduced to 5.50% APR. With the same monthly payment at a lower rate, you could not only pay your student loans off two months sooner, but you’d also save around $640 in interest over the life of the loan!

What if you still can’t make your payments?

If you’ve tried budgeting and you’ve applied for income-driven repayment plans but your payments are still too high, you have some time to get your ducks in a row. With payments resuming, there is a 12-month onramp period. You won’t be penalized for not making payments, meaning your loans won’t go into default and your credit won’t take a hit. After one year, you’ll have to resume payments or risk default. However, interest will still accrue during the onramp period. It buys you time, but it’s best to make payments if you can to avoid increasing the amount you owe due to interest accrual.

Final thoughts

Preparing for student loan repayments can be daunting, but it’s important to have a plan in place. By following the tips above, you can ensure you’re financially prepared to resume payments. Be patient and understanding with yourself—it may take some time to adjust to making student loan payments again. Don’t be afraid to ask for help if you need it.

If you’re still struggling to make your payments, there are resources available to you. You can contact your loan servicer to discuss your options, visit the Federal Student Aid website for more information, or even apply for our Student Loan Payoff contest. We’re awarding three deserving people $10,000 each, for a total of $30,000 in relief. Our first two winners have been selected, and our final winner will be announced in December!

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