After more than three years, the Department of Education’s student loan forbearance program is coming to an end, with payments resuming in October.
According to Experian, borrowers can expect to pay an average of $200 per month. With credit card interest rates spiking higher than 24% in August, making sure your finances are in order before the fall will be key to offsetting the burden of debt.
Here are three steps you can take to get ready:
- Know your servicer. Whether you’re new to student loan repayment or were making payments for years before the forbearance program was put into place during the pandemic, experts say your servicer may have changed. Visit the Department of Education’s student loan website to find your servicer and update your contact information.
- Make a budget. If you haven’t been using a budget or revamped an existing budget to include your upcoming student loan, now is the time to make sure the appropriate funds will be available and diverted to your repayment. If you need help, talk to a certified credit counselor who can work with you to make an efficient budget that works for you.
- Manage credit card debt. With high credit card interest rates the current norm, you’ll want to make sure you’re able to pay on any credit card debt, in addition to your upcoming student loan repayment. One way to help offset the cost is to speak with a certified credit counselor about a debt management program (DMP). If you enroll in a DMP, your counselor will negotiate with your lenders work with your creditors to consolidate your loans unsecured credit cards into one monthly payment while also working to lower your interest rates. This can help you pay off credit card debt faster while freeing up the funds for your student loans.
While the Supreme Court struck down President Joe Biden’s student loan forgiveness proposal in June, the Biden-Harris Administration launched the Saving on a Valuable Education (SAVE) plan in August, set to go into effect July 1, 2024. This income-driven repayment plan also takes into account family size and will help keep monthly payments low—potentially as low as $0 for some households, while others could see savings as high as $1,000 a year.
As of Sept. 1, interest resumed accruing on student debt. While hope is on the horizon for qualified borrowers, budgeting and paying down credit cards can help prepare you to pay on your student debt come this fall.