Student Loan Payments to Resume Soon – What You Need to Know

(LibertySociety.com) – After a multi-year pause on student loan repayment, interest will begin to accrue this month and borrowers will have to resume making payments in October. Money experts are offering advice on how to be prepared for the stress of adding back a potentially large payment into monthly expenses. Borrowers need to find out what their monthly payment will be, when it is due, and which account the payment will come from. Millions of Americans have reported the dwindling of their savings accounts due to record inflation, but some borrowers may have to tap into those accounts to cover the new payment. Experts also suggest having the payment automatically drafted instead of manually paying online or mailing a check.

Vanguard financial advisor Tiana Patillo recommends that borrowers review their current budget and look at ways to cut back. She suggests making high-interest debt a top priority, but also said to be sure and make all payments that are due, even if it is just the minimum. Doing this will maintain and improve credit scores, which Patillo stressed as being very important for future financial endeavors. She also advised borrowers to build up “an emergency fund of three to six months” to be prepared for unexpected expenditures.

Michael Liersch, who heads the advice and planning department at Wells Fargo, offered advice to students who will eventually be required to begin repaying their student loans. Students should research their future salary to see if their payment will be affordable after they are out of school. He recommends finding ways to cut down on spending before graduating, such as transferring to a school that may be less expensive. He also said students should consider taking a job during school breaks to save up money for future payments.

Borrowers who will be required to resume payments should also sign up to see if they are eligible for the Saving on a Valuable Education (SAVE) plan, which was recently unveiled by President Biden and the Department of Education. While income-driven repayment plans have been around for years, the SAVE plan could potentially save borrowers on interest and decrease monthly payment amounts.