Tips for resuming student loan payments
Keep your payments as low as possible.
As of October 1, student loan payments have resumed. This follows a pause of more than three years on payments and interest accrual. If you have student debt, you might have to add hundreds of dollars to your budget each month.
But there are some steps you can take to reduce your payment amount and duration of your repayment period. Here are three tips to consider as you start making student loan payments again.
Look for income-based repayment plans
Income-based repayment plans have helped individuals with student debt reduce their monthly payments, even before the pause began. Now, the federal government has introduced what they are calling their most affordable repayment plan.
It’s called the SAVE plan and some of the benefits include:
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A reduced monthly payment based on your income. You could even qualify for no monthly payment.
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Unpaid interest will not increase your balance if you make your monthly payments.
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Your loans may be forgiven after you make payments for a certain duration. The duration depends on your loan balance when you apply for the plan.
You can learn more about the SAVE repayment plan online. If you don’t qualify for the SAVE plan, or if you don’t think it’s right for you, there are other income-based repayment plans to consider.
Get an auto-pay discount
Many loan servicers will offer an interest discount if you enroll in automatic payments. The most common discount is 0.25%. Check with your loan servicer to see if they offer an auto-pay discount.
Pay off higher-interest loans first
Most student loan accounts are broken up into many loans unless you consolidated your debt. In many cases, these loans will have varying balances and interest rates.
If you are able, you should try to pay extra on the higher-interest loans to pay those balances off first. This will help bring down your monthly payment as you go forward.
Make a plan
The plan that works for one individual may not work for the other. To make the most of your student loan payments, you must look at your unique financial situation.
Our community inclusion department is here to help. We can help you create a plan to repay your student loans. If you would like some assistance, fill out the form below and we’ll contact you to schedule an appointment.