After three years, federal student loan payments will resume beginning in October. Payments were paused on federal student loans in March 2020 as a relief measure during the Covid-19 pandemic. As you prepare to resume payments, there are a few things you should do as soon as you can to get your ducks in a row.
Refamiliarize yourself with your loans.
Access your loan online through your loan servicer and ensure your contact information is up-to-date. They will be sending you a notice or billing statement before your first payment is due and you want to make sure that you actually receive it.
Review your loan terms such as the outstanding balance, the remaining period left to pay it off, and the interest rate. Use tools like the Peach app or websites to see how much money you could save if you increase your monthly payment.
If you do want to make a change to your repayment plan, it’s better to do it early and get ahead of the rush in late September when the call wait times will be significantly longer and there might be website crashes.
Enable auto-pay to avoid missing any payments.
Enabling auto-pay is one of the easiest ways to ensure you never miss a payment on your loan. Either via phone or the loan servicer’s website, you can select your payment amount and frequency and automatically have it withdrawn from your bank account. This is really important because some loan servicer’s will actually knock off a small amount (think 0.25%) from your interest rate if you do so since it shows you’re a reliable borrower.
If you had auto-pay enabled before the payment pause in 2020, you still need to re-enable the service before payments are set to resume. If you continued to make payments to your loans during the payment pause using auto-pay, still login or call your loan servicer to ensure the service is still turned on.
Make a budget and plan for your upcoming payments.
Revisit your budget and understand how your student loan payments will affect your overall monthly spending. It might be that you’ve had an increase in your income and can actually afford higher payments towards your loans to pay them off faster. Or, it could be that your expenses have risen (blame inflation!) and you might need to trim excess spending in some categories to ensure you can afford your monthly student loan payments. It’s better to have a clear understanding of how your money is currently being spent before you are on the hook for loan payments in September.
Peach out ✌️
