After a three and 1/2 year pause, student loan payments will resume in October — which is sooner than you might think.
“Interest rates will start to kick back in even earlier than that in September,” said Brian Walsh, student loan expert and leader of the financial planning branch at SOFI, a personal finance company.
Walsh said that since it’s been such a long time since many have had to worry about these payments, it’s easy to overlook basic financial details.
The first thing you should do according to Walsh is check your balance, interest rate, and monthly payment amount the day before your first payment is due.
“Step No. two would be looking at your finances, and step three will be figuring out what your goals are when it comes to your student loans,” Walsh said.
With interest rate hikes, inflation or even increased amounts of personal savings, Walsh said it might be a bit of an initial shock to your monthly budget to once again account for another loan payment. That’s why preparation in the weeks leading up to payment resumption is so important.
“Payments will kick back in, but the good news is that borrowers have options,” Walsh said. “Stretching it out longer to reduce their payments is one option.”
Other options for borrowers could be to consider an income-driven repayment plan, which is something you can explore with loan servicers.
“Basically, payments are really capped to a percentage of your income with this option,” Walsh explained.
Beyond that, he said, “Others are looking to refinance their student loans.”
“This is where they take out a new, private loan, that pays off their existing loans, and ideally lowers their interest rate, or lowers their monthly payment,” Walsh told WTOP.
Whatever you consider, you should be aware of scammers and only trust verified entities.
“Unfortunately, a lot of people are going to try and take advantage of this,” said Walsh. He added that any person or company that says they can wipe away debt completely is probably lying to get money or personal information from you.
“If it sounds too good to be true, it most likely is,” he said.
“Getting information from reputable sources like credit score monitoring or the loan servicers is a good place to look,” Walsh said. StudentAid.gov also has information on all the different loan servicers.
For professional help, you can consult a personal finance company like the one Walsh works for, but that could include paying extra for an expert’s advice.
You can always look at your credit score through a credit monitoring agency — which can be done in many online banking apps — which will allow you to see information about your outstanding loans.
“You’ll actually be able to see all the individual line items for all outstanding loans you might have in one place, which can help you keep track of everything in case you’re confused about how much you still owe, or about which loans you have outstanding,” Walsh said.
