What to Do if You’re Worried About Being Able to Make Your Payments Once the Pause Ends The right savings approach will be different for everyone, but it could come from cutting discretionary spending or increasing your income by asking for a raise or taking on a side gig. “So you need to figure out where you’re going to carve out the money to make the payments on your student loans.” “People have a tendency to increase their spending to consume all available money,” Kantrowitz explained. Receiving stimulus checks or a raise during the pandemic while you didn’t have to make your monthly loan payments may have caused a boost in your spending, conscious or not. If you learn that you’re spending $500 a month on eating out, the next time you want to head to a restaurant, you might hesitate a bit. Categorize the expenditures in broad segments, like food, housing, transportation, medical expenses, and entertainment, and then tag them as either mandatory or discretionary. Make note of every expense throughout the 30 days, using a spreadsheet or a budgeting program, like Quicken or Mint, to stay on track. “The first thing I would suggest doing is a descriptive budgeting exercise, where you track your spending for a month,” Kantrowitz said. However you’ve been using those extra funds, whether it’s to build up your emergency savings, pay down credit card debt, or dine out a bit more, now is the time to adjust your monthly cash flow to make space for your student loan payments. You’ve probably gotten used to having a bit more cash in your checking account each month. Prepare Your Budget for Your Payments to Restart If you’d like to re-enroll in autopay, look out for an email from your loan servicer asking whether you want to keep your autopay status when payments resume. If you were previously signed up for autopay, it may not restart automatically when payments restart. Kantrowitz pointed out it also has the bonus benefit of reducing your interest rate by a quarter of a percentage point. Setting up autopay is a simple way to avoid the hassle and expense of late fees and interest. You’re more likely to miss the very first payment than any other.” “With all the potential confusion with the restart of repayment, it’s a good way of ensuring that you don’t miss a payment. Kantrowitz recommends that borrowers sign up for autopay, where monthly payments transfer automatically from your checking account to your loan servicer. “Your payment is still due even if you don’t know, and even if you don’t get a coupon book, statement, or one of those half-dozen notifications,” Kantrowitz said. So make sure any relevant details are reflected in your student loan accounts. The past three years have been eventful for many people - you may have moved, changed jobs, or moved your money to a different bank. That’s why it’s particularly important to make sure that your loan servicer and both have up-to-date contact information so you receive those notices promptly. There will be no missing what your due date and payment amount will be. Once that 60-day countdown to payment restart begins, you will receive at least six notices from your loan servicer about the restart of repayment, according to Kantrowitz. Make Sure Your Contact and Bank Information Are Up to Date Some servicers, including FedLoan Servicing (which services public service loan forgiveness loans), Granite State Management and Resources, and Navient, phased out of federal loan servicing at the end of 2021. It may be a good idea to double-check your servicer regardless, because there are changes underway that will affect many student loan borrowers. If you’re not sure which student loan servicer manages your loans, visit the dashboard for more information. If you’re among the 26 million Americans whose loans have been on pause, here are some simple steps you can take now to make things easier down the line. Whichever eventuality comes to pass, borrowers have a bit of time to prepare before payments commence. If things remain at a stalemate on June 30, 2023, payments will start back up again 60 days after that date. As of the time of publication, the suspension of student loan payments will continue until 60 days after one of two things occurs: President Biden is able to implement his student debt forgiveness program or the Supreme Court resolves the questions around its legality. There’s still some uncertainty about when exactly the pause will end. Generally speaking, you should expect your payment and due date to be the same as they were before the pause began, said Mark Kantrowitz, leading expert on student loan debt and author of “How to Appeal for More College Financial Aid.” If you’ve been enjoying the temporary pause on student loan payments - along with the 0% interest accrual and the stop on collections for loans that are in default - you may be wondering what happens when the pause comes to an end.
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