Student loans paused all the way back in March 2020—that was years ago now! It’s been so long there are some recent graduates who have NEVER made a student loan payment since they’ve gotten their diploma. Other borrowers have paid off their balance, others have used the time to pay off other debts, and some have avoided thinking about their debt for the last few years.
If you still have a balance on your student loans, understand that they’re restarting again this October! That means it’s time to make your payment plans and pay down those federal loans. Here’s what you need to know:
Student Loans Are Restarting In October
Are Student Loans Really Restarting in October?
Though there have been many extensions of the student loan pause (9, to be exact), it’s true that student loans are for sure restarting this October. The Supreme Court struck down the relief program, so there will probably be no continuation of forgiveness proceedings.
When Will My Loans Start Accumulating Interest Again?
Student loan payments will begin again in October, however interest will start accumulating in September. Previously, both student loan interest and payments were paused, so be aware that you’ll have added interest in September and a fresh payment due in October.
Should I Wait to Pay My Student Loans?
If you haven’t paid anything during the student loan pause, I totally understand your motivation. A break in those high payments can make you feel like you finally have some breathing room. However, continuing to pay during the pause would have been one of the best financial decisions you could make in regards to your student loans!
Why? Because there’d be no added interest. You could have potentially paid off your entire loan before now, avoiding 3 years of accumulated interest on top of your principal. Basically, your debt was on sale and you could have paid it down at a big discount!
But, we can’t change the past. There’s no shame in whatever decision you made. Now, though, it’s time to start paying. I wouldn’t recommend waiting for September or October. Start now and get some payments out of the way before you see added interest again.
What Should I Do if I Can’t Pay My Monthly Bill?
Times are tough. We’re all feeling the strain of inflation and high costs of living. Plus, your life could look totally different now than it did 3 years ago! You could have a couple more kids, a different job, a new spouse, or any number of other big changes. These shifts in your personal life can alter more than just your family dynamic—they can mess with your financial stability and change your financial plan too. So, if you find yourself struggling to make ends meet as is, here are some things you can do to get those payments taken care of:
Make a budget.
Want to know the easiest way to give yourself a raise? Make a budget! No, seriously. Most people feel truly like they make more money when they make and stick to a budget. This is because a budget makes you super intentional about every dollar. You avoid frivolous spending and suddenly have enough for that student loan payment!
If you don’t end up finding margin in your budget after working out your monthly plan, it may be time to cut expenses. Start with non-essentials like entertainment subscriptions, daily coffee, gym memberships, extra cars, and regular shopping. Throw all your extra money instead at your student loans to knock a big debt off your plate. Won’t that feel good? (Learn more about the debt snowball HERE.)
Get a side gig.
When there’s no way to find extra by cutting expenses or making a budget, it’s time to make more money. A second job or side gig can help you earn what you need to make monthly payments—and hopefully soon that final payment! You can find a list of great side gigs in this blog post.
Contact your loan servicer.
Your loan servicer may be able to offer some options for you to decrease your payments and make it a little more manageable. With the servicer you can look into different repayment plans and determine what you can swing at the moment. In fact, Biden’s new student loan plan would lower monthly payments for income-based repayment plans if you qualify. (Learn more HERE.)
Even if the new student loan policy passes through Congress, try your best to pay as much as possible on your student debt. Remember, the longer you have it, the more interest you’ll accumulate! (Basically, the longer you have the loan, the more it costs.)
Additionally, don’t let the servicer talk you into a few more months of forbearance or a consolidation option. Both of these are crummy choices that don’t actually help you. Only go with plans that involve making payments!
Will Student Loans Ever Be Forgiven?
It’s really unlikely that student loans will ever be forgiven. The Supreme Court has made it clear that the legal basis for forgiveness is questionable at best. With such a lengthy delay and the amount of judicial debate in regards to the merits of student loan forgiveness, I doubt another administration will attempt something like this again—at least not on a large scale.
Smaller scale forgiveness is possible like with the Biden-Harris Administration’s newest forgiveness push. In this case, certain demographics and circumstances may warrant forgiveness or payment reduction in the government’s eyes, but only time will tell! Don’t rely on student loan forgiveness. Get your debt paid off and never go back to owing anyone! (Especially the federal government, am I right?)
The student loan pause will cease in October 2023!
The time has finally come, student loans are coming back! I know, I know, they’re definitely no one’s favorite bill to pay—even if you’re using your degree. Making a plan for repayment now will save you stress later. However, if you need help making a budget and figuring out how to start making payments again with your current income, join me for a free consult. I’d love to help you formulate a plan! Until then, browse the blog with a ton of helpful financial info for the person that’s tried everything.