Fall is in full swing with pumpkins, hayrides and flannels in every color. What else is happening this season? Student loan payments started again on October 1. For many of us, this means reevaluating monthly budgets to ensure on-time payments and maintaining a healthy budget.
While it can start to feel overwhelming with the thought of pulling money together, remember you are not alone.
Did you know student loans are the second largest type of consumer-generated debt behind mortgages?
Bankrate reports that 43.6 million Americans have federal student debt, and 54% of college undergraduates finish with student loan debt.
Student loan payments can be a hassle. The loan is not going anywhere until you plan to resolve it. Instead of providing potential forgettable ways to budget for those payments, let’s talk about some crucial facts by asking yourself four simple questions about student loans.
Are You Eligible For a Lower Repayment Plan?
The SAVE plan bases your monthly payment on your income and household size. Using a program that considers your income can help reduce or bring your repayment to zero balance a month. Applying or checking your enrollment status is quick and straightforward. It is also worth noting that the SAVE plan can benefit the interest accrual.
What Does It Mean To Be In Forbearance or Deferment?
If you have trouble making payments or cannot keep up with payments, providers may offer forbearance or deferment. Both options temporarily prevent you from having to make payments on your loan.
What’s the difference? Forbearance will still accrue interest while you’re not paying and can last up to 12 months. Deferment stops the interest accrual on some loans and pauses monthly payments that can last up to three years or however long you qualify. Make sure you know exactly what option applies to you when speaking with your provider.
What If You Miss a Payment?
You want to ensure you don’t miss the payments for your loan. Missed payments could put your account in jeopardy of being in default. Defaulting on student loans could be reported on your credit as a delinquency.
This could affect your score negatively and usually remain on your report for seven years. If you have trouble making payments, don’t wait until you start missing them. Contact your loan provider and seek better arrangements for your circumstances and budget.
Although there are helpful options, sometimes it can still feel overwhelming. Beyond Finance called on its Chief Financial Wellness Advisor, Dr. Erika Rasure, to shed light on the topic of student loan repayment. She shared three more helpful notes to keep in mind:
Reasonably cut expenses that bring little or no value to your everyday life.
While it sounds like a broken record, write down how much you spend and find opportunities to reduce expenses. If you cannot reduce costs and are having difficulty affording necessities, it’s time to level with yourself in a kind and compassionate way.
Focus on you and your financial situation.
No one cares about our money more than you do. Focus your attention away from the narratives of others and the media to work on your situation. Reflect on how you can take care of yourself and your finances. You owe it to yourself to take the steps to feel balanced as you enter repayment.
Remember that everything is temporary.
Make the calls to your servicer, know your options, and don’t be afraid to ask questions and “annoy” customer service. You need to be your strongest and loudest advocate.
If you can’t afford the payment, there is no shame in asking for a hardship-related deferment or forbearance. Whatever you do, you can’t just let it sit there. Take the action you need when you need it, and get yourself back on the repayment track as soon as possible.
In times of financial stress and worry, you must be honest about what you are or aren’t doing. Ask for help when needed. Additionally, take intentional action related to the things you can control. Stress and worry will likely give way to a greater sense of confidence, trust and empowerment in yourself.
Student loan repayments don’t have to dilute your holiday season. You can enjoy your holiday season and make it a priority to pay back what you owe.