Federal student loan repayment resumes soon – so what should you be doing? After over three years of forbearance, student loans are set to begin accruing interest on September 1, and payments will resume in October. We reached out to Donald Kerr, director of student lending and college services at AAA Northeast, to find out what you need to do to prepare for the return of student loan payments.
Check out Donald’s tips for tackling student loans on New York’s PIX11 News. For help planning and paying for college finances, book an appointment with a AAA lending specialist today.
Student Loan Repayment Date
Wait, what day is this actually starting? Before payments start again, the company that manages your student loan will contact you to let you know the exact date your next payment is due. They’ll also tell you the amount that’s due at that time.
Make Sure Your Information Is Correct
A lot can change in three years, including your address, email and phone number. Make sure the company holding your student loan has your correct contact information, or you could miss important communications.
If you don’t already have one, make an online account with your student loan servicer. This will allow you to view your repayment information as soon as it’s available.
Know Your Stuff
Don’t know the company that’s currently holding your student loan? Has it been transferred to a different student loan servicer? Some companies stopped working with the Department of Education during the pandemic, or were acquired by other student loan servicers. You can look up who’s managing your federal student loan by going to studentaid.gov.
Keep a Budget
Keeping a budget is one of the most important ways you can stay on top of your student loans. Once you know the amount you need to pay every month, you can set it aside in your budget. An even better way to ensure that your student loans get paid like clockwork is to set up an auto payment option. The money will be automatically deducted from your account every month, so you won’t have to worry about forgetting a payment. It’s a good way to stay on track and build a positive credit history.
What if You Can’t Pay?
But what if, no matter what you do, you can’t afford the monthly payment? No matter what, don’t ignore the loan. If you reach out to your student loan servicing company, you can explore the options available for reducing your monthly payment.
One such option is an income-based repayment plan. This will ensure your monthly payment is affordable to you based on your income level.
You could also utilize a graduated repayment plan that starts low and gradually scales up your monthly payment over the lifetime of the loan.
Another option is an extended repayment plan. This will increase the number of years you have to repay your loan, resulting in a lower monthly payment.
“Only use these repayment plans if absolutely necessary,” said Kerr. “When you extend the term of the loan, you add additional cost from more daily interest adding up over a longer period of time.”
Still Have Questions?
If you follow these tips, you should be ready to start repaying your student loans when the time comes. But if you still have questions, you can visit the repayment section at studentaid.gov or call your student loan servicer directly.
You can also reach out to AAA for help. “We offer a counseling service on different repayment strategies and options available to members,” Kerr said. “We also have a student loan refinancing product that can help, but this is mostly for private student loans.”
Are you prepared for the return of student loan payments? Will you be using any of these tips? Let us know in the comments below.
AAA is here for your student lending needs. Learn more or schedule an advising appointment at AAA.com/FinancialAid.