Roughly more than 45 million Americans owe as much as $1.6 trillion in federal student debt, according to the U.S. Department of Education. With the student loan forbearance program coming to an end in October, Experian data shows the average monthly payment borrowers can expect to pay will hover around $200. For those already struggling or on the brink of debt, student loan repayment may be an additional burden.
Interest started to accrue on student loans starting Sept. 1. With repayment just around the corner, experts advise borrowers to be prepared.
Here’s some tips to stay proactive:
Contact Your Servicer
If you’re not sure who your servicer is, visit the Department of Education’s student loan website and follow the instructions, including how to update your information so you don’t miss any important billing information.
Get Your Budget in Order
Especially if you have existing debt, it’s important to create a budget or update it to include any new upcoming student loan payments. Since your monthly payment could be as much as a couple hundred dollars, you’ll need to set aside enough to cover that as well as your other household expenses.
Enroll in a Debt Management Program
With a looming new expense to take care of, credit card holders with debt to manage may want to look into credit counseling and a debt management program (DMP). If you enroll, your counselor can negotiate with your lenders to consolidate your debt into one affordable monthly payment while also typically lowering your interest rates. Through a DMP, you can pay back credit card debt more easily and free up the finances to pay on your student loans.
Although the Supreme Court struck down President Joe Biden’s student loan forgiveness proposal in June, you may qualify for the Saving on a Valuable Education (SAVE) plan. Launched in August by the Biden-Harris Administration, the SAVE plan is slated to go into effect by July 1, 2024. For more information or to fill out an enrollment application, visit the Department of Education website.
For now, getting your budget in order is critical to your financial health. If you’re nervous about October and looking to offset the cost of your debt, consider a DMP.