Student loan payments return in October, following a pause that has lasted more than three years. More than 43 million Americans may need to adjust their spending to make room for their first payment in the upcoming days.
If you're counting down the days until October, we've pinned down two things you need to keep in mind about your student loans.
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1. Your first payment will be due
Student loan payments will be due sometime in October. Your exact date will depend on your loan servicer, so you should expect to receive a notification soon if you haven't received one already. The notification will explain your due date, payment amount, and any other relevant details you need to know to make your first payment.
The good news is that you won't be required to dish out cash as soon as you receive your notification. You'll have at least 21 days before your payment is due to stack up enough cash to make your first payment. But there's no need to wait until October comes to start making moves. You can reduce your payment anxiety by sticking to a clear plan.
Here are a few things you can scratch off your list now:
- Earmark funds for student loan payments. You can open a new checking account or create a sub-savings account for student loan payments. Either way, you're reducing the chances of accidentally spending your student loan funds on other expenses that might come up. Having a separate account will also allow you to better track and plan for future payments.
- Review your finances. Get your financial house in order by finding out how much money you receive and how much you owe every month. Knowing this will help you figure out if you need to boost your income or cut unnecessary expenses out of your budget.
- Start saving now. Every penny you save helps you chip away at your student loan debt. When your paycheck arrives, set aside some funds for an upcoming student loan payment. If you have an influx of cash coming in, such as a bonus, put those funds toward your payment.
- Determine the best payment plan. You'll automatically be enrolled in the standard payment plan if you don't select another option. With this plan, you'll be debt-free in 10 years. But if you can't afford the monthly payments, you might want to consider an income-driven repayment plan. The Biden Administration's Saving on a Valuable Education, or SAVE, plan calculates your monthly payment based on your family size and income. You might even see your monthly payments drop to zero.
2. Your loan servicer may have changed
We discussed how your loan servicer will determine your due date for your first payment. But if you have a federal student loan, there's a chance that you may have a new loan servicer. Many of the companies that managed debt for the government have exited the space. Some student loans have been transferred to new servicers, so don't be surprised if you see the names Aidvantage, Edfinancial, MOHELA, or Nelnet show up on your paperwork.
You can check whether your loan servicer has changed by going to StudentAid.gov. If you're one of the borrowers with a new servicer, you might have to do the following:
- Create a new online account
- Update your contact information
- Reenroll in automatic payments to receive your 0.25% AutoPay discount
- Confirm your loan details
Plan ahead for student loan payments
There may be a shift in your finances coming in October, but there's no reason to panic. You can go online to access your loan details and start saving money for your first payment now. When October rolls around, you'll be ready to hit the ground running toward your student loan payoff goals.
