Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, you weren't required to make payments on your federal student loans throughout the pandemic. While we thought federal student loan payments were going to resume September 2022, the Biden Administration announced in late August that the student loan payment pause will be extended one last time through December 31, 2022. The announcement included student loan forgiveness and a new income-based repayment plan option, which you can read more about here.
They seem really, really serious about this being the last extension, so it's important to plan for your federal student loan payments to resume January 1, 2023.
Many of us have used the break in student loan payments to make ends meet, accomplish our other financial goals, or get ahead by saving and investing. If the idea of this coming to an end is overwhelming, don't worry. Set some time aside now to start preparing, and you'll thank yourself come January!
Find out or refresh your memory on how much you owe, what interest rate is applied to each balance, and what repayment plan you are currently enrolled in.
For federal student loans, you can find out what outstanding loans you have by logging into the Federal Student Aid account dashboard or by calling the Federal Student Aid Information Center at 800-433-3243.
If you have private loans, you can find out who is servicing your loans by reviewing your credit report at AnnualCreditReport.com.
Your lifestyle, your income, and your fixed expenses likely changed since the last time you were required to make federal student loan payments. To make sure you can afford your payments, spend some time creating a spending plan. List all of your fixed and variable expenses, accounting for expenses like rent, groceries, utilities, insurance, transportation, and entertainment.
If you are spending more than you earn or don't have a lot of room left over every month once you take your student loan payments into consideration, you can either look for areas to cut back or find ways to earn more money.
For example, you can save money by meal planning, tracking your online spending weekly, and being creative about having low-cost fun. Or, you can improve your cash flow by getting a part-time job for launching a side gig.
Not sure where to start? Talk to a Bolder money coach for help planning and managing your spending.
If you find that your minimum required payment is too high based on your current expenses and income, find out if you are eligible for an alternative payment plan.
With federal loans, you could qualify for an income-based repayment (IBR) plan. With IBR plans, your payment is based on a longer repayment term and a percentage of your discretionary income (which has now been lowered from 10% to 5%).
Planning ahead is the best way to avoid starting out 2023 with student loan stress.
👇 Need a little help? Talk to a Bolder Money Coach about how to make the most of your student loan payments.