Student loan payments begin this month, tips on how to stay on top of payments
TUCSON, Ariz. (13 News) - After the Supreme Court struck down President Biden’s plan to forgive loans up to 20 thousand dollars, borrowers are determining how they will pay their loan, or if they’ll pay at all.
During the COVID-19 pandemic, federal student loan payments were put on hold for three years, and that ends this month.
With interest picking back up last month and due dates starting this month, borrowers are weighing their options on what the best course is for them.
“So this may be a great opportunity for you to take a look at the entire picture in terms of what you’re contributing to your 401k, what other debt you have, how much is your existing car payment and can that be reduced,” said John Hagensen, a certified financial planner, partner and managing director for Creative Planning.
“Looking at the big picture and incorporating this new payment is what I suggest as the first step, because everything can be built off that plan once it’s in place.” As a back-up, the Biden Administration rolled out the SAVE program to help lower monthly payments.
The ‘on-ramp’ program is another option that may help, where a borrower can miss a payment for up to 12 months without impacting your credit score, but your interest will continue to grow.
This should be used on an as-needed basis.
“The interest rate is high enough where you can’t ignore it or simply put your hands up and say I can’t afford this and I’m not going to make the payment, that’s not a great solution,” Hagensen said.
“But I also make extra payments to figure out how to pay your student loan as fast as possible because this is a political yo-yo, it’s not going away.”
Kassie Sreerama is a graduate student at the University of Arizona, and she says that she is in no position to afford her loans on top of her other expenses.
“I was a little stressed out because they did start coming back while I was still in my undergrad,” she said, “meaning that my loan that I was hoping to be paused until I got out, I was going to have to start paying before I was really ready.”
Sreerama had to defer her loans for a year to avoid payments, but she believes this step wasn’t necessary.
“They should know that I’m still enrolled in school. They told me that I shouldn’t have to pay until I’m out of school, and they said we didn’t know you were still in school despite it being in the system as such.”
For incoming college students, Hagensen suggests really looking closely at loan options and determining with families which approach is best.
“This being at the top of a conversation, it spurs conversation with families, and it has us a bit more mindful as we enter college and make that choice that we’re really going to see the benefits of that debt taken out,” he said.
Another recommendation is starting at a trade school or community college to cut costs and find a path right for you.
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