11 things you can do to be prepared when your student loan starts paying off again
When do student loan payments resume? This is the biggest question that student loan borrowers across the country are looking to answer.
The confusion about when student loan payments will resume is not surprising given the events of the past two years. Each time the “final” deadline was announced, it was extended again. The moratorium is set to expire on December 31, 2022, and student loan payments are set to resume on January 1, 2023. But it has been extended again through July 2023. The latest extension comes due to the court’s decision to freeze the president. The Biden Student Loan Cancellation Program
In light of the multiple extensions, it is only natural for lenders to ask when they will resume paying student loans. Will student loan repayments resume in July 2023 or will the moratorium be extended again? The truth is, no one knows for sure. Much depends on the court’s decision on student loan forgiveness.
The good news is that you have another six months before you start paying your student loans again. Use this time well and adjust your finances until you are ready to start making those payments.
11 things you can do to be prepared when your student loan starts paying off again
1. Update your contact information.
Your loan provider will start sending you payment notifications 1-2 months before your payment is due. Such notices will be sent to the mail or email address on file. If you move house or change your phone number or email address, it’s important to update these details.
Loan notices from the loan servicer contain important information about the amount you owe and the new due date. These notifications will also include updates about student loan cancellation programs and other important information. You don’t want to miss any of this important information.
Don’t wait until the last minute. Sign in to your FSA account today and make sure your contact information is up to date. As an extra precaution, it’s also a good idea to update your contact information on the Circulation Officer’s website.
2. Get loan service details.
Federal student loans are funded by the federal government but managed by loan officers. The federal government randomly allocates each student loan to any contractor on their list. During the debt freeze, several organizations terminated their contracts with the federal government. If any of them manage your loans, you will be assigned a new employee.
The conversion process should ideally go smoothly and you don’t have to do anything. But, things can go wrong and cause problems for you when you resume your student loan payment. To avoid potential problems, it is best to take the time now to find out who the loan provider is for each of your loans.
Your FSA account dashboard contains details on all of your federal student loans. Against each loan, you can find the type of loan and the name and contact details of your loan officer. Ensure that each service provider has up-to-date contact information.
If you need additional assistance or cannot log in, you can call 1-800-4-FED-AID (1-800-433-3243) for assistance.
3. Write down your monthly payments
When you’re logged into your FSA account, take a look at your monthly payments and the due date on each loan.
Create a spreadsheet and write down all of your federal student loans. For each loan, list the interest rate, amount due, repayment due date, and the name of the loan provider. Keeping all your loan details on one sheet of paper will make it easier for you to budget and create a payment plan.
4. Student Loan Repayment Balance 2023
Budgeting is the most time consuming step, but it is also the most important.
Check the spreadsheet and calculate your total monthly payments. Now you know how much you will owe when student loan payments resume in July 2023. Do you have enough funds for these payments?
Remember that you are not just looking at the first month loan payment. You will have to make loan payments every month starting in July. You may have saved enough to cover your first two or three loan payments. But what happened after this? Do you think you will be able to raise enough money to meet these ongoing payments? Don’t forget to include rent or mortgage payments, utilities, groceries, and other essential ongoing expenses.
This is an important exercise, and the sooner you start doing it, the more time you’ll have to raise the money to cover those payments. Are you going to cut your spending so you can save more for student loan payments in 2023? Or will you find ways to earn extra income? Doing both can help increase your savings and make other payments more affordable. Whatever you decide, put your plan into action as soon as possible.
If you have money in a low-interest savings account, consider moving it into a higher-yield savings account that pays higher interest. Ask your company’s human resources department if they have any kind of student loan assistance program. Find every way to make money and save money over the next few months to make your loan payments more affordable.
5. Set a payment due date reminder.
If you have multiple loans, you will have multiple payment dates each month – one date for each loan. Do not try to remember these dates. If you miss your due date, you’ll end up paying a late fee penalty, plus interest unnecessarily. Setting frequent reminders for payment amounts and due dates will help you stay on top of everything without added stress.
Lenders usually send out loan statements and reminders but don’t rely on them. You are responsible for making all payments on time, regardless of whether or not you receive a reminder.
6. Renew or set up a self-payment system.
Setting up AutoPay offers some notable advantages. For one thing, lenders will offer you a reduced interest rate for paying with AutoPay. This is a small discount but it can save you a lot of money over the life of your loan. Another advantage of automatic payment is that all your payments will be transferred from your account on time each month. This can save you the stress of manually switching payments to different creditors on different due dates each month. It also reduces the risk of missing out on payments, which can be a costly mistake.
If you haven’t set up auto pay before, do so now. To do this, you will need to obtain your loan officer account details.
If you set it up before, log into your account and check when the last payment was made. Automatic payments are stopped when the payment interval takes effect. Make sure there are no payments after March 2020. If so, request a refund from your lender. If your maintenance of a particular loan changes, you will need to cancel the old instructions and issue new ones.
7. Check if you need to revalidate your IDR plan.
Did you sign up for an income-driven (IDR) plan before the loan moratorium went into effect. According to the terms of IDR plans, you must update your details if your income, employment situation or family size change. This is known as checking your IDR plan.
If your income decreases or your family size increases, you may qualify for lower monthly payments. Go here for more details and re-verify your IDR if needed.
8. Bad debt recovery
Federal student loans become in default if they are not repaid after 270 days from the due date. Did you default on any of your federal student loans before the grace period begins? Since then, the status of these loans will remain unchanged. This means that they will still be in default.
Generally, there are severe penalties if you default on a loan. Your salary and tax returns may be garnished. You lose all federal benefits and may have to pay collection and court fees if you are sued for money. Also, your balance will be affected.
All of these results were discontinued with the payment being discontinued. But it will go into effect once student loan repayments resume. You better stand up to him now while you still have time.
Contact your loan provider and ask them about the criteria and process for refinancing your student loans. This may vary between servers. If you meet the criteria, fill out an application to clear your debts from default. If you don’t meet the criteria for a refund, talk to your provider about your options. You may qualify for a deferment or forbearance, which will delay your payments even further. However, with these options, interest will continue to accrue and the cost of the loan will increase.
9. Explore student loan consolidation.
With a consolidation, you combine two or more federal student loans into one. It has advantages and disadvantages. Benefits include easier payments, lower monthly payments, and access to additional payment plans. The main disadvantage is the loss of the benefits and protections associated with the original loans.
Take the time to explore student loan consolidation and its pros and cons to determine if this option is right for you. If so, ask the loan servicing officer about procedures and other requirements. Have everything lined up so you’ll be ready to apply for consolidation when you start paying your student loans again.
10. If you can afford to pay, consider paying now.
You’ll likely have some money left to start paying in January 2023. During the repayment period, the interest rate is fixed at 0%. This means that any payments you make during this time will go to principal, not interest. By the time student loan payments resume in 2023, interest will begin accruing on the reduced principal.
If you can afford it, don’t worry about when you will start paying your student loans again. Go ahead and start making those payments right away to remove your debt.
11. Consider all possibilities and explore payment options now.
You have set your budget and estimated how much you can save. I’ve also calculated how much you can realistically earn until your student loan payments start over again. You have sufficient funds but any emergency situation can derail your finances. It is recommended that you be prepared for any eventuality. In this case, it’s a good idea to explore your other options. Do this in advance and find out all the requirements and formalities so that you are prepared in case something happens.
One alternative worth exploring is student loan refinancing. This can help lower your monthly payments and make them more affordable. If you have good credit, you will also qualify for a lower interest rate, which saves you a lot of interest accumulating.
Don’t count on another patience extension and wait too long to arrange your money. Six months will pass faster than you think and the repayment period cannot be extended again. You don’t want to be unprepared if student loan payments resume in July 2023. Defaulting on a loan has costly consequences. Get started with the basics now and in six months you’ll have peace of mind when you have everything you need to start making your payments.
