For the last year and a half, most student loan borrowers have been off the hook from making payments, but in the New Year that is set to change.
The postponement of student loan payments is set to end Jan. 31, 2022, and now is the time to start preparing for this transition if you haven’t been making payments.
Don’t fret—there are plenty of options for repaying your loans in a way that will fit your current budget, and we’ll guide you through those right here.
First things first, you’ll need to assess what your budget is and how much money you can afford to comfortably put toward your student loans each month. Has your income increased or decreased in the last year? Are you struggling to catch up from being out of work during the pandemic? These are all things to consider.
Next, contact your student loan provider(s) to find out how much your payments are scheduled to be in January. If the amount is more than you are able to pay, you don’t need to panic. Most student loan providers are more than willing to work with you to come up with a repayment plan.
The best option for easing your payments is to apply for an Income-Driven Repayment Plan (IDR). This option takes your income and family size into account and sets your monthly payments at a rate that fits your discretionary spending for 12 months. You can reapply each year, and there is no cap on how many times your loan can qualify for an IDR.
In some cases, you can qualify for a loan forbearance, which will pause your payments all together for a year. This is not an ideal option because interest continues to build during this period and is added on at the end of your loan.
Neither of these, or any other repayment options, have a negative impact on your credit, as long as you make payments on time.
Also remember, any payment plan you set up can be changed without penalty. If your income or life situations change, communication with your student loan provider is key.
For more information on repayment options or to apply for an IDR, visit studentaid.gov.
