Student loans are officially coming back, so let’s be proactive!

Yes, it’s true. We have all heard the news. There will be no more extensions to the federal student loan pause as part of the new debt ceiling deal. The federal student loan pause lasted over three years. A question we commonly hear is, “How am I supposed to adjust my financial plan to build my student loan payments back in? My life has changed so much in three years!!” We hear you! Here is what you should be doing to prepare:

• Login to studentaid.gov and go through the loan simulator to see what your student loan repayment options are. This simulator will show you which payment payment plans you are eligible for, giving you insight on your monthly payment, pay off date, and loan forgiveness opportunities.
  • Update your family size if it has changed. It may seem minor, but this affects your monthly payment if you are on an income-based repayment plan. The more people that are in your household, the lesser your monthly payment. Unborn children included!
• Take a look at your budget NOW
  • Use the next couple weeks to understand your cash flow, and find places to cut back to integrate your upcoming student loan payment.
  • If you already have an idea of what your student loan monthly payment amount will be, start putting this amount towards your savings account. This will help you mentally prepare to not have access to this amount in your cash flow. 
• We are all still hanging on the edge of our seats to see if student loan forgiveness will come to fruition. Unfortunately, it is still very unclear if this will take place and what the Supreme Court will ultimately decide later this month. Prepare for the outcome of forgiveness not occurring and re-adjust if forgiveness happens, not the other way around.

Facts you need to keep in mind:

• Student loan repayment should be centered around your goals. If you’re looking to buy a home and want the lowest payment possible, find a plan that works for you. If you’re looking to pay off your student loan debt as soon as possible, find the plan that works for you. Don’t be pressured to do the standard 10-year plan if it doesn’t work for you.
• You will continue on the repayment plan you chose before the federal pause began, unless you apply for a new one. If you’re a new grad and have not picked a plan, you will automatically be a part of the standard 10-year plan.

August 30th is the deadline in which interest will begin to accrue. The due date for your first payment date will vary, but you will receive a billing statement at least 21 days before your due date.

All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.