5 tips to prepare and make payments more affordable when Federal student loan payments resume in 2022
Update your address or contact info if needed
Make sure your contact information is up to date in your profile on your loan servicer’s website. Wrong contact information could make you miss important updates.
Here’s a checklist.
- Email address
- Physical mailing address
- Phone number
- Bank account information (It’s been a while; maybe you don’t use the account you have linked to your loans anymore.)
- Take a look at the minimum amount you’re required to pay
Your situation might have changed during the pandemic as you might have used the money you would have needed to spend on student loans to pay for something else. So it’s a good idea to get info about your payment and take a look at what your spending has been like over the last few months to figure out how much of a monthly student loan payment can fit into your budget. Be ready as your payment will be due no sooner than 21 days after servicer sends the billing statement.
- Take action now if you want to lower your monthly payments
If your situation has changed, and the required minimum payment is a bit too high one option to consider is enrolling in an income-driven repayment plan. With this payment plan, your required minimum payment is dependent on how much money you’ve earned that month and family size, and if your pay is low enough, they can reduce your monthly payments to as low as zero dollars.
You can apply for an income-driven plan through your servicer’s website in about 10 minutes and processing should take no more than two weeks.
But there are some cons to income-driven plans. One major downside to these plans is that payments may be small or even 0 which may feel great in the moment but you are accruing interest on that and multiplying your loan debt year over year. If you plan to take advantage of the income driven repayment plan don’t think it as your long-term repayment plan.
- Reach out to your loan servicer if you’re unable to make payments
Reach out to your servicer and have that conversation as soon as possible, so you know what your options are. If, for example, you’re currently unemployed, one option you may have is unemployment deferment. This lets you postpone your loan payments for up to another 36 months.
- Be proactive and take a look at your options now!
The time to act is now, before the year-end. To learn more about the end of forbearance go to www.Studentaid.gov.
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