NASHVILLE, Tenn. (WTVF) — Beginning October 1, student loan repayments will begin to resume meaning some borrowers will be entering repayment not only for the first time, but for the first time in years.
Not everyone has the exact same due date.
Whether it's your first time or you're restarting payments following the COVID-19 payment pause, we've gathered all you need to know to make sure you're prepared.
At least 21 days before your first due date in October you should receive a payment amount. If you recently left school (meaning within the past six to nine months) you will not have a payment due in October. This time period is your automatic grace period which lasts six months.
There are circumstances in which your grace period may have been impacted per the U.S. Department of Education including if you were active duty military, returning to school or if you consolidated your loans during that period.
Now lets assume you're outside the grace period. The amount you will pay each month depends on which repayment plan you choose. There are plenty of loan strategies you can choose from and to figure out how you can lower your student loan payment, use the Loan Simulator provided by the Department of Ed.
Another way to lower your payments is to sign up for auto pay which gives you a 0.25% interest rate deduction on Direct Loans.
Note: If you were enrolled in auto pay before the payment pause double check that you are still enrolled.
If you're struggling to make payments, you're urged to stay in contact with your loan servicer because they can help you find a plan that will help you. Remember that you can change your repayment plan at any time for free. If you receive your first payment and are unable to make payments, check in with them. Whether it's to stay on track or get back on the payment track, the most important thing is to avoid going into default.
Financial advisor said borrowers should consider whether it even makes sense to pay off their loans in the first place. "There are a series of payment plans called income driven repayment plans and those payment plans - instead of seeking to pay your loans off in full - you pay them for a certain period of time." He said at the end of that period any remaining balance is forgiven.
But there are new options to consider like the Biden administration's SAVE income drive repayment plan. "The SAVE plan is really unique because before they calculate your income, these plans allow you to take a certain amount of it off the table," said Harrison.
Harrison says there is one thing you should not do. "The biggest misconception is that if you can't pay the loans you should just avoid it.
Default happens when you're at least nine months past due on your loans. This can damage your credit and future borrowing ability.
Lastly, the most important thing above all is to prioritize your health. Student loan and debt payoff in general is extremely stressful, try to break things down into smaller more manageable payments and work with experts to help find different refinancing options.
It’s also possible to pause payments through forbearance or deferment, but you may accrue interest at that time.
You can also check and see if you qualify for loan forgiveness if you're a teacher, government employee, work for a nonprofit, etc.
Check if you follow for forgiveness
