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Tips for fitting student loan payments into your budget

What we'll cover

  • When student loan repayments resume

  • Ways to prepare for loan repayments

  • Ways to make room in your budget

Along with the memories made and knowledge gained, many adults also carry student debt with them post-college. And as the government pause on loan repayment comes to an end, you may be among the almost 44 million Americans who have student loan payments to make — maybe for the first time. Here's how you can be prepared.

When do student loan payments resume?

The federal interest-free payment pause expired this fall after being enacted during the pandemic. On September 1, 2023, loans began accruing interest, and borrowers need to make payments starting in October.

What is the temporary on-ramp period?

To provide borrowers assistance, the federal government has announced an “on-ramp" period for the first year of repayment. This means that from October 1, 2023 to September 30, 2024, any missed, late or partial payments will not result in a negative report on your credit history. Plus, borrowers won't be in danger of default or having their loans sent to collection agencies.

Loans will continue to accrue interest, but this temporary measure is designed to help vulnerable borrowers over the next 12 months.

How to prepare and budget for debt payments

Maybe you've been accounting for student loan payments in your budget all along, and their impending restoration will only be a matter of turning on automatic payments. But if that's not the case, you certainly aren't alone — and you don't need to panic.

To start, figure out how much you will owe monthly. You can do this by contacting your loan servicer. If you aren't sure who yours is, visit the federal student aid website. Be sure to confirm your current contact information and ask about payment plan options.

On September 1, 2023, loans began accruing interest, and borrowers need to make payments starting in October.

Next, take a critical look at your monthly spending. If you don't yet have a budget in place, there's no better time than now. Using a budget method that you like, try to find areas you can trim or eliminate costs.

If you put money into a savings or investment account regularly, consider transferring those funds to your student loan payments as loan interest rates often outweigh returns on savings.

After you determine how much of your existing budget can go toward your school loan, you might find you're still falling short. If this is the case, look for opportunities to increase your income. This might mean taking on a part-time job on the weekends, trying out gig work (like ridesharing or food delivery), freelancing or monetizing a hobby. Or, you might seek out a raise at work or take on additional hours or overtime, if possible. Any additional earnings can go toward your loans and keep you from accruing additional interest.

More strategies for managing student loans

There's no denying it: Student debt can be a stressful financial strain. But while you probably aren't excited to welcome back the payments, it doesn't have to break your bank account.

With Ally Bank's Savings Account , you can set up buckets and boosters to automatically set aside money for your student loans and let our technology identify more areas you can afford to save. Keeping your money in a safe and secure account (and one that earns interest) is a smart way to maximize your dollars as you repay your loans as quickly as possible.

Prepare, don't panic

When the interest rate freeze on student loans ends this fall, accommodating the additional monthly bill may feel like an adjustment. If you can, start putting aside money for the payments now. Or at least, begin thinking about where you can cut spending or add income. That way, you won't sweat it when payment day comes.

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