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Worried about your student loans? What we know

With the start of a new school year upon us, college students (and alumni) across the U.S. are facing the “will we or won’t we?” moment that nobody asked for: Will we or won’t we have to pay back student loans?

At the end of August, the pandemic driven federal student loans payment pause is set to expire. While there are talks of some level of student loan forgiveness, with a decision by the Biden Administration expected before the expiration of the current moratorium, no one knows for sure the details of such a program. As usual, I recommend being prepared for the worst and hoping for the best.

As the end of the month quickly approaches, there are lots of concerns and questions about what a restart of loan payments will mean. Here’s what we know and how it could impact your budget.

How and when student loan payments will begin again

The student loan pause has been extended several (six!) times. In fact, President Biden recently indicated that another extension of the suspension is possible. The situation is still very much in flux. Let’s get prepared so you’re not caught off guard when your loan is due.

What we know: You’ll have at least 21 days before your next payment is due. A billing statement with your payment amount and due date will be sent to you, but you can also go online, call or email your loan provider to get these details. If you use auto-debit for payment, those payments likely won’t restart automatically, and you’ll need to re-enroll for that service.

What are my options?

You might feel overwhelmed by the prospect of fitting monthly student loan payments back into your budget, but don’t panic. Consider some of these options for paying down your debt.

Reducing payments

If debt has sidelined your other financial goals, you’re not alone. A good place to start when looking for ways to make school loans more manageable is the government. They have plans like income-driven repayment (IDR) plans and the public service loan forgiveness (PSLF) that can help reduce your monthly payment. The IDR determines your payment amount based on your income and the PSLF is available for teachers, members of the military and public service workers.

If your income is low enough, you may even be eligible to eliminate your loan payments completely. Most importantly, plans like these can give you room to make progress on other financial goals, like paying down other types of debt, saving up for a down payment on a home or building up an emergency fund.

Pro tip: Have questions about qualifying for IDR? The Department of Education has a lot of great resources . See the new requirements for PSLF and find out if you’re eligible here .

Employment benefits

If you’ve gotten a new job recently or haven’t checked in on your benefits in a few years, this is a good time to dive into the fine print. Some companies have matching programs and other benefits to help their employees repay student loans. You won’t want to miss out on this benefit if it is available to you!

Refinance your loans

Do you owe multiple loans to multiple servicers? Refinancing or consolidating can simplify and lower your monthly payment, give you more time to pay down your debt and possibly help you lock in a lower rate on your outstanding balance. With more of your payment going toward the principal each month, you could get out of debt that much faster. Make sure you talk to multiple consolidators if you want to explore this route – you’ll want to make sure you are getting the best rate.

Tips for reaching your financial goals

While the worst of the pandemic may be behind us, a lot of us are still facing difficult challenges — like inflation and career changes. If you still feel like you’ve yet to fully regain your footing, that’s okay! No matter your job or particular financial situation, you can take manageable, actionable steps to achieve your goal of paying off student loan debt.

Working the cost into your budget

It may be time to reevaluate if you’re having trouble finding room in your monthly expenses for your student loans. Take a look at what you’re spending each month and identify where you can cut back. If you’re still struggling, try taking a different approach. Budgets are not one size fits all. Try different strategies until you find one that works for you.

Finding ways to earn extra cash

Scrimped and saved to the best of your ability but still coming up short when it comes time to pay your loans? Earning extra money from a side hustle, negotiating a promotion or taking on more hours at your current job could give you that boost you need to make it over the finish line.

Consider increasing your payments (with care)

Whether it’s a sudden windfall, a salary increase or a tax return that finally came in, if you find yourself with extra cash, you might be tempted to use it to make a larger loan payment that month. That’s a good thought, but don’t go overboard. It’s important to consider your other high interest debts and make sure your emergency fund is healthy.

Put student loan debt in the rearview mirror

The future of student loans is anything but clear right now. And while it might be tempting to assume they’ll be delayed again or forgiven altogether, neither of those things are guaranteed. The best we can do is move forward with the information we have. With proper planning and strategy, you can be prepared when student loan payments restart and move forward with financial confidence.

Lindsey Bell is an award-winning investment professional with a passion for personal finance and more than 17 years of Wall Street experience. Bell’s unique ability to connect the dots between data and real life and craft bite-sized money ideas that people can use and apply stems from her deep background as an analyst, researcher and portfolio manager at organizations including J.P. Morgan and Deutsche Bank. She is known for demonstrating why and how an understanding of all things money improves a person’s finances and overall well-being. An ongoing CNBC contributor, Bell empowers consumers and investors across all walks of life and frequently shares her insights with the Wall Street Journal, Barron’s, Kiplinger’s, Forbes and Business Insider. She also serves on the board of Better Investing, a non-profit focused on investment education.

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