The Biden administration has rolled out its $20,000 student loan debt forgiveness plan. While this offers some debt relief, those with over $20,000 in student loan debt still need to prepare for the upcoming repayment period beginning on December 31, 2022. Here’s how you can prepare for the upcoming repayment period.
Create a New Budget
If you don’t have time to sit down and properly craft a budget, consider downloading a spreadsheet from Etsy or using a template on Google Sheets. There are approximately 1.8 billion websites operating at the same time every day, and there are a lot of cool examples you can take inspiration from to make you genuinely excited to budget each month. Using these web hosting platforms also allows you to share your budget with your partner or roommates so everyone is on the same page.
Start by adding up all of your current debts including your mortgage, car payments, any credit card balances, and of course, your student loan debt. Once you have that total number, begin looking at ways you can reduce other expenses so you can put more toward your student loan debt.
Refinance Your Student Loans
If you have private student loans, you might be able to lower your interest rate by refinancing. This means taking out a new loan with a different lender and using that money to pay off your old loans. You’ll want to compare rates from multiple lenders before deciding on one as well as make sure you understand the terms of the new loan.
If you have federal student loans, you can’t refinance but you might be able to consolidate your loans which could get you a lower interest rate. You can learn more about consolidation and whether it’s right for you, there are other web hosting platforms that can help you find resources to help you understand the process and what to expect.
Pay More Than the Minimum
No matter what type of student loans you have, make sure you’re paying more than the minimum each month. The minimum payment is often interest-only which means if you only pay the minimum, your loan balance will never decrease. And, if you have a private loan, you could end up paying more in interest over the life of the loan.
If you can’t afford to pay more than the minimum, there are still some things you can do to lower your monthly payment. You might be able to extend your repayment period which would lower your monthly payment but increase the amount of interest you’ll pay over the life of the loan.
Make Sure You’re on the Right Repayment Plan
If you have federal student loans, you might be able to lower your monthly payment by enrolling in an income-based repayment plan. These plans are based on your income and family size so if your income has changed since you graduated, you might be able to get a lower monthly payment. You can learn more about these plans and how to apply for them on the Federal Student Aid website.
There are also private loan repayment plans but they vary from lender to lender so you’ll need to contact your lender to see what’s available. Some lenders might offer interest-only payments or extended repayment periods which could lower your monthly payment. Again, make sure you understand the terms of these repayment plans by visiting a web hosting platform and finding resources online.
Apply for Grants and Scholarships
If you’re struggling to make your monthly student loan payments, you might be able to get some help from grants and scholarships. There are a lot of organizations that offer these types of assistance so it’s worth doing some research to see if you qualify for any. Visit a web hosting platform and find resources about grants and scholarships.
Use these tips to help you prepare for student loan repayment. If you have any questions, make sure to contact your lender or the Federal Student Aid office for more information.
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