Nearly 44 million borrowers will have to start paying their student loans on September 1st. The interest free payment pause, started in March 2020, under President Trump, and after 3 years and 9 extensions later, it will resume this next month. This will certainly cause more strain on consumers’ already tight budgets. With rising prices, high interest rates, and inflation consumers turned to credit cards and BNPL programs to navigate the current economic turbulence, and we are now seeing the effects of it. Delinquency rates on credit card payments, auto loans, and mortgages are increasing and have surpassed pre-pandemic levels. As student loans resume, consumers will be faced with yet another monthly bill that can affect their budgets.
Here are a couple of suggestions on how to manage your student loan payments:
- Contact your student loan provider to make sure that your auto-pay is turned on. Auto pay is optional, but borrowers will save 0.25% on their interest rate if they choose to enroll.
- Apply for income based repayment options. This can help you lower your monthly bill.
- If you have more than one loan, try consolidating them so you can better manage your bills.
Remember that not paying your student loan can and will affect your credit. Suggestions for taking control of your finances: Take a look at your budget, negotiate with your creditors, consolidate your debt, consult a financial advisor, prioritize your spending, work on side gigs if possible, and cut spending. Living within your means is the only way to take control of your finances.