Last week’s U.S. Supreme Court decision striking down the Biden administration’s student loan repayment plan means millions of borrowers will now have to plan for the return of those monthly payments.
“Many Americans are feeling the effects of inflation and higher interest rates. The ruling will certainly impact monthly budgets and personal spending.” said Donald Kerr, Director of Student Lending and College Services at AAA Northeast Bank, “Interest will begin accumulating on student debt on September 1, 2023, and first payments will be due in October. Now is the time to plan for repayment.”
Advice for individuals with student loans in preparation for repayment:
• The company that manages your student loan will be contacting you to let you know the exact date your next loan payment will be due and the amount you need to pay as well.
• Make sure the company holding your student loan has your current contact information including e-mail, phone, and mailing address.
• If you do not already have one, create an online account with your lender so you can be proactive and view your repayment information as soon as it is available.
• If you do not know who is currently holding your student loan or it has been transferred and you have lost track of it, you can look up who is managing your federal student loan at studentaid.gov.
• Once you know when and how much you will be paying every month, you will need to set aside this amount of money in your monthly budget. Signing up for an auto payment option where the payment is deducted from your account every month at the same time is a good way to ensure you stay on track and build a positive credit history.
• If you are unable to make the monthly payment amount, there are options to reduce your payment. Contact the lender managing your loan and explore options to reduce your monthly payment.
Options include income-based repayment plans that make sure your monthly payment is affordable based on your income level. Graduated repayment plans that start your payments low in the beginning but gradually increase your monthly payment over the life of the loan.
Extended repayment option which increases the number of years you have to repay your loan resulting in a lower monthly payment. Only use these repayment plans if absolutely necessary as they can increase the total cost of the loan and cost you more in the long run.
If you follow these tips, you should be ready to start repaying your student loans but if you still have questions or need advice you can visit the repayment section at studentaid.gov or call the company that manages your student loan directly.
