What You Need to Know about Student Loan Payments
Student loans have become a major financial stressor for many individuals. Now that federal student loan payments have resumed, you may be concerned with how these payments will impact your monthly budget. Here are some details on when payments will resume and tips on how you can prepare.
Payments Resuming in October 2023
During the COVID-19 pandemic, the United States government added in relief measures that paused student loan payments which meant that borrowers weren’t required to make structured payments for over three years. Now as of September 1, 2023, interest will start accruing on student loans and payments will start again in October 2023. Since it has been awhile since student loan payments were due, double check that your contact information, monthly due dates, and payment amounts are correct.
Interest Rates & Refinancing
Like any other loan, interest rates play a huge part in how it impacts monthly payments. It’s important to know if your student loan has a fixed or variable interest rate. If you have multiple student loans with different interest rates, paying off the loan with the highest interest rate will mean paying less interest in the long term. We highly encourage that if you’re able, try to make more than your minimum payments to pay off your student loans faster.
Refinancing could be helpful if you have a high interest rate student loan; and a good credit score would allow you to potentially qualify for lower rates. A lower interest rate could reduce your minimum payment and help you pay off your loan quicker.
Making Loan Payments and Why it Matters
With student loan payments resuming, it may be difficult to factor them into your financial planning. If you think you will have a hard time making your student loan payments on time, we have a couple tips that can help. You can request additional relief from your loan servicer and there are federal loan repayment plans that will lower your monthly payments compared to the standard repayment plan.
During tough financial times, it may be tempting to ignore your student loan payments. However, it’s important that you make all required loan payments on time. There are significant consequences to missing loan payments such as negatively impact your credit and even the withholding of your wages which would be sent to your loan servicer.
“Student loans are a vital part of an individual’s financial building blocks. Making sure payments are made as agreed upon is a great way to establish and build a strong credit score. With good credit comes more opportunity to obtain additional luxuries in the future from car loans to mortgages to possibly starting your own business. Without a strong credit score, none of that is possible,’ says Amy Branning, Vice President, and Commercial Lending Officer.