The spooky month of October is about to get a little scarier. After a three-year pause that began in March 2020 amidst the pandemic, the U.S. Department of Education has announced that payments will resume for people with student loan balances. The pause, which has been extended six times, reached its definitive end with Congress recently passing a law that prevents further extensions.
We realize this is creepy news for college students and grads but there are a few things you can do to prepare for your dreaded due date.
Firstly, make certain of what you actually owe. The Federal Student Aid website is the easiest and most efficient way to access this information. You'll first need to log in with your FSA ID (which you can create at www.studentaid.gov if you don't have one already.) Once logged in, you can view the original principal amount, current balance, and interest rate. Keep in mind that current loan amounts are subject to change. And if you have private loans, this information won't appear on the Federal Student Aid website. You have a few options here: you can log into your lender's website or app—if you're unsure of who your provider is—you can visit AnnualCreditReport.com to access your free, weekly credit report which lists loans in your name. A third option is to contact your school's financial aid office directly. They can likely help track information, as most private loans are school-certified.
Next, you may need to evaluate your repayment plan. Based on your current monthly income and expenses, you might find that resuming payments for federal student loans could wreak havoc on your current budget. The Department of Education has a loan simulator that can provide options if you're concerned about managing the additional expense.
While on the subject of loan affordability, you might want to consider consolidating your student loans. This option will depend on your specific financial picture, so be sure to do your research. A standard loan repayment is ten years but with a Direct Consolidation Loan, you could have a repayment timeline of up to 30 years. This can make your monthly payments more affordable as they'll be spread over a longer repayment period. But take note - Not all loans are created equal. FFEL and Perkins Loans don't qualify for certain income-driven repayment plans or Public Service Loan Forgiveness (PSLF), for example. But if you combine those loans into a Direct Consolidation Loan, you can gain access to those programs.
If you're feeling anxious and overwhelmed when it comes to preparing your finances around student loan repayment in October, we can help. At Telhio we can personalize a financial plan specifically for you and help you consolidate high-interest debt. Our lenders can help review your budget and develop a personalized plan to mitigate the impact of student loan repayment when October arrives. We also offer members access to Greenpath financial counselors to answer your student loans questions. Stop in a central Ohio Telhio branch or visit us at www.telhio.org to get started.