KALAMAZOO, Mich. — Student loan payments are set to resume in October so borrowers are encouraged to start figuring out their budgets and considering repayment options.
“Some borrowers, they may have graduated from college and have not made a payment in about three and a half years,” said Todd Mora, program manager for the Sanford Center for Financial Planning and Wellness at Western Michigan University.
If you haven’t had to make payments yet, Mora says to start creating an itemized list of all your bills.
“Try and do a, basically a cash flow, which is a simple document that just shows the money coming in and where it's all going to go but do it prospectively, meaning doing it out into the future,” he explained.
Borrowers are given a variety of options based on income. Those options include President Joe Biden’s new SAVE plan, which calculate your monthly payments based on your income and family size.
“They then will limit the amount that you will make in debt payments and potentially there would be a forgiveness after a certain period of time, most likely it'd be 20 to 25 years,” Mora said.
If you’re working for a nonprofit or a governmental agency and want to apply for Public Service Loan Forgiveness in the future, pick your plan carefully. Some plans don’t qualify for that program.
Mora adds that selecting a plan now could save you from making payments later that are not in your budget.
“If borrowers don't set something up with their loan servicer other than the standard repayment plan, that's the one that they'll default into,” Mora added.
If you need to, you can split your monthly payments into two, or make additional monthly payments to bring the balance down quicker.
To view your student loans, find your service provider and figure how much you owe, click here.
