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4 Key Areas of Focus as the Student Loan Pause Comes to an End



Get ready now to start paying your student loans again.

For over three years — since March 2020 — millions of education loan borrowers have not had to make monthly payments.

That reprieve is ending soon.

On Friday, the Supreme Court rejected President Biden’s student loan forgiveness plan, which would have freed certain borrowers from $10,000 to $20,000 of education debt.

Student loan payments will resume in October. Here’s how to prepare.

I have worked with a lot of folks who have student loans. Some have struggled to make payments because of low wages, illnesses or family obligations, such as caring for aging parents.

But others, in my experience, have just been trifling.

If you fall into this category of borrowers, here’s what I recommend once the pandemic-related pause for your federal loans finally ends this fall.

If you want more personal finance advice that’s timeless, order your copy of Michelle Singletary’s Money Milestones.

Practice making your payments now.

Contact the company that services your loan to confirm your monthly payment. Then, starting in July, put that money in a savings account. This will give you a sense of how the loan payment will impact your monthly budget.

If the pinch to your finances is too hard during the practice months, contact your loan servicer to figure out your payment options.

A deferment or forbearance allows borrowers to stop making loan payments if they meet certain criteria, such as economic hardship.

We see so many stories of people with six-figure amounts of debt that we assume that’s the norm.

However, most student loan borrowers owe less than $25,000, according to the Federal Reserve’s latest report on the Economic Well-Being of U.S. Households in 2022. The Fed said the median amount of education debt in 2022 — among those with any outstanding debt for their own education — was between $20,000 and $24,999.

But if you need to go the deferment or forbearance route come October — because of, say, a job loss or extended illness — at least determine if you can afford to pay the interest that is due.

A lot of borrowers have encountered financial stress since graduating. Others dropped out before finishing college but still have loans to repay. Some students were duped by private for-profit schools that saddled them with significant debt for worthless degrees. These are the groups that would benefit most from the Biden administration’s proposed debt forgiveness of up to $20,000.

Or they went back to school for an expensive master’s degree that they thought would help boost their income. It didn’t, or at least not appreciably. Faced with high monthly loan payments, they asked for forbearance.

Years later, in shock at how their loans have ballooned, they ask: Why do I have to pay so much?

Don’t ignore your responsibility

For many Americans, the end of the student loan grace period translates to decades of debt.

The answer to your situation isn’t to ignore the liability.

Others assume the payments will be unaffordable without having investigated the various repayment plans offered by the Education Department. You may qualify for an income-driven repayment plan, which is based on your earnings and family size. You might not have any required payment because your income is too low.

At, you will find a loan simulator that can compare the plans. You will answer some questions that will help you determine the best option. For instance, you can indicate your goal is a low monthly payment, and the simulator will suggest a plan.

If you choose to avoid the consequences of failing to address your loans, things can get ugly, including possibly a paycheck garnishment.

If your debt is here to stay, take action. Don’t ignore it.


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