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  • As of October 2023, student loans payments are back, but there are options if you can’t afford them.
  • Check your payment plan, and make sure your income is correctly reported.
  • Avoid the temptation to refinance your federal student loans.

As of October 2023, monthly payments are once again due on federal student loans after being paused since March 2020. While many borrowers are just fine picking up with repayment wherever they left off, it’s only inevitable that some Americans will have problems resuming payments due to ongoing hardships from the pandemic, a loss in income, or a budgeting issue that has left them struggling to keep up with other bills, let alone their student loans.

Fortunately, there are solutions for people who can’t afford student loan payments now. We reached out to experts to learn about all the top options out there. Here’s what they suggested.

1. Remember, you still have time if you need it

First off, you should know that you still have a year to get back on track without any major consequences to your finances. Jared Costigan, a Student Loan Planner consultant, points out that the White House has announced an “‘on-ramp’ to repayment” that gives borrowers 12 months to figure out their next steps without damage to their credit. According to the White House statement, “borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.”

Costigan says that while payments are not due and your loan remains in good standing during this time, interest will accrue during this period and your loan balance will be higher when you exit forbearance and re-start repayment. This means you should only continue skipping payments as a last resort.

2. Switch your repayment plan

Robert Farrington of The College Investor also says it’s crucial to figure out if you’re even on the right repayment plan for your student loans, and to consider new options.

He points out that people who graduated college in the last three years were likely put on the standard 10-year repayment plan by default, which has the highest monthly payment over all. Borrowers who don’t want to pay the payment on a standard 10-year repayment plan should look into income-driven repayment plans (including Biden’s new SAVE repayment plan). This plan has a higher threshold of income that counts toward $0 monthly payments, and administration officials say even those who don’t qualify for a $0 monthly payment will still save an average of $1,000 per year compared to other income-driven repayment plans.

3. Update your income information

Farrington adds that, if you’re already on an income driven repayment plan and you feel like your payment is too high, you need to double-check that you certified your income and that your payment reflects your current income.

Ultimately, this will help you make sure your income-driven plan is giving you the best possible monthly payment based on what you earn right now, and not how much you earned in the past.

You can head to studentaid.gov and follow the directions to make sure your certified income is correct.

4. Avoid the temptation to refinance

Financial planner Danny Cieniewicz of Hyperion Financial says it can make sense to refinance private student loans if you can get a lower interest rate, a lower monthly payment, or both. However, you’ll want to give caution to the idea of refinancing federal loans with a private lender.

This is because these loans have protections in place, including access to income-driven repayment options, loan forgiveness programs like Public Service Loan Forgiveness (PSLF), and hardship programs like deferment and forbearance. When you refinance federal loans with a private lender, you give these protections up.

5. Figure out ways to earn more or spend less

Mark Kantrowitz, student loan expert and author of “How to Appeal for More College Financial Aid,” agrees that switching repayment plans could be the way to go. If you’re still unsure how to afford the monthly payment, however, you may need to figure out ways to spend less or earn more money.

Good options include “asking your boss for a raise, getting a part-time job in the evening and weekends, cutting expenses and selling stuff you no longer need,” he said. Also track spending for a month and tag each expense as mandatory (a need) or discretionary (a want), and compare the total discretionary spending with your student loan payments.

Finance educator Ben Markley of You Need a Budget says that using a monthly budget and giving every dollar “a job” can give you more clarity. Take the time to write down all your expenses and normal spending habits compared to your income and figure out where you want each dollar you earn to go in the future.

“This gives you a clearer sense of what your money is doing, what you can actually afford, and where you might want to make changes,” said Markley. “Armed with that knowledge, you can make changes that will put you in a better position over the long-term.”

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