With student loan payments set to resume in October, many borrowers are already worried about how they will fit these payments into their budgets. A recent GOBankingRates survey found that 42% of student loan borrowers will have to tighten their monthly budgets, and 31% will no longer be able to pay all of their bills.
Jaspreet Singh, founder of the Minority Mindset YouTube channel, said that instead of waiting for the fall to figure out how to add a student loan payment back into your budget, the better option is to start preparing now.
“Do not wait for student loan payments to restart — get ahead of the curve while you still can,” he told GOBankingRates. “It’s been over three years since anyone has made a student loan payment so naturally, most people stopped budgeting for their student loans.
“At the same time, the cost of living has gone up drastically,” Singh continued. “In fact, 62% of Americans are living paycheck to paycheck, so when millions of Americans have to start paying $450+ a month for their student loans again, it’s going to hurt.”
Singh recommended that borrowers do these three things to be prepared for when the payments begin again, and to continue to thrive financially when payments officially resume.
Start Putting Money Aside Now
Don’t wait until the last minute to set aside money for your student loan payments.
“Take advantage of the student loan pause,” Singh said. “Start putting money aside today — aggressively — for your student loans. Yes, you should start preparing for student loan payments before they start.”
Pay More Than Your Minimum Payment
Prioritize paying off your student loans so you can eliminate them as quickly as possible.
“When payments restart in the coming months, make a large payment towards your student loan balance,” Singh said. “As a tip, make sure the additional payment is being used to pay down your principal balance instead of pre-paying your future payments. That will reduce how much money you will have to pay in interest.”
You should be dedicating a portion of your monthly budget to investing, and Singh said you shouldn’t stop investing when payments resume.
“Do not stop investing to start making your student loan payments again,” he said. “Instead, cut back on your lifestyle or work to earn more money. Your future self will thank you.”
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Gabrielle Olya contributed to the reporting for this article.
Survey methodology: GOBankingRates surveyed 1,028 Americans ages 18 and older from across the U.S. between June 27 and June 29, 2023, asking nine different questions: (1) Have you used Artificial Intelligence (AI) for any of the following? (Select all that apply.); (2) How much do you think you’ll need in monthly Social Security income in order to retire comfortably?; (3) How much do you spend on your average Costco trip?; (4) How often do you go to Costco?; (5) What items do you purchase most frequently at Costco?; (6) How do you think the restart of student loan payments will affect the economy in 2023 and beyond?; (7) How much student loan debt do you currently have?; (8) How will the restart of student loan payments affect your financial situation? (Select all that apply.); and (9) How much did you (or do you expect to) inherit from your parents/relatives? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.