After Deferment: Preparing to Restart Student Loan Repayment

PSECU student loans don't have to be a heavy burden

If you’re like many federal student loan borrowers, you may not have made payments on your federal student loans once the CARES Act was passed in March 2020, granting relief to borrowers of certain federal student loans. Before the relief measure expires, it’s important to put a plan in place for when your student loan repayment begins. Read on for tips on how to prepare and what you can expect.

Know When You’re Required to Begin Making Payments Again

According to Federal Student Aid, you should receive reminders from their office, as well as from your loan servicer(s), of when your repayments are required to begin again. In order to receive these notices, you’ll need to make sure that your loan servicer has your current contact information on file.

It’s also important to remember that it’s ultimately your responsibility as a borrower to stay up to date on your loan terms and ensure you make your payments on time. If you need help staying on track with making your payments, consider our free bill payer service, which allows you to quickly and securely manage your bills.

As always, if you have questions about your loan and/or required payments, it’s best to reach out to your loan servicer directly to get clarification.

Know How Much You’ll Be Required to Pay

It’s possible that your loan payment amount will change once the suspension of payments ends.

Federal Student Aid shares that for borrowers on a traditional repayment plan (such as standard, graduated, or extended) your payments will be recalculated based on your current principal and interest balances, as well as the remaining repayment period on your loans. According to their website, the payment could go up or down depending on various factors for borrowers on these plans.

If you’re on an income-driven repayment plan, Federal Student Aid reports that your payment amount will remain the same.

You can also use their Loan Simulator to help learn more about repayment options.

Be Prepared for Automatic Withdrawals

If you had auto-debit payments set up for your impacted federal student loans, Federal Student Aid indicates that these debits will resume automatically on your first due date after repayment begins. Make sure the funds you need will be available to avoid overdrawing your account. If you’ve changed financial institutions and would like your payments pulled from a different account, you’ll need to update that information before payments resume.

Keep in mind that some companies may require you to update autopay information in advance of the due date in order for the payment to be processed on time. If you know you want to make a change, contact your loan servicer as soon as possible to make sure they have enough time to update your information before your payment is due.

Student loan repayment

Adjust Your Budget to Account for Payments

You may have redirected the money you were using for your student loan payments to other expenses during the suspension of payments. If that’s the case, you’ll want to plan ahead now to make sure you’re prepared to adjust your spending to account for restarted payments.

How easy or difficult this may be will likely depend on what you’ve been doing with the money you were putting toward your student loans each month. For instance, if you were putting that money into savings, beginning to repay your loans again may not impact your ability to afford other expenses or meet other financial obligations since the amount of money you have available to spend will stay the same.

Resuming student loan payments may impact you more if you used the money you were putting toward your student loans to help balance your budget. For instance, if you were already struggling to pay your student loans before the suspension of payments, you might have redirected that money to pay your monthly bills or manage other debts, like credit card payments.

Take time before your payments resume to look over your budget and see where adjustments may be necessary. Depending on where you stand, you may need to make small adjustments, like cutting back on takeout, or identify larger changes, like lowering other debt payments by refinancing loans or transferring high-interest credit card debt.

If you need help getting started, check out our quick video tutorial on creating a spending plan and our budgeting worksheet.

Ask for Help Before You Miss a Payment

If you’re worried that you won’t be able to afford your student loan payments when they resume, reach out to your loan servicer now. Don’t wait until you miss a payment to ask for help. Missing a loan payment can have a negative impact on your credit score, which can impact many other areas of your life, from getting approved for a mortgage to your car insurance rate.

While the best option for you will depend on your individual circumstance, Federal Student Aid shares that an income-driven repayment plan is available for eligible borrowers. These plans are based on your income level and can make your payments as low as $0 a month.

Money Management During Financial Crisis

Maybe you’re feeling stressed about student loan payments beginning again. Or maybe you’re facing general money management challenges. Whatever the case, you’re not alone if you’re struggling with financial hardship.

To learn more about managing your money in times of crisis, visit our blog.

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.