Four Ways to Prepare for Student Loan Repayments

Student loan forbearance is ending at the end of August and interest will resume on September 1, 2023. With federal student loan repayments beginning in October 2023, it is beneficial for borrowers to start preparing for repayment now, instead of waiting for the bill to arrive. Here are four ways you can start preparing for federal student loan repayments:

1. Review your budget: Evaluate your current cash flow and find out what your monthly loan payments will be. Depending on your circumstances, it may be beneficial to start setting aside that monthly payment amount before loan repayments are due. If you find that your expenses leave you with little cash left, you can start reducing your spending habits to create more room in your budget for your loan repayments. 
2. Take advantage of the forbearance period: Federal student loans were set to 0% interest during the forbearance period. Restarting payments early can help maximize interest relief by reducing the principal balance. However, keep in mind that any payments made between March 2020 and August 2023 are applied to any accrued interest first.
3. Evaluate repayment options: Review your repayment plan and determine if it's right for your current situation. Before your first bill arrives, you may want to consider exploring more affordable repayment plans such as an income-driven repayment (IDR) plan; especially if your family size has recently changed. That way, the adjusted monthly payment amount is reflected in your bill statement. Enrolling in auto pay could also save you 0.25% on your interest rate.
4. Update your contact information: You will want to make sure your contact information is up to date to ensure you receive important communication from your servicer regarding your loan repayment.

For more resources on navigating student loan repayments, please visit Enrich - Provident's free financial wellness center.
For the most recent information and updates on student loans, please visit the Federal Student Aid Office of the U.S. Department of Education website.