The Supreme Court has overturned Biden’s student debt forgiveness plan. While student loan payments were suspended during COVID, interest fees will resume in October 2023. It is essential to understand your numbers now to avoid feeling stressed and overwhelmed in a few months.
I had over $70,000 in student loan debt. My payments were between $500 and $700 a month. I never fought or got angry with the payment because I knew that $500-$700 would always be needed in my budget. It might have different names in the future, like “car payment” or “childcare,” but I would always have a similar payment.
That is why I encourage you to plan your student loan payments into your budget now! If you aren’t sure how much you will owe, make an estimate and start allocating that money aside. Not only will this put you ahead of the game in October, but it will save you so much stress. So don’t get discouraged. Stay in control of your finances with these four easy tips to pay down student loans drama-free!
As you prepare to start repaying student loans again, consider…
[08:16] I want you to incorporate your student loan payment into your budget now.
[10:13] I want you to put a reminder in your calendar to set up auto pay on your student loan payments.
Tune in to this episode of Money Files to learn four tips to help with repaying student loan debt.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
IF YOU LOVED THIS CONVERSATION ON 4 WAYS TO PREPARE FOR STUDENT LOAN PAYMENTS, CHECK OUT MY EPISODE ON HOW TO BREAK THE DEBT CYCLE BY UNDERSTANDING YOUR SPENDING HABITS!
Transcript for “4 Ways To Prepare For Student Loan Payments”
Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work every day with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Hello and welcome back to another episode of Money Files. I hope you guys are having a great month wherever you are in the world or whenever you are listening to this episode. So I’m recording this episode at the beginning of July and I want to talk to you about something that I know is on, like top of mind for my clients and that is student loan repayment. For those of you who don’t know about my story, I had student loan debt over $70,000 of student loan debt and I paid it off before, or excuse me, I paid it off actually after I bought a home. I feel like that’s always one of the things people think about as that’s some form of debt that I have and I won’t be able to buy a home if I have student loan debt. I know there are varying degrees of student loan debt, but I was paying anywhere from $500 a month to $700 a month.
And one of the ways that I thought about my student loan debt is like honestly in my twenties I was like, okay, this $500, $700 payment, I definitely had thoughts like, oh my goodness, this payment sucks. But I also recognized at least for myself that I wanted to make more money because even with that 500 to $700 I thought about at the time, I was like, okay, that could be a car payment. If I had a child that would be like some need for my child. So for me, I guess you could say I got comfortable with my payment. I didn’t have a posture where I was trying to fight the fact that I had to pay student loan debt. It wasn’t a good use of my energy to think about being upset about having to pay the student loan debt.
Instead, I really thought about how can I actually increase my income because I feel like I’m always going to have this 500 to $700 payment. It just won’t be called student loan. It will be called something else. And so what I started to see when I looked at my own numbers was that I wanted to make more money so that I had more freedom. And so that was like in my mid twenties that I was thinking in that way. And I think it just really helped me not be so focused on being frustrated about the fact that I was in multiple five figures of debt because I knew that I was always going to have a payment that was like 5 to $700 a month. It would just be called something different. So if that’s helpful for you to even just think about it in that way, I just thought about it as this is a steady payment that I’m in general going to have in my life so let me think about other alternatives instead of just being focused on this amount that I need to pay month to month.
But if you are someone who is in student loan debt currently, especially with what just happened with the Supreme Court overturning Biden’s decision or Congress, excuse me, overturning it, I want you to have a plan to have your own back. I don’t want you to be someone who has your head in the sand about your debt and you decide to ignore it because that’s not actually going to get you the outcome that you want. I want you right now while you have the time to be able to create a plan for yourself because in creating a plan for yourself, you’re going to actually create more calm, you’re going to create more control, and you’re going to be able to create options for yourself and to think about what it is that you want to do financially.
And anytime you’re listening to my podcast, like what I am going for is helping you be in control. Like that’s the main thing that I desire for you is for you to feel like, okay, I have advocacy and I can advocate for what I desire and what I need. So if you are someone, like I said who’s listening to this and you’re preparing to repay your student loan debt, there are some things that I want you to know if you haven’t done the research on your own already, but student loan payments will be due again starting in October of 2023, at least at the time of this recording. Because of covid 19 and the relief plan that they had, student loans have been on 0% interest and they have been in a place where the payments have been suspended. So people haven’t been making payments for the last almost three years. And if you are someone who has not paid off your loans, nothing has been forgiven, then you know or might want to be aware of, that student loans are going to have to be repaid starting in October.
The student loan interest is going to resume starting September 1st, 2023. This is just information to have for yourself. So in thinking about this, once again, I want you to be prepared, and this is something I talk about with all of my clients about being prepared is because if you have been not being mindful of how much money you were paying towards student loans or maybe you were paying your loans towards your credit card or you’ve been putting them into savings, I just want you to be able to transition how you’re spending and thinking about your money so that way you have money available to be able to start paying your loans back starting in October. So the first thing I want you to do is I want you to know your monthly payment amount that’s due.
So I would start first by logging into your account and see if there’s any information there that tells you your new loan amount that’s due or even your former loan amount that was due month to month. So maybe you forgot that number because you haven’t actually focused on that number for the last several years. So just know how much is due. If you are someone who maybe you graduated during the pandemic and your loans haven’t been due, you don’t know the amount, I would say make an estimate. Like for a lot of my clients, depending on how much loan debt they’re in, we’ve just been estimating. So some of my clients we’ve estimated $700 a month, we’ve estimated $800 a month or even a thousand dollars a month depending on the interest rate and the amount due and that allows us to at least kind of plan around what we assume their payment will be.
Another thing that you can do is actually make sure that you call your loan service provider and you can speak to someone directly and ask them like I’m trying to find out more information about the amount that’s going to be due on October 1st. Is there any way that you can support me in getting an estimate or getting that number calculated? What I learned on Studentaid.gov is that they’re supposed to be sending a billing statement at least 21 days before your first payment is due. But I don’t want you to wait for that like three week window because I want you to be preparing now. Set some time aside on your money date, which should be a weekly habit that you have and on your money date, like one of the things you can do is say, I’m going to call my student loan provider and see what that amount is.
There’s also a loan simulator. I haven’t personally used it, but I’ll put it in the link in the comments and you can go through and look at repayment plans that meet your needs. And I think that’ll actually help you identify or potentially identify how much money you’re going to have to repay when that amount is due so that all of this is in service of you being able to estimate an amount that you might have to pay. I would rather you estimate like, okay, I think my payment’s going to be $800 a month and maybe your payment’s going to be $900 a month, but now you’re only having to figure out a hundred dollars versus if you don’t ever think about a number that you’re going to have to repay. So the first thing I want you to do is to know your monthly amount due.
The next thing I want you to do is I want you to incorporate the amount into your budget now. So we’re in July. It’s a perfect time to start planning because nobody gets hurt if you start planning in advance. Y`ou don’t have to be stressed when you start planning in advance. And so you can incorporate the amount in your budget now. So let’s say that your student loan payment is $500. If your student loan payment is $500, you can decide with your next paycheck, I’m going to set $250 aside, like I’m going to transfer it to a student loan savings account and what you’re doing is you’re going to already have a payment available for when your student loans do become available. You’re going to already build in a routine as though you are paying your student loan and you’ll be able to experience what is it like for me to make this $500 payment month to month.
So if you’re getting paid on July 30th, you’ve set aside $250. If you’re getting paid August 15th, you’re going to set aside another $250. And that’s assuming that you get paid biweekly or not biweekly, twice a month. If you get paid weekly, you’re going to break down and set aside $125 every single week. If you get paid monthly, then you would set aside $500. But I want you to get into that habit now because when your student loans become due in October, you’ll already have at least a month or even two months of payments, which means that you’re going to start to get out of that paycheck to paycheck cycle, which is the goal. You don’t want that paycheck that you’re getting to be the paycheck that you’re like, oh, out of my July 30th paycheck, I pay my student loan payment. That makes money feel like really tight for you.
We don’t want money to feel tight. We want money to feel even. We want money to feel calm. And so that’s why I want you to start preparing for it now and if you start preparing now, that’s what you’re going to create for yourself and you’re going to create flexibility. The next thing I want you to do, step number three is I want you to put a reminder on your calendar to set up auto payment for your student loans. I know when I was paying back my student loans, one of the benefits of doing auto payment was that they gave me a slight reduction in my interest rate. I want to say it was like 0.25%, but being able to be someone who pays your student loan on autopay will benefit you in the long term. One, you’re not going to default. Two, you potentially are saving a little bit of money and three, you just have that ease that you know that it’s paid and the only thing you’re looking for is to make sure that they only took out the amount that you ask them to take out.
So just put a reminder in your calendar, I would say for mid-September, maybe September 20th, September 15th, whenever your money date falls in between there to set a reminder to log into your student loan provider and input whatever information you need to input to make sure that your student loans can be paid off automatically or be put on auto pay. And the fourth thing, if you are planning on paying more than the minimum amount due and I know when I was paying off my student loans, my student loans were in like groups. There was like a group A or group 76, like the loans had different numbers because the loans were associated with different years and the loans also had different interest rates.
So I had a debt payoff plan for myself and I knew which loan I wanted to pay off first. So I remember having to actually call in and tell them, my student loan payment is $500, but I’m going to be paying $600 and I want the extra $100 to go to loan 76, and I want that $100 to be going towards the principal each month. And the reason that you need to call in and be specific is because otherwise they’ll take that $600 and they’ll just apply the money wherever they decide to apply it and or they will advance your next payment. So if you’re paying the $500, but you really pay $600, they’ll put the extra $100 towards your November payment instead of actually paying down your principal. So that’s one way that you can engage in financial ownership and make sure that you’re actually paying down the loan that you desire to pay down.
So definitely make sure when you know your repayment plan, look at the interest rates, look at the balances, you can decide if you want to do a debt snowball or if you want to do a debt avalanche, whatever payoff plan you desire, but then also make sure that you set that up with your loan provider and then beyond setting it up, make sure that after that first payment comes out, that you actually check and make sure that they did the thing that you asked them to do. So just because your bills are on auto-pay doesn’t mean that you don’t pay attention to them. We always go back and make sure that people are actually doing the things that we directed them to do with our money because we’re people who are in control of our finances.
So those are my four tips for how you want to start repaying your student loans because I truly want you to be in control of how you’re paying your student loans. So do yourself a favor and set aside some time to really do some research on the student loan repayment plan that you want to use, thinking about how your student loan repayment, how that factors into your budget. But you are going to be so happy you engaged in this work before October because it will create more ease and more peace of mind. And yes, let me know also, if you want more help actually getting to know your numbers. And if you’re like Keina, I would love to put this in my budget, but I don’t have a budget, like apply to work with me in my five month coaching partnership. So if you want to work with me one-to-one, you can go to my website or you can go to www.wealthovernow.com/appointment and grab a time on my calendar. I would love to walk you through creating a budget that allows you to create a financial system so you can spend money drama free. But have a great week and I will talk to you next time.
Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
