BOSTON - The pandemic pause on federal student loan payments is about to expire this summer and last week's debt ceiling agreement includes a provision that makes another extension unlikely.
That means tens of millions of borrowers will have to start paying back that debt. Some recent grads have never made payments and experts say that is going to mean a big adjustment to their monthly budget.
According to Matt Frankel, a certified financial planner, and Motley Fool contributor, the average student loan payment is about $350 and that is going come as a bit of a shock. "It will mean the need to cut back in certain other areas. Consumer spending is still very high compared to pre-pandemic levels and one of the big reasons is that people haven't had to account for their student loan payments," he said.
Frankel says there may be a grace period but advises borrowers not to wait until the last minute to check with their loan servicer and start figuring out where and how to replay that loan. "A lot of people are going to have to relearn how to navigate these processes and the best way to get their loans paid down," he said.
The good news is that student loan payments are among the most flexible kind of debt and there are a number different payment plans available. Some of those plans include a graduated plan that increases as your income increases. There is also an extended repayment plan that stretches the payments out beyond the traditional ten-year plan and an income-based plan.
There are also forgiveness programs for certain public service jobs. "It's not just the traditional public services, like being a teacher for example, there are a lot of non-government organizations that do qualify for public service forgiveness," Frankel said.
More information about payment options here: https://studentaid.gov/manage-loans/repayment/plans
for more features.