Former college students are likely starting to become used to life without monthly student loan payments. Payments have been on pause since March of 2020, which has allowed many the opportunity to save up extra cash in the meantime. President Joe Biden recently extended the pause of loan payments from September and into January, but it seems unlikely that this will be extended any further.
This means that former students will have to get ready to pay them again, which poses a unique set of challenges with this monthly cost having gone away for some time. Here are some ways people can ready themselves for upcoming loan payments during the remaining 4 months of the pause.
Pay Off Credit Cards Now
Credit Cards can generally be categorized as one of our more expensive sources of debt given that they accrue a large amount of interest over time. Federal student loans, on the other hand, are generally interest-free.
By knocking out extra credit card debt now, that will essentially help balance out the costs that you will add to your monthly payment in January due to the interest you are currently being charged. If you can, try and make a dent in your credit card debt now while you have the extra money to throw around.
Forget The Pause And Start Paying Student Loans Now
Although student loans do not have to be paid until January, there is no rule set in stone that you have to wait until then either. This will allow you to shorten your repayment timeline that is set up through your student loans.
It also will allow you to get a head start on the scheduling and organizational side of these payments that will become mandatory in 4 months anyway. However, it is worth noting that if your repayment plan is income-based that you do not want to repay earlier than January.
Add To Your Emergency Fund
The pandemic has shown us how quickly our lives can change. It taught us that we need to be ready for anything and always have a plan.
One of the ways in which many people have done so or can do so is to build an emergency savings account large enough to cover all basic needs and payments for several months. Hopefully, you will not have to reach into this fund to pay off loans, but building up a strong emergency fund now will bring you the security you need just in case.
