Student loans: What to do now?
Today President Biden extended the pause on federal student loan payments through January 2023. The order also provides $10,000 in debt relief for everyone making less than $125,000 a year. That is serious dough! But what if you still have loans to repay?
If the pause does end at the new deadline, it will have been 22 months since borrowers were required to make payments. You could call it a lucky break, except that would be offensive to the pandemic.
Sure, the extra time is good. And yes, there are a lot of people who want to cancel student loans entirely. But if you are one of the 45 million people who borrowed money through federal loans, you will most likely have to repay them eventually.
For now, do nothing. (Yay!) Take a breather. Sometimes a bit of good news comes your way, and it’s healthy to be able to savor that. Then there are two things to do next.
Two things to do
Check your info: When your loans are eventually due, you will get reminders (somewhere between 6 and 6 million) from the Department of Education. But only if your contact information is correct. You’ll also want to know who your loan servicer is.
This is way easy and you can do it right now! Here is a direct link to the page on the studentaid.gov site where you can do that thing where you forget your password and then reset it and get a new one and then log in and update all your information: https://studentaid.gov/fsa-id/sign-in/landing
Practice: Paying debts is hard core adulting, real big league stuff. How do professional adults manage all of their sh*t on a daily basis? Mostly by screwing up a lot. But practicing would definitely be easier.
Pretend you did have to pay your loans starting next month. How confident are you about where that money would come from?
If you’re making enough to cover your expenses and more, start setting money aside in a savings account once a month as if that’s your loan payment. This is separate from an emergency fund. Remember, you’re practicing for that money to leave the account. Start with half the payment if you need to, or less. It’s practice.
If your current income wouldn’t allow you to cover payments plus your expenses, start thinking about how you might make a little more money. It’s a tough spot to be in, but at least you have a little more time to figure it out. (And you will.)
Why it matters
Saving and boosting your income are both sound strategies for money and life. Even if student loans end up getting canceled, entirely, for everyone (warning: highly unlikely), you’ll be in a better position to spend on other things you value even more.
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I had a dream that Jeff Bezos rode up to the White House on a white horse and said, “I’ll pay for the student loans! All of them!” He had this shiny suit on. It was blue and it was gigantic. Everyone was like, “Wow, thanks Jeff, you’re ok after all!” But the suit was not ok and frankly not enough people were talking about that.
Photo by Albert Vincent Wu on Unsplash