Student loan repayments have resumed, financial expert has some tips
MIAMI - If you're one of the tens of millions of Americans who have federal student loan debt it is time to start paying once again.
After a three-year hiatus because of the COVID-19 pandemic, payments are due again starting this month.
While many are concerned, there are some steps you can take to budget and plan and save yourself in the long run.
The first step is to do your research and look at your budget and your loan.
"I'm paying for it all by myself. I have two jobs right now so it's helping," said first year college student Enzo Passo, who is working hard to pay for tuition at Miami Dade College.
"It's very expensive," says Enzo.
The teen hopes to transfer to a four year university when he finishes but is worried about student loans.
"I'm actually worried about it but I just started college. I'm in my first semester, so I still have like two years to figure it out," he said.
Enzo, like tens of millions of Americans, is concerned about student loans and student loan debt.
"Everything's getting like really really expensive and it's hard, especially for someone who just moved here," he said.
As of last month, interest started accruing again and as of this October 1st, payments are due and we live in a very different world today than we did three years ago.
"Inflation is high. We've seen home prices go higher than ever," said Jonathan Barrett of Barrett Financial Solutions.
"This is happening. This is not going away. Student loans do need to be repaid and missing those payments will ultimately affect your credit. So you need to explore what fits best in your budget," said Barrett.
Barrett says not to panic but to plan and there are options to look into.
"The best option is obviously the standard repayment plan where you're repaying it as you're supposed to be paying it over 10 years but a lot of people can't afford to do that. So what you want to do is reach out to your provider to see what options you have," says Barrett.
While it is possible to refinance, it isn't always the best plan, according to Barrett.
There are several ways to pay back loans including an income-driven repayment plan, a graduated payment plan, and some may qualify for an extended repayment plan.
Worst case scenario, if you can't pay at all, you can go into forbearance or defer your payments but it all comes at a price.
"Your interest still accrues during that time so you'll pay the most overtime if you defer your loans," he said.
For students like Enzo, keeping a close eye on your finances will help you in the long run.
"Budgeting is very important. A lot of people who built their budgets over the last three years might not be prepared for this. This is your financial security. You do need to research your best options for you," said Barrett.
The Biden Administration also put the SAVE Plan in place this year to help Americans who may struggle to pay. It could help but also could lead to more money being paid in the long run.