Your financial situation might become disastrous when federal student loan payments resume in October, particularly if you are already having trouble making your credit card payments.
Strategies to Consider Before The Federal Student Loan Payment Will Resume (Photo: Huffingtonpost)
Risk Characteristics Of Federal Student Loan Payment Once It Will Resume
A blog post from the Consumer Financial Protection Bureau in June stated that one in five Federal Student Loan debtors had risk characteristics that suggested they could have trouble making Federal Student Loan payments once they resumed.
The initial 12-month Federal Student Loan on-ramp phase from October 1 to September 30, 2024, won’t have a big impact. During that time, there won’t be any Federal Student Loan defaults or credit score declines due to late payments. However, when interest accumulates, it will become more challenging to control the rising debt. Make progress with regular payments over the course of the following 12 months. Over time, you’ll increase your savings and accelerate the repayment of your debt.
READ ALSO: Federal Student Loan Debt Repayments Will Resume This Month Of October
Here are some strategies to consider Before The Federal Student Loan Payment Will Resume
1. Revamp Your Budget
The amount of money available for debt repayment is made clear by an updated budget. Check your bank and credit card bills for areas where you might save money or find more affordable options.
2. Seek Lower Credit Card Interest Rates
You may be eligible for low-interest options if you have a strong credit score of 690 or higher. For instance, you can transfer debt from another account to a balance transfer credit card to earn a lower interest rate.
3. Consider An Income-Driven Repayment Plan
Your monthly payments on federal student loans under an income-driven repayment plan are determined by your income and the size of your family. Additionally, after 20 or 25 years of payments, the debts are forgiven.
4. Participate In Credit Counseling If Needed
A nonprofit credit counseling agency may be helpful if you are having trouble seeing any progress on your debt. A credit counselor can assess your financial situation, help you make a budget, and decide whether you qualify for a debt management program. With this option, you can pay a fee to combine your credit card debt into a single payment with a lower interest rate.
5. Take A Break From Credit Card Spending
Avoid charging more items to your credit cards after reducing the balances on your existing bills. The temporary use of a debit card or cash can help you stick to your budget.
