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Published: Nov 19, 2021 14 min read
Students on university campus

If you’re a federal student loan borrower, you may have grown used to not making payments over the past nearly two years. But the pandemic relief program that froze federal student loan payments and interest is coming to an end in less than 90 days. You'll be on the hook for payments again staring in February.

And that's official — while there have been four previous extensions of the forbearance period, the Education Department says that won't happen again. In other words, you will need to start repaying your loans, regardless of what happens with the pandemic or the economy.

If that has you panicking, you’re not alone. A Credit Karma study published in October found that 63% of those with outstanding student loan debt are concerned about their ability to make payments once federal student loan forbearance ends. Another recent survey from Savi and Student Debt Crisis Center found as many as 9 out of 10 borrowers weren't ready to resume payments.

But there’s plenty you can do now to help you ease back into paying your debt, including potentially lowering your future monthly payments. Here's where to start.

Know what your student loan balance is

You can log on to your student loan servicer's website to see what you currently owe. If you don't know which company manages your student loan billing (aka your servicer), you can find that out, along with your balance, by logging on to StudentAid.gov. If you just graduated and are entering repayment, check your email or physical mail for instructions on setting up an account.

But heads up. Your student loan servicer may change within the next year. Multiple servicers are leaving the business. Navient, for example, says it will transfer all its accounts to other companies before the end of the year.

“Read every piece of mail and every email that you get,” Stacey MacPhetres, senior director of education finance at Bright Horizons’ EdAssist Solutions, says. “I think we are all guilty of thinking, ‘Oh, that's a solicitation or I don't need that.’ But there's a lot of change happening.”

The good news is a lot will also stay the same. If you made no payments on your federal student loans during the forbearance period, your balance should be the same as it was when the Trump Administration put the payment pause into place back in March 2020.

Your loan terms, interest rates and any existing benefits will remain the same, too. The number you call to ask questions about your loans shouldn't change and neither should your online log-in credentials.

If you're on a standard repayment plan, your February payment should be the same as it was the month before the forbearance program kicked in. If you're a new borrower just starting your repayment, your monthly bill amount won't be shown until January.

Finally, if you're on an income-driven repayment (IDR) plan — more on that later — your servicer will notify you of how much you owe before your next payment is due.

Update your personal information

Regardless of whether your student loan servicer is changing, make sure all your contact information is up to date. Here’s a checklist.

  • Email address
  • Physical mailing address
  • Phone number
  • Bank account information (It’s been a while; maybe you don’t use the account you have linked to your loans anymore.)

If you're on an income-driven plan, you weren't required to submit your annual paperwork to recertify your income and family size during the forbearance. Instead, your loan servicer will notify you of your new deadline to update your income. This is another reason to make sure your contact info is up to date: If you miss this deadline, you risk seeing your payments increase unexpectedly.

If, however, your income has dropped or your family has grown, you have the option to recertify before forbearance ends so that your new payment will be based on your current financial situation. Recertification takes about 10 minutes. However, getting the application processed may take at least two weeks, according to the Consumer Financial Protection Bureau (CFPB).

And if you were enrolled in auto-debit, where your payments were automatically withdrawn from your back account each month, note that it won’t renew when repayment begins. You need to opt back in at least 30 days before your first post-forbearance payment.

Rework student loan payments into your budget

Many borrowers who stopped making payments during this period have used the money they would have needed to spend on student loans to pay for everything from rent to credit card debt. So, one of the biggest challenges may be reworking your budget to fit in student loans once again.

To start, consider parking at least the amount of your February student loan payment in a savings account so you're covered for the first month of repayment. If you can’t do that right now, save up toward it over the next three months. So if you're going to owe $300, try moving $100 into savings each month through January.

But if making payments is a real issue, you'll need to take a harder look at your budget. Make a list of necessities like housing, groceries and transportation. Then, cut out what you don’t need. No judgments, but maybe two trips to the gym a month aren’t worth $100. Plus, a simple Google or YouTube search can pull tons of home workout routines that don’t require any equipment — or a monthly fee. And do you normally use all the streaming services you pay for? Maybe you can stick with the one you use the most. Or, you can split the costs with a friend or family member. Overall, any extra bucks you keep can go toward your student loans.

Renegotiate existing bills

If student loan payments are still a hassle after you've re-worked your budget, you may be able to save some money by renegotiating payments like phone bills, internet services and insurance.

Start by examining other available options. Then call your service provider and tell them you’ll switch to a carrier with better offers. They may be willing to meet or lower their competitors' rates. If you don't want to go in alone, companies like Billcutterz contact your service providers and negotiate your bills for you. But you have to share any savings you get with the company for doing the leg work for you.

Switch to an income-driven repayment plan to lower your monthly payment

If you’re struggling financially, you may be able to lower your monthly payment by signing up for an income-driven repayment (IDR) plan. These plans set your monthly payments based on your earnings and family size, and if your pay is low enough, they can reduce your monthly payments to as low as zero dollars. Plus, whatever remains of your your federal student loans will be forgiven after 20 to 25 years of payments, depending on the type of IDR plan you’re enrolled in and what kind of debt you have.

You can apply for an income-driven plan through your servicer’s website in about 10 minutes and processing should take no more than two weeks.

But there are some cons to income-driven plans. One major downside to these plans is interest continues to accrue on your loans, and for most borrowers, income-based payments are not large enough to cover the accruing interest, so their debt continues to grow.

“If you plan to take advantage of an income driven plan, don't think of it as your long-term repayment program,” MacPhetres says.

Your payments may be small, or even $0, which may feel great in the moment, she adds. "But remember, you're accruing interest on that. And you are in essence, multiplying your loan debt year-over-year.”

So if your monthly payment on an income-driven plan is $0 and you can make a payment of any size, you should do it. This will take a bite out of your growing debt. MacPhetres says in these instances, you should contact your loan servicer and tell them you want that payment added to the principal (the amount you borrowed). This would ensure your payments don’t just strike down interest.

Income-driven plans weren't designed as long-term solutions. For some borrowers, it will make more sense to exit the income-driven plan as soon as they can to pay off their debt faster and pay less interest overall. Others, particularly borrowers who work in low-paying fields and have large debt loads, may be better off staying in the income-driven plans long enough to qualify for loan forgiveness down the road. If you want to figure out how much you'd pay under different plans, including whether you may see some debt forgiven under certain plans, you can use this student loan simulator.

Ask your employer for help

Seventeen percent of employers offer student loan repayment assistance and another 31% plan to roll these programs out, according to a 2021 study by the Employee Benefit Research Institute.

“A growing number of employers are recognizing the need to offer student loan assistance as a financial wellness benefit to differentiate themselves in a competitive market and to attract and retain top talent,” GiftofCollege chief operating officer Patricia Roberts says.

Gift of College offers resources focused on helping individuals or companies contribute to college savings accounts or student loan balances.

So if you’re looking for work, don’t be afraid to ask employers if they offer these benefits. Here's a tool you can use to search for jobs at companies that offers student loan repayment to employees. These programs work differently at different companies, but most work as a type of match, where your employer only pays if you do.

In the past, student loan assistance was counted as taxable income for both the employer (for payroll taxes) and the employee (for income taxes). But under temporary rules, that's no longer the case, which makes the benefit a better deal for employers. If you work at a company that doesn't offer it, try taking a proposal to your human resources department.

“I think employees should feel comfortable asking about this type of benefit and informing their employer," Roberts says. "The employer may well not know about these changes that were put into place at the end of 2020."

Carefully consider whether refinancing is right for you

If you have private student loans, it may be feasible to consider refinancing your loans. Money's best student loan refinance companies can lower your interest rate, and therefore lower your monthly payments. Doing so with your private loans could free up some money to make the minimum payments on your federal loans.

But if you have federal student loans, refinancing may not be the best route, even if it could lower your monthly payment. Federal loans tend to have smaller interest rates than private loans, which means the savings offered through refinancing are likely smaller.

More importantly, when you refinance your federal loans through a private company, you leave the federal system. That means you lose all its benefits including access to its income-driven plans, its forbearance programs and any future assistance.

“If we ever were to go back into another CARES Act-like situation, you would not benefit,” MacPhetres says.

Plus, you need a stellar credit score to qualify for the rates you see promoted on TV and online. If you’re already struggling with student loan debt, chances are this won’t happen. Instead, explore the other options available such as an income-driven repayment plan.

More from Money:

Should You Refinance Your Student Loans Before Federal Payments Restart?

There's a Good Chance Your Student Loan Will Soon Have a New Servicer. How to Manage the Transfer

How 2 Years Without Student Loan Bills Changed the Game for America's Borrowers