The Countdown to Student Loan Payment Restart: How to Prep Smartly

Student on steps

California Platinum Loans is here to guide our community through the upcoming shift in student loan payments. As payments restart, understanding the terrain will be essential. Not only are these payments restarting, but there’s also a swirl of chatter about new programs, potential debt forgiveness, and changing servicers. Ready to demystify it all? Let’s unravel this student loan tapestry.

The Return of Student-Loan Payments

After enjoying a prolonged, pandemic-induced hiatus, student-loan borrowers need to brace themselves: the bill is coming due. Starting September 1st, federal student loans will begin accruing interest. Borrowers can expect their first bill to drop sometime in October, with individual due dates based on their loan-payment cycles. As we’re all re-adjusting our financial spectacles, here’s a playbook on what’s about to transpire.

Economy on the Treadmill: Faster but Steady

Borrowers may want to swap out their cashmere for a safety helmet because, according to Moody’s Analytics, the payment restart is set to augment student-loan payments by an impressive $70 billion annually. The silver lining? Bernard Yaros of Moody’s suggests that while this might bring about some financial strain, it’s not the tipping point toward a recession. But let’s be honest; the real challenge lies ahead for individual borrowers. And remember, a pinch for Wall Street might feel like a punch for Main Street.

Navigating the Student-Loan Labyrinth

With a multitude of changes, reforms, and announcements in the realm of student loans, borrowers might feel like they’re trying to read financial news during a rollercoaster ride. A recent flurry of questions at a webinar hosted by the Student Debt Crisis Center underscores the confusion. But while the road may seem convoluted, there are clear steps that borrowers can take to prepare and protect themselves.

Tips to Get Ready:

1. Know Your Servicer: During the payment pause, there’s been a game of musical chairs with servicers. Check the Department of Education’s website to ensure you’re sending payments to the right place.

2. Autopay is Your Friend (Sometimes): Even if you were on autopay before, you might need to re-enroll. It’s not just about convenience; autopay also offers a 0.25% interest rate discount.

3. Dive into Your Payment Options: From standard plans to the new SAVE plan introduced by the Biden administration, ensure you’re on a repayment plan tailored to your financial situation.

4. Income-Driven Repayment Plans: If this sounds right for you, get on board. Some already enrolled in specific plans like REPAYE will transition automatically to the SAVE plan.

5. Be Proactive, But Careful: While some advocate for a student-debt strike, finding a strategy that won’t backfire on your financial health is essential.

6. Stay Informed on Forgiveness: While there’s buzz about debt forgiveness, concrete changes are still on the horizon. In the meantime, stay updated and make informed decisions.

While tossing student loan statements into the ‘later’ pile is tempting, now is the time for proactive measures. Arm yourself with information, connect with your servicer, and consider your repayment options. At California Platinum Loans, we’re here to keep you informed and equipped. Remember, knowledge is not just power – in this context, it’s also savings.

Discover How to Get An FHA or A Conventional Mortgage With An Existing Student Loan Debt: Get To Know More About These Options Currently Available For You

You’ve probably seen more than a few of the thousands of articles and news reports about how student loan debt is preventing people from buying homes. And, if you’re like one of the 65% of college graduates who have student loan debt, you could owe an average of $47,671, according to Nerd Wallet, which did a study of how much people owed in student loans in 2018. If you’ve attended graduate or professional school like med school or law school, you might owe $100,000 to $200,000 or more. More than 44 million people in the U.S. have student loan debt, and the total owed is more than $1.6 trillion, according to the Federal Reserve Board.

Those are the stats, but how can you buy a house with student loan debt?

First things first: pay close attention to your credit score. You have many options for free credit monitoring. You can usually get credit and ID theft monitoring services as benefits from good credit card companies.

Making all of your monthly payments on time contributes to a high credit score. Missing even one payment can have serious consequences for your FICO credit score. If you find an error, it’s worth your time to take action to remove it from your credit report.

Don’t take on additional debt if at all possible. For example, if you have credit cards, don’t use them unless absolutely necessary, and pay them off as soon as possible. Lenders like to see credit utilization less than 30%. If you can reduce the balances on any credit accounts other than your student loans to 10% or less, this will boost your credit score.

Second, look for assistance programs that might help you make a down payment on a house or offer you a low down payment requirement. FHA loans, VA loans, and in certain areas, even USDA loans can over low or zero down payment options.

You can also investigate options to consolidate your student loans and pay them off faster. The sooner you get your student loan payments under control or paid off, the sooner you will be able to seriously start looking for a house and becoming a home owner. A qualified mortgage professional will be glad to work with you on qualifying for a California home mortgage and home ownership.