According to a recent article from Forbes[1], there are 45 million student loan borrowers in the United States. The collective amount owed is about $1.7 trillion. That’s trillion with a t. Of that total debt, approximately $1,007.5 billion is in forbearance.
If you are included in those statistics, there’s some good news for you though! Federal student loan repayment has been paused (no minimum payments and no interest accruing) since March 2020. This pause has recently been extended through August 31 of this year. Since it’s only May, you still have 3 months to take advantage of this! Squeeze out every available dollar you can from your budget to throw at your paused student loans. The lower you can get the principal now, the less interest you’ll accrue when loan payments resume in September.
You might be thinking, “But everything costs more! How am I supposed to find extra money to pay down loans?!” That’s a very valid point so let’s look at some action steps.
Step 1: Look at last month’s income and spending. Total up all your spending by category.
Step 2: Review your totals and identify areas of overspending. Did you spend $100 on takeout fees? Did you fall victim to a BOGO sale?
Step 3: Decide which areas you can cut back on. Maybe you start a carpool to reduce fuel costs or cancel the gym membership you aren’t using and opt for walks outdoors.
Step 4: Declutter! Clean out your closets, the attic, and the garage. Find items in good shape that you no longer want/need and sell them.
Step 5: Is your place of employment short on employees? There’s probably an extra shift or two you can pick up here and there to earn some extra cash.
Student loans don’t have to stay in your life forever. You can pay them off. With a little extra effort and a plan, those loans don’t stand a chance. (And I know because I’ve done it.) Don’t limit yourself to the 5 steps above either. Get creative!
One last note: Yes, student loan forgiveness is a topic that keeps coming up. However, we don’t know when or if it will happen, how much the forgiveness would be, or who it would apply to. You could wait to start making payments again until September, but you’ll cost yourself more interest in the long run waiting for a decision.
If you are interested in budget coaching for yourself or someone else, send me an email at nicole@raderandrader.com to see if it would be a good fit!
[1] https://www.forbes.com/sites/zackfriedman/2022/05/16/student-loan-debt-statistics-in-2022-a-record-17-trillion/?sh=2839d1b94d5a