When President Biden set out to have student loan debt forgiven, many Americans were hopeful that he’d manage to succeed. But unfortunately, the Supreme Court shot down that student loan forgiveness plan. And now, millions of borrowers are on the hook for monthly loan payments for the first time in more than three years.
If you’re worried about keeping up with your student loans, that’s understandable. The average borrower today owes $337 a month, which is hardly a small amount. And while you may be able to shrink your loan payments on a monthly basis by moving over to a different repayment plan (particularly, one that’s income-based), at the end of the day, you’re still talking about having to make a monthly payment that’s substantial.
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The good news, though, is that with savvy budgeting, you can set yourself up to tackle those loan payments without falling behind. Here are a few strategies to adopt.
1. Categorize your bills into essentials and non-essentials, and slash the latter
We all have expenses we spend money on that are necessities. But many people have expenses they can technically do without. It’s important to categorize your bills this way to identify options for cuts in your spending.
Let’s say your monthly student loan payment is $300. If your rent is $1,000 a month and you already have inexpensive rent for your neighborhood, there’s probably not much you can do there. But if you currently spend $400 a month between streaming services, social outings, and restaurant meals, you can cut spending in those areas to free up money for your student loan payments.
2. Audit your essential bills and see if there’s room to cut your costs
Your essential bills are the ones you can’t compromise on. You need food, shelter, and a way to get to work. But there may be a way to minimize your essential expenses if you dig deeper.
Let’s say you’re spending $1,000 a month on rent and there are no cheaper apartments in your area. If you can’t lower your rent, you might be able to get a roommate for a period of time to split that rent with you. The result? Extra money in your pocket to pay your student loans.
3. Put your student loan payments on autopilot so you don’t fall behind
At this point, you may be making your first student loan payment after years of having those payments paused. And you might forget to make those payments in future months if you’re just not used to them.
A good way to avoid falling behind on your loans is to enroll in an auto-pay option. That takes human error out of the equation. It might also be a good way to ensure that your loans are getting paid before you take money out of your bank account to spend on things like leisure and entertainment.
No matter what monthly student loan payment you’re now on the hook for, it may be wreaking some havoc on your finances. But if you follow these budgeting tips, you may find that you’re able to adjust to your new monthly payments more easily than expected.