Savvy Budget Girl

Preparation for Student Loan Payment Resumption

Wendy Coop Episode 26

Do you feel lost in the convoluted world of student loans? It's time to clear the fog and understand what the recent Supreme Court's rejection of President Biden's student loan plan entails for you. As someone who has navigated this labyrinth, I share my journey, which includes default, a resurge through the Fresh Start program, and articulating how to get ready for the recommencement of payments.

Get ready to decode the cryptic terminologies and understand the implications of subsidized versus unsubsidized loans. Learn how to find out your loan interest rates and tips on budget planning. If you're still in school or struggling with a financial crisis, discover available options, including income-driven repayment, loan consolidation, and official deferment or forbearance. This episode equips you with the knowledge and resources to face your student loans head-on, so stop fretting and start planning.

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Speaker 1:

All right, welcome to tonight's live stream. It is a rather impromptu live stream, though the news is not new. I don't know why I'm calling it news. It's not new. This is the Savvy Budget Girl podcast And we are going live July 1st to talk about the recent stories, or news stories about student loans. So if you live in the United States, particularly if you've been watching from around the world, you know this is a big, huge mess.

Speaker 1:

And yesterday the news came down that the Supreme Court struck down President Biden's student loan plan And what that means is the student loan forgiveness that was promised by President Biden I think it was last year, so it was 10,000 for some people, 20,000 for others if you had taken out Pell grants I think it was Pell grants, basically that went all the way to the Supreme Court of the United States SCOTUS for short And SCOTUS said, hey, the president doesn't have authority under that law that he tried to use to cancel student loan debt. So in response to that and I'm looking at an article from USA Today, so I'm going to share my screen if you're watching this on YouTube, so you can see. If you're not watching this on YouTube and you're listening to the audio, that's fine, i'm going to read what it says anyway. Usa Today says that on Friday, president Joe Biden said that he will pursue canceling student loan debt through an alternative legal authority after the Supreme Court blocked his signature program to eliminate up to $20,000 in student loan debt for millions of Americans. Biden said his administration will work to forgive student loan debt through the Higher Education Act of 1965, which authorizes the Education Secretary to modify, waive or compromise federal student loan under certain circumstances.

Speaker 1:

Now, previously they had used a law, and I don't remember what it was called the HEROES Act. That the HEROES Act was what the Biden administration previously tried to use to waive or modify the terms of student loans. And then Scott has said, hey, you can't do that, not through the HEROES Act. So what does all that mean? Well, there's a couple of things going on. The first thing that's going on is when we had the debt ceiling crisis not long ago And I mean it was a month ago we had the debt ceiling crisis In order to come to a specific compromise. What happened was it was agreed in the bill that student loans would no longer be paused, so the continual student loan payments that borrowers like myself had been receiving during the pandemic for the last three years was going to go away. There wasn't much publicity about that, so hopefully you knew that. And so then what we found out I think it was last week was student loan payments would resume sometime in the fall because of what was agreed to in the debt ceiling. So nobody was anticipating really that SCOTUS was going to say that this move by the president was constitutional. Because of that, the student loan pause ends August 29th. Interest will start accruing again September 1st 2023, with payments resuming sometime in October 2023. That is what we have come to so far with student loan payment. So we're gonna look at what it says officially on studentaidgov, which is your website for checking your end applying for federal student aid, and it says this helps, if I share my screen, it says the Supreme Court issued a decision blocking us from moving forward with our one-time student debt relief plan. Visit studentaidgov, slash debt relief to learn more about the actions President Biden announced following the decision and find out how this decision impacts you. And then it also talks about how you can have lower payments from the new save plan And if you sign up for the repay now plan, you will automatically be enrolled in the save plan before payments resume. So that is a lot to know. Like I said, payments will resume sometime in October. You should have already heard from your student loan finance or about when the payments would resume, because they do have to let you know in a timely fashion before those student loans resume.

Speaker 1:

So, that being said, what if you haven't been paying on those student loans for the past three years? I haven't been, of course. There was a time in the last three years where I didn't really know what my student loans were, so I had to pull my head out of the sand in order to figure out what my student loan debt was before I could figure out what I was going to potentially owe. So one of the things I did and leave a comment below if you have been paying your student loans the whole time. So if you're watching this on YouTube, leave a comment below the video. Let me know if you've been paying your student loans this whole time or if you took a pause like most Americans did. So I had to pull my head out of the sand to make sure that I even knew what my student loans were, and I have about $69,000 in student loans Previously, 24, 25 of that have been in default, and so I use the Fresh Start program to offer it by the government, which you can also find on studentaidgov, to pull those loans out of default. Of course, i do have to make those payments, but now I have $69,000 of student loan payments. That will all be current once payments resume.

Speaker 1:

So what you have to do now is budget. Yeah, that was incredibly simple. You waited seven minutes for me to tell you to budget. You have to put the payments in your budget right now, and if you don't know how much you're going to be paying when the payments resume in October, the first thing you're going to want to do is total up all your student loans, figure out how much you have in student loans, figure out what the interest rates are And if it doesn't say online because most of us are looking at these statements online, because a lot of them say zero right now because of the payment, pause, call your servicer. I know nobody wants to do that. That's like I mean hello, wendy, what are you talking about? Yeah, call your servicer, ask for the interest rates And then, while you've got them on the phone, ask them what the anticipated monthly payment will be, and if you're still in school, like I am, and you won't have to pay, interest may still accrue, depending on the type of loan that you have.

Speaker 1:

So you're going to want to find that out as well. Do you have subsidized loans? Do you have unsubsidized loans? If interest is going to be accruing, it may be in your best interest to either make the entire payment while you're still in school, if you are able, or to at least pay the interest while you're still in school, because that's where a lot of us get in trouble. It's not so much the amount that we took out, but the amount of interest that accrued during the time we were in school. And so now that's all catching up to us when we're trying to pay these loans after a school, whether that's after your bachelor's, master's, phd whatever you did medical school, law school, whatever you did you were in school for a long time And you probably have a lot of interest accruing. So, at the very least, make your budget so that you can account for paying at least the interest if you are still in school.

Speaker 1:

And if you're not in school and payments are just going to become due, it is more important than ever that you talk to your service loan provider Because statistically, or at least by survey, many people are not in a position to repay their student loans once those payments resume in October. If that's you, you're going to want to take advantage of one of the loan repayment methods, like income driven repayment. You could consolidate your loans. There are a variety of payment plans, including official deferment or forbearance if you are in a hardship situation. So don't think that just because the government forbearance is ending, that you can't get forbearance on your loans. You can in certain situations if you qualify. So you're going to want to look into that. And again, all that information is available on studentaidgov And if you've never logged into there, you never created an account. Create an account if you've never logged in, but it has a wealth of information for you on how to get loan forgiveness, how to repay your loans, understanding your loans and knowing who holds your loans. Again, this is a federal government website, this is studentaidgov.

Speaker 1:

So it's easy for me to say put it in your budget. But I know that there's a lot of things straining your budget inflation, recession, there's a lot of things going on. The price of everything is higher, but wages haven't kept up, or maybe you're in between jobs, or maybe you want a better job and you're looking for a higher income. Whatever the situation is, you have to start by getting a hold of your budget. You have to know how much money is coming in and how much money is going out so that you can properly budget, not just for student loan payments, but any debt repayment, as well as your goals for the future. Maybe you want to buy a house, maybe you need a new car, maybe you want to buy a new computer, maybe you just want a new phone. Whatever it is, it's harder to achieve those goals if you don't budget, because you need to know what's coming in and you need to know what's going out and specifically where it's going. That's why I wrote a whole book about it, called Budgeting for Women, because that's my thing, it's budgeting. That's why we don't talk about investing much on this channel. We don't talk about Any other thing except budgeting, because that, i believe, is truly the foundation of everything that you need going forward, whether you're a fire movement person, financial independence, retire early or whether you're in the retire standard whatever that's called camp. So I want you to be prepared in the best way possible for student loan payments to resume in October. You can start making payments now if you want. You could have been making payments the whole time. We all could have if it was in our budget, but we took advantage of the payment pause and we didn't make those payments. So now we're going to have to figure out a way to get this stuff back in our budget.

Speaker 1:

So that may mean cutting back on some things that you took advantage of before. It may mean finding a way to increase your income. It may mean and increasing your income may mean side hustles. It may be starting a business. It could be getting a new job. It could be getting a part time job, which I hate to tell people to get two jobs that I've done that. I did that for like a month and it nearly killed me. So do what you can do, realizing that you can only cut so much. I'm not saying live on beans and rice, rice and beans and tuna. I'm not saying, well, tuna is expensive. I'm not saying you have to sell your house to get out of debt, but something has to give, and that may be a combination of saving money and creating more income. I'm working on doing the same thing myself. I've been in an internship for the last year an unpaid internship for the last year at my church, and this fall I need to start bringing in more income that I wasn't able to do while I was in the internship. So to do that, i'm going to start offering VIP financial planning days.

Speaker 1:

Yes, this episode is kind of sponsored by me, but I want you to know that, as a money coach specifically as a faith based money coach I feel like it is a biblical imperative for us to steward our money Well. Okay, it's our job to be good users of the resources God has entrusted in us, and budgeting is a tool we use to do that. Whether you call it a budget or a spending plan, the fact of the matter is is we still need to do it. We are not the federal government. I mean, the government has the budget, but we just can't spend more than we make and expect that to last for a long time. It's a recipe for disaster. So I'm here to help you on this channel, on this podcast, as a money coach, to do the things that we need to do to write our ship financially so that we can be in a good financial position Just to help ourselves but to help others, to be that generous, philanthropic, human being that you want to be. But we do that by getting our house in order first. Don't rely on the government to do for you what you can do for yourself. You can do this. I believe in you.

Speaker 1:

If you need help along the way, i've got plenty of free content. If you want to sign up for a VIP day, you can connect with me on Instagram or on TikTok. It's Abby budget girl. I just want you to know that, although a lot of people are upset by this decision by SCOTUS to block student loan debt relief, it doesn't mean you'll never get relief And it doesn't mean you'll always be paying on it the rest of your life. Take care, my friends, and remember the budget is where it's at. If you have any remaining questions, i can answer in a future episode. Leave a comment below the video. If you're watching on YouTube, if you are listening to the audio podcast, hop on over to Instagram or TikTok and leave me a message at Savvy budget girl. Again, my name is Wendy Koop and I'm the Savvy budget girl. Thank you so much for tuning in. I appreciate you and I wish you a happy and safe 4th of July weekend. Take care. Bye.

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