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When do student loan repayments start? The debt ceiling deal gives a firm deadline

The job market is cooling but still pretty strong, so you may be able to find extra work. In the meantime, Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit based in Plymouth, Massachusetts, said individuals should reevaluate their expenditures and stop spending as though the debt is forgiven. She suggests borrowers set up interest-bearing accounts into which they can deposit amounts equal to their anticipated monthly payments. While the interest on those accounts can be beneficial, what’s more helpful is the practice of budgeting and forming a new routine around those payments, Mayotte said.

Here’s how to prepare to start paying back your student loans when the pandemic payment freeze ends

Betsy Mayotte, President of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into a savings account.

“Then you’ve maintained the habit of making the payment, but (you’re) earning a little bit of interest as well,” she said. “There’s no reason to send that money to the student loans until the last minute of the 0% interest rate.”

Mayotte recommends borrowers use the loan-simulator tool at StudentAid.gov or the one on TISLA’s website to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.

“I really want to emphasize the long-term,” Mayotte said.

Debt Free or More Student Loan Payments? These 20 Million Borrowers Await ‘Life-Changing’ SCOTUS Decision

With prices rising for housing, gas, groceries, vehicles and more, inflation has staked its claim on the wiggle room in borrowers’ budgets that paused payments initially provided. Illustrating this point, a recent study from the Philadelphia Federal Reserve Bank found that nearly 1 in 3 borrowers who were making full payments before the pandemic said they won’t be able to make payments in full when the pause ends.

“For a lot of people,” Mayotte says, “that money just isn’t there anymore.”

Here’s how to prepare to start paying back your student loans when the freeze ends

Betsy Mayotte, President of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into a savings account.

“Then you’ve maintained the habit of making the payment, but (you’re) earning a little bit of interest as well,” she said. “There’s no reason to send that money to the student loans until the last minute of the 0 percent interest rate.”

Mayotte recommends borrowers use the loan-simulator tool at StudentAid.gov or the one on TISLA’s website to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.

“I really want to emphasize the long-term,” Mayotte said.

Here’s the ‘most likely scenario’ for when student loan payments could restart — and how to prepare

To calculate how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

If you do decide to change your repayment plan, Mayotte recommends submitting that application with your servicer before payments turn back on.

“I have significant concerns that there will be some big servicing delays,” she said.