MISSOULA — More than 40 million Americans with student loans will need to resume payments this month.
University of Montana Financial Education Program director Andrea Janssen told MTN News that first-time, full-time undergraduate students finish college with an average of $22,000 worth of loans.
We talked with Janssen the director to learn some tips about how to pay back student loans the smart way.
Student loan payments are resuming after pausing during the COVID-19 pandemic which means millions of Americans will have to make room in their budgets to pay down on those loans.
“It's happening. Loans are starting. Come see us. We’ll help you the whole way,” Janssen said.
From understanding credit cards to student loan payments, the UM Financial Education Program works to set up students, staff and alumni for future financial success. But Janssen says it’s not a one-size-fits-all all approach.
“We do the loan simulator. We’ll look at that. We’ll put in your income, your family size, your family income, and then look at your loans and they’ll do an algorithm to see — based off of your income, and family size — your payments are going to be this amount,” Janssen explained.
Janssen says it’s important to look out for scams when starting to repay. The first step should be to log into your federal student aid account where you can find a list of official loan providers to prevent scams and more.
“That is one of the best resources. It will have all of your loan information there. Exactly who your loan servicer is, potentially when your due date is for your next payment, what type of loans and studentaid.gov is also where you would apply for an income-driven repayment plan or any type of forgiveness,” Janssen explained.
Multiple repayment options are available for people in different financial situations. Janssen says one best practice is to pay your minimum amount plus an extra $50 if you can afford to.
“If they can’t pay it all and their income is low, then definitely an income-driven repayment plan is the best way to go,” advised Janssen.
One of the new income-based repayment options from the Biden administration is the SAVE program which could lower, or even eliminate, monthly loan payments for about 20 million borrowers. An option for all borrowers is a new on-ramp program that runs through September 30, 2024.
“This ramp-on period is giving them a 12-month grace period, so even though you're required — or you want you — to make those payments, right now, if you can’t make it you have an extended 12-month grace period,” Janssen said.
According to Janssen, avoiding your student loans past this point could have major impacts on your future plans.
"It will negatively affect your credit, make it harder for you to get loans for mortgages or car loans or anything like that because it still has that negative impact on your credit,” she said.
Janssen says the federal student aid website is user-friendly but if you need a little extra help, the University of Montana’s financial advisors are also available by appointment to former, current, and prospective students, and UM employees.
“Once we finish an appointment, we have a lot of people who are leave that are like ‘you released so much anxiety over this situation compared to what I had coming into this appointment’,” Janssen concluded.