Student loan payments restart, one UAH professor helps you stay ahead of them
HUNTSVILLE, Ala. (WAFF) - Over 44 million borrowers will have to start paying back their student loans as the three-year pause on payments comes to an end.
Both current and former students are figuring out how to put these payments back into their financial plans.
“I don’t like student loans,” University of Alabama in Huntsville (UAH) junior, Micaela Haynes said. Surely, she’s not alone. Over 600,000 Alabamians will have to start putting money into their student loans again according to the Education Data Initiative.
Haynes does not have to start paying her loans back until she graduates but they are weighing heavy on her mind.
“I don’t have much of a plan,” Haynes said. “I feel like I probably should. I’ve been saving as much as I can. My parents actually paid for my first two years of college and I’m on a scholarship so I don’t have that much money that I need to pay back but still a significant amount.”
Economics professor Dr. Wafa Orman says the best thing to do is to have a plan to pay back the average $200 to $300 monthly payment.
“After you graduate what’s that $200 to $300 a month going to mean,” Dr. Orman said. “That’s the equivalent for a lot of people, of a car payment. You have to be mindful that after you graduate you’re going to have this extra car payment, if you think about it that way, after you graduate so plan wisely.”
Dr. Orman says the payment will be about 5 percent of the income for your average borrowers but the Consumer Financial Protection Bureau reports that one in five people with student loans are likely to struggle once their payments resume.
Dr. Orman recommends checking back in on your student loans because a lot has changed in the past three years.
She says some student loans have been removed because of errors. For others, their borrower may have changed.
“While these payments have been paused sometimes the loan service provider has changed because the government subcontracts out the collections of these payments to different service providers,” Dr. Orman said. “You need to check who your service provider is to make sure you’re sending the money to the right place
“It can make a big dent in your monthly payments,” Dr. Orman said. “You might even, if you’re one of the lucky ones, find a big chunk has been written off under this new program you need to make sure that you are eligible for it or not.”
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