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Time to Pay for That Diploma!

Time to Pay for That Diploma!

September 08, 2023

The party’s over. After a three-and-a-half-year hiatus on repaying student loans, roughly 44 million Americans with student loan debt will have to start budgeting for repayments. Interest will start accruing on the outstanding balance on Sept 1st, with payments starting in October. Borrowers are expected to receive a billing statement or other notice from their loan providers at least 21 days before the bill’s due date. This new expense could certainly shake up the budget of borrowers, especially the 20% of borrowers who graduated from college during the pandemic and were never subject to repayment. Many of these borrowers either do not know or have forgotten, exactly how much they are expected to pay when October comes around. So, not only will borrowers be exposed to an added expense in October, but, for many people, the exact amount is a mystery. Will we still be able to afford to do our weekly dinner at a nice restaurant, or do we need to stack up on Top Ramen packets? Here are a few things to do to prepare:

  • First, make sure that you know who your loan servicer is. Many loan servicers have changed during the pandemic, so the entity that handled the loan before March 2020 can be different than the one you will be dealing with in October (e.g., Navient stopped servicing in 2021 and Aidvantage picked up their accounts). You can go to Home | Federal Student Aid and click on the “My Loan Services” link. Make sure you are registered and can log into the account with the servicer.
  • If you have moved since the pandemic started, make sure you update your information with the loan servicer. Log into your account to check that the contact information and bank information are accurate.
  • While you are logged into your account, be sure to take note of the loan interest rate and the amount due. With this information, you can be proactive in making the payment ahead of time or you can take action to ensure that your bank account has sufficient funds to make the payment. The last thing you need is overdraft fees!
  • Check to see what repayment plan you are currently enrolled in. Many borrowers are automatically enrolled in the 10-year repayment plan, which is the most expensive. Borrowers should review other repayment options, such as the Saving on A Valuable Education (SAVE) plan. A loan simulator at the Federal Student Aid site - Home | Federal Student Aid (Loan Repayment, then Loan Simulator) – can help to determine which plan is best for you.

President Biden directed the Education Secretary to start a process to compromise, waive, or release loans “under certain circumstances” after his initial $20,000 debt relief plan was shot down.  However, with the time it takes for new processes to go through all the necessary (?) government channels, holding one’s breath is highly inadvisable. The best bet is to properly prepare and adjust for an added expense that is likely to last a while.


Jonathan Childs, MSFS, ChFC®, RICP®

Financial Planner, Paragon Wealth Management




Tracking # 473878-0101

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.