(News USA) – Millions of Americans whose federal student loan payments were interrupted during the COVID-19 pandemic will see those monthly expenses resume this spring. Around the same time, the first student loan payments will be due for the Class of 2022.
If you belong to one of these groups, you may be wondering how to prepare yourself financially. A CERTIFIED FINANCIAL PLANNER™ professional can help you plan ahead and make sure you don’t fall behind on your student loan payments.
Here are four benefits of working with a CFP® professional to manage your student loans:
1. Get and stay organized. When you have a student loan, it’s important to know the name of your loan servicer, loan terms, estimated payment amounts, and payment schedule. If you plan to use direct debit to make your payments, you must provide your loan servicer with the correct account number. A CFP® professional can help you organize this information and track payment details.
2. Make sure you have enough cash to cover loan repayments. A CFP® professional will help you incorporate student loan repayments into your monthly budget. This means not only adding your payment amount to your fixed monthly expenses, but also identifying opportunities to save money elsewhere. This may involve cutting discretionary spending, consolidating other loans, or refinancing high-interest debt.
3. Choose your best repayment strategy. There are several repayment options available to federal borrowers. Some allow you to double the length of your repayment term; others base monthly payment amounts on your discretionary income. Students with private loans may have different repayment options to consider, and private loan repayment plans may vary by lender. A CFP® professional can help you evaluate all of your repayment options and determine which is best for your financial situation.
4. Avoid the consequences of default. Missed payments can lead to a lower credit score, garnished wages and tax refunds, and possible loss of access to future student aid. But your risk of default will be lower if you take the time to prepare your finances with the help of a CFP® professional.
Visit LetsMakeAPlan.org to learn more about preparing for your student loan repayments as well as how to find a CFP® professional near you.
College is expensive and managing student debt can seem overwhelming. A CFP® professional can help you develop a timely repayment plan while balancing your other financial goals.