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Nine Steps to Prepare for Repaying Student Loans

According to the U.S. Department of Education, roughly 42.9 million Americans have outstanding federal student loans meaning that approximately 1 in 8 Americans are currently in debt as of 2021. This may just seem like a temporary situation as the majority of the population plans to work and pay off their loans. However, due to Covid-19, the U.S. unemployment rate has reached 4.8% which will make it impossible for many people to begin repayment. And to top it all off, U.S. student loan debt has nearly quadrupled since 2006 reaching a staggeringly high new record of 1.75 trillion dollars as of 2021.

Fortunately, there was a reprieve during the pandemic when the Department of Education offered loan holders the ability to pause their repayment without incurring any interest. About 90% of those that were eligible took the offer. However, that reprieve is about to come to an end as

repayment is scheduled to begin again starting in October of this year (exact dates vary according to when you initially began paying your student loans). Although Education Secretary, Miguel Cardona says further extensions are being considered, experts agree that you should not count on that. So, start preparing for the deadline with these basic steps.

1 Review your federal loan history. Get your loan history by logging in to "My Federal Student Aid"—you’ll need to create an FSA ID if you don’t already have one. As you review your information, note the balance of each loan and interest rate, the loan type, and the servicer of each loan.

2. Check in with your loan provider to ensure that all your information is up to date regarding payment method, address, etc.

3. Get to know your loan servicer as their services are free and they can help you with a plan to pay off your loans.

4. Complete mandatory exit counseling. Exit counseling provides important information you need to help prepare for repayment.

5. Know the dates of when repayment begins. Start paying it sooner rather than later if you can. Many loan programs offer a reprieve of 6 or 9 months after you graduate before you need to start making payments, however, get a head start if possible.

6.Create a budget and stick to it. If you have never created a budget before, you can look for resources on your college website or take advantage of free tools that you can find at

7. Consolidate your debt. If you have multiple loans, consider consolidating into one loan with one payment. It will make it easier to keep track of your repayment progress, interest charges etc.

8. Set a goal for repayment. After setting up a budget and determining how much you can afford to pay each month, set a date for when you plan to finish repaying your loans.

9. Select an affordable repayment plan. Now that you’ve set a goal for repayment, you can find a repayment plan that fits your goal using Student Loan Snapshot at OurMoneyMatters. Make sure to have automatic withdrawals set up from your bank account so you are not tempted to skip or decrease your payments.

What to Do If You Struggle to Repay Your Debt

If you still are having trouble with paying student debt even though you have taken the necessary steps to prepare, put in a request for economic hardship or unemployment deferment if you are struggling to find a job. As a last resort, you can use forbearance to suspend your bills but keep in mind the consequences of compound interest and a large balance. Be sure to also email whoever is in charge of finance at your school and don’t be afraid to reach out and ask for help and take advantage of available resources.

Student debt and the growing expense of college presents a huge obstacle for many lower income families. Students struggle to pay back loans for decades which prevents them from saving to buy a home or investing for retirement. However, there is some hope that things may change since Biden has been elected. At least, student loan forgiveness is now tax-free until 2025, which was part of a provision in the Federal Coronavirus Stimulus Package that President Biden signed into law back in March. Although that’s just a start, there are other proposals in Congress to wipe out student loan debt completely. That said, you can take the steps outlined above to ensure that you are prepared no matter what happens. Most importantly, remember that you are not alone and that resources are available that can help you get on track and stay on track.

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