Student loan payments resume: Experts give tips, address most-asked questions

As of Oct. 1, tens of millions of Americans once again have to budget for student loan repayments after a pause of more than three years.

"There’s anxiety now. What am I going to cut, so I can make these payments happen?" said Ester Trujilo.

Trujilo is one of the more than 45 million borrowers who together owe approximately $1.6 trillion, according to President Joe Biden's administration.

"No matter what your income is, you’ve gotten used to spending the way you’ve been spending for the last three years," said Trujilo, who has $120,000 in student loan debt after earning multiple degrees.

"Now when I go into my budget, I’m looking at how much do I need to pay for these student loans and what buckets am I going to pull out of so I can make that payment happen?"

The Biden administration tried to cancel up to $20,000 in student debt for eligible borrowers, but the Supreme Court invalidated that debt relief program in June.

Now, it's time to take a close, hard look at finances, according to experts.

"It means less money to go out and have fun with," said Elizabeth Buffardi, a certified public accountant (CPA) and financial planner (CFP).

"When you stop and look at where all the money is going, a lot of times you can be like, 'oh my gosh why am I spending X dollars on that thing? I don’t even like that thing, or I don’t use that thing,'" said Buffardi.

Buffardi is a member of the CPA Society, which offers three "smart money management tips" as student loan repayments resume.

First, put savings and payments on auto pay.

"That money is being taken directly out of your account before you even have a chance to miss it," said Buffardi.

Second, cut back on unnecessary spending.

"You can Doordash your groceries or food. Your gym membership is on a subscription," said Buffardi.

"When you start to go through and start canceling some of those subscriptions, a lot of times you can go through and free up cash for other things."

Third, apply for an income-driven repayment plan through the Department of Education.

"The number one question we’ve been getting over the last couple of months is which repayment plan do I pick," said Betsy Mayotte, president of the Institute of Student Loan Advisors (TISLA).

TISLA is a nonprofit organization founded to ensure all consumers have access to free, expert, non-biased student loan advice, according to its website.

Mayotte said borrowers should take advantage of a loan simulator tool on the Federal Student Aid website.

"You can plug your information in once, and it tells you not only what your monthly payment will be under all the plans you’re eligible for, but almost more importantly how much that plan will cost you over time."

Most borrowers will qualify for at least one of five plans, according to Mayotte, regardless of income.

She also said people don't need to panic about missing a payment.

"The Department of Education is calling it an 'onramp' period. I’m calling it a soft landing," said Mayotte.

"Normally if you’re 90 days delinquent, you get negatively reported to the credit bureau from then on out until you get below 90 days again. If you get 270 days delinquent, the loan goes into default. That’s not going to happen in the next 12 months."

In addition, borrowers who were in default prior to COVID are eligible for a temporary program called "Fresh Start."

"Which will let them get out of default pretty much immediately," said Mayotte. "Then they’ll be eligible for lower payment options. It also removes the default line from their credit report like it was never there."

Another expert, with the nonprofit National Foundation for Credit Counseling, said most of the consumers he speaks to are concerned about affordability.

"It’s that scramble to make adjustments to the budget that’s caused a lot of concern for student borrowers because things have changed," said Bruce McClary.

"Things might be a little more difficult. We’ve had to go through a period of inflation. There’s been higher cost of living," McClary said. "There may be additional pressures on the budget that people are concerned about and need to address as they start looking at [their] first student loan payment this month."

McClary said in addition to the Student Aid website, borrowers should immediately make contact with their loan servicers.

"If you’re trying to get in touch with student loan servicers with questions and need reassurance, just pack patience when trying to get in touch right now," he said. "Phones are ringing off the hook. Websites are overloaded."

However, if you haven't made contact or received notice of an upcoming bill, be proactive.

"They have been reaching people 21 days before a due date, [so] that means there’s some interruption in the communication chain," said McClary.

"Reach out to your servicer, reestablish connection, and give them updated information to reach you," said McClary.

Experts also advise consumers to be aware of potential scams.

No legitimate creditors or advisors will ask for account passwords or Federal Student Aid pin numbers, and there's never a fee to use government repayment programs or to get help with your loans.