4 Ways to Fit Student Loan Payments in Your Budget

Let’s face it—no one is excited about paying their student loans again but with federal student loan payments resuming next month, it’s time to make a plan to adjust your budget. Any time you need to make room in your budget, there are a few levers you can pull. The strategy (or strategies) you choose will depend on your priorities.

Reduce expenses

The first and most obvious place to find extra funds is by reducing your spending in other areas. While cutting back on spending feels the most disruptive to your life, it’s the least disruptive to your financial picture. Start with the easy cuts—get rid of subscriptions you aren’t actually using and shop around for cheaper services like car insurance or cell phone plans. Then examine your remaining bills. Are there services you use but could pause temporarily? Could you make a big change like moving to a cheaper place or swapping your car out for a less expensive one? Finally, look at your day-to-day spending. Are there categories of spending that you could pull back on to make room for your student loan payment? 

Reallocate savings & extra debt repayment

If your budget already includes room for saving, you can pull back on those goals to make more room for your student loan payment. For example, if you have been saving $400 per month toward your emergency fund and $250 per month toward travel but your student loan payment is $250, you can reduce your emergency savings to $250 per month and travel to $150. The same idea applies if you are paying off credit card debt. Lowering your credit card payments to fit in student loans will extend your payoff timeline, but as long as you pay at least the minimum on your cards (and don’t add any new expenses to it), you will make progress on paying them down.

Make more money

When cutting back isn’t an appealing option, explore ways to make more money. With gig economy work like food delivery or dog walking, you can get started quickly and have a lot of control over how much you work. However, leveraging skills you already have is typically a more lucrative way to boost your income. Alternatively, you could look for a part-time job doing something that you enjoy like coaching a youth sports team or bartending on the weekend.

Get on an income-driven repayment plan

If you’ve looked into reducing your expenses and increasing your income and you still can’t make your payments, it’s time to look into an income-driven repayment plan. Once the new SAVE plan is fully implemented, you could pay as little as 5% of your income toward your student loans, and if you make $32,800 annually or less, your “payments” will be $0. Until the SAVE plan is fully implemented, you can pay as little as 10% of your income toward your student loans. To explore whether you’d benefit from an income-driven repayment plan, check out Federal Student Aid’s loan simulator.

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