Millions of student loan borrowers — myself included — haven’t made a student loan payment since March of 2020, when loans were first placed into an emergency forbearance during the pandemic. Now experts are urging us to prepare for repayment.
Before the payment pause in 2020, my student loan payments were about $40 per month under the now-defunct Repaye income-driven repayment plan. I moved onto the Saving on a Valuable Education (SAVE) plan as soon as the option was available in 2023. That set my payments to $0 per month. Shortly after, my loans, along with millions of other people’s, were quickly put into an interest-free forbearance because of legal challenges to SAVE.
Now that SAVE has been officially shot down by the courts, experts don’t expect the Trump administration to defend this income-driven repayment plan. With SAVE on its way out, what does repayment look like for my $63,493 student loan debt?
How much will my student loan payments increase without SAVE?
The Department of Education let borrowers in SAVE know just before Trump’s inauguration that the earliest we should expect repayment to resume is December 2025, and income recertification won’t be required until at least February 2026. However, repayment could start sooner now that SAVE has been blocked by the appeals court, Mark Kantrowitz, a student loan expert, told CNET.
At best, that gives me about a year to figure out how to fit a student loan payment back into my plan after a nearly six-year break. At worst, it gives me a few months.
Encouraged by advisors, I used the Department of Education’s loan simulator to see what kind of monthly bill I can expect when payments resume.
I was shocked by the numbers.
My income as a freelance writer has gone up since those $40-a-month payments in 2020. Now I work for my own S-corp and pay myself an annual salary of $80,000.
If my payments were to resume under the SAVE plan given my income increase, my monthly payment would be $192, and my loan balance would be forgiven in April 2031.
With SAVE likely disappearing, I’m not eligible for any other income-driven repayment (IDR) plans. My remaining options to repay my consolidated loans are:
Graduated repayment is designed for borrowers who are early in their careers and can expect significant income increases over the years. I’m midcareer and work for myself, so I don’t expect that kind of bump. Bracing for $800 payments in the future doesn’t sound feasible.
That leaves me with a payment of $488 per month… more than 10 times the amount of my last student loan payment.
How I’m planning for my increased student loan payment
That $488 is a hefty monthly payment to absorb, especially as my housing costs happen to be going up this year, as well. At this rate:
I’m left with about $1,400 per month for spending. If I spend about $500 on groceries and gas, that leaves me $900 for any other fluctuating and unexpected costs. My situation, thankfully, isn’t dire, but I’ll lose a lot of the financial cushion I’ve grown used to. I’ll have to think more carefully about purchases than I have in several years, and I won’t have much wiggle room for emergencies, luxuries or unexpected expenses.
Since I have almost a year to adjust how I use money. Here’s how I’ll plan ahead to absorb the new payment:
- Keep my savings and credit intact for emergency expenses, like car repairs or health surprises
- Eat out less frequently and spend less when I do
- Buy clothing from thrift stores for lower prices
- Buy furniture and home goods from thrift stores and watch for freebies in buy-nothing group
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Use my remaining time in 2025 to build up funds for future purchases, including travel and my next car (those monthly savings contributions will probably stop once I restart student loan repayment)
What if you can’t afford your new student loan payment?
Income-driven repayment plans are intended to make student loan payments affordable, but they don’t take your real cost of living into account (just your income and family size). SAVE’s adjusted formula made IDR an option for many borrowers who, like me, don’t qualify for other IDR plans but are still burdened by student loan payments.
If you find yourself unable to qualify for IDR after recertifying your income next year — or if your payment doesn’t feel feasible, even under IDR — here are some ways to make your loan payment more affordable:
- Work with student loan experts like those at Edvisors or the Institute of Student Loan Advisors to create a money management plan. Make sure you’ve tried all your options with the Department of Education’s repayment plans.
- Apply with your loan servicer for deferment or forbearance. You might qualify if you’re experiencing economic hardship, you’re unemployed or you’re experiencing other financial difficulties, like medical expenses.
- Look into refinancing — with caution. Refinancing your federal loans with a private lender might land you a lower interest rate or lower monthly payment, but it’ll also eliminate any potential for income-driven repayment, forgiveness or other relief in the future.
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Work with a nonprofit organization, like Upsolve, to discuss debt-relief and bankruptcy options. Student loans aren’t commonly discharged in bankruptcy, but it’s possible if payments cause undue financial hardship.
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