Millions of student loan borrowers like myself haven’t made a student loan payment since March 2020. However, with the end of the Saving on a Valuable Education (SAVE) plan imminent, I’m making adjustments to prepare myself for a hefty monthly student loan bill.
Like many borrowers, my federal student loans were placed into an emergency forbearance during the start of the pandemic in 2020. Before the pause, my monthly student loan payment was around $40. After moving onto the Biden’s administration’s SAVE repayment plan in 2023, my monthly payments dropped to $0. But SAVE received pushback from several Republican states, pushing my student loans, along with millions of other borrowers, into another forbearance period while the courts ruled on the legality of the student loan plan.
With SAVE officially struck down and little hope of reviving it, I decided to explore the repayment options for my $63,493 student loan debt.
Read more: Student Loan Payments Could Skyrocket for SAVE Borrowers. Here’s How Much Yours Could Rise
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 advisers, I used the Department of Education’s loan simulator to see what kind of monthly bill I could expect when payments resumed.
I was shocked by the numbers.
My income as a freelance writer has gone up since those $40-per-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 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 mid-career 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.
Read more: IDR Left In Limbo: Experts Explain What’s Going on With Student Loan Payment Plans
How I’m planning for my increased student loan payment
That $488 is a hefty monthly payment to absorb, especially as my housing costs are going up this year. At this rate:
I’m left with about $1,400 per month for spending. Spending about $500 on groceries and gas 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 the 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 consider your real cost of living (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, unemployment or 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. Although student loans aren’t commonly discharged in bankruptcy, it’s possible that payments cause undue financial hardship.
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