Opinion: A student loan break is an opportunity to organize your financial life - CNET

Opinion: A student loan break is an opportunity to organize your financial life – CNET

The government has hit the snooze button seven times to resume federal student loan payments since the CARES Act took effect in March 2020. Whatever happens in the future and whatever your current situation, this temporary grace period on federal student loans is an opportunity to get home financing in order.

Creating a business plan can put you back in the driving seat, and you don’t have to wait for the government (or anyone else) to take positive actions that will improve your overall financial situation, including debt management. Here are some strategies that can help you take advantage of the next few months to save, adjust your financial situation, and move towards your goals:

Log in to your benefits

Your employer may offer benefits that can help you manage student debt in addition to other financial goals such as retirement, setting up an emergency fund, or saving for a big purchase like a home.

Besides taking on the temporary federal loan, the CARES Act also opened the door for companies to pay out up to $5,250 in student loans per employee annually, meaning employees won’t have to. Pay US federal income tax on payments made by companies for student debt. . However, this type of direct assistance is not always available to employees. In fact, before the pandemic, only 4% of employers offered help paying off student loans.

Whatever financial benefits today’s employer may or may not offer, it can be helpful to reach out and start a conversation about student loans and broader financial needs. De nombreuses entreprises proposent des ressources financières telles que des webinaires educatifs, des outils de planification or uncoaching in direct qui vous aident grandement à créer un plan personnel pour gérer votre budget, économiser pour l’avenir et progresser object if versus compensation. No student debt.

Find additional support

In addition to your benefits, if you have student loans, use this time to refer to resources such as the Consumer Financial Protection Bureau or the Student Loan Advice Institute. Also consider reaching out to your loan manager with any questions or to find out alternatives that can help you better manage your payments, such as requesting a deferment.

Some borrowers choose to simplify their payments through loan consolidation or refinancing, but just be aware that these arrangements can sometimes lengthen the overall time it takes to repay the loan, reducing potential savings. You may also qualify for alternative payment plans, such as income-driven payment plans.

Whatever your choices, be sure to study how they affect interest rates and repayment schedule. The point here is to make the most of outside resources when considering how to manage your payments, whether that means reaching out to a loan manager or arming yourself with a deeper understanding of the details.

Reevaluate your budget and make a new plan

Part of making informed decisions is taking the time to understand your full financial situation. You’ll want to be strategic about how you allocate your money to debt, savings, and other goals, and be careful not to lose sight of long-term needs while managing bills and short-term payments.

Create a new budget that takes into account your income, debt, fixed monthly living expenses, any side jobs, savings goals, and any other financial commitments. Take advantage of free tools like online debt calculators, retirement accounts, and budgeting apps to learn how to split your monthly income among your various financial goals. Be realistic about your true needs and desires, whether you’re moving to a new city, starting a family, traveling abroad, or building savings.

Use this grace period to confirm exactly how much student debt you still owe, how much interest you are being charged, and how much minimum monthly payments are required. Debts with the highest interest rates usually cost you more than others, so it may be a good idea to focus on paying off those debts first. These concrete details will help you determine how long it will take you to pay off your debt and achieve your other financial goals. According to the Council of Colleges, the average borrower takes about $30,000 to pay for college, and the Department of Education says most repayment terms are 10 years, or 30 for consolidated loans.

be organized

If you don’t have much wiggle room in your budget, find ways to make small changes to create a financial buffer. For example, maybe there is a streaming service that you don’t watch and you can cancel, or days when you can cook at home instead of eating out. Even an extra $50 in your pocket every month could mean you save an extra $600 every year. Changing your financial habits can be challenging, but it takes discipline to put your plan into action and make progress toward your financial goals.

And don’t forget the fine print: If you move elsewhere, be sure to update your contact information with your loan officer and on all linked accounts. You may need to re-register or update your settings for automatic payments. And if you’re still on hold for payments, you might consider starting over: Since the loan interest rate will remain at zero, any payments you make during the forbearance period will go directly to a capital reduction.

Now is a great time to make sure your personal management is in order and that you are organized and empowered to make the financial decisions that work for you. Managing student debt will be an ongoing challenge, but it doesn’t have to get in the way of your financial life. Take advantage of this extended grace period to put yourself in a stronger position so you can get started on your financial life.

Crystal Parker Boycereth is Director of Financial Wellbeing, Morgan Stanley at Work.

This article has been prepared for informational purposes only. The information and data in the article were obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or warranties as to the accuracy or completeness of information or data from sources outside of Morgan Stanley. It does not provide personal investment advice and has been prepared without taking into account the individual financial circumstances and objectives of the recipients. The strategies and/or investments discussed in this article may not be suitable for all investors. Morgan Stanley recommends that investors evaluate specific investments and strategies independently, and encourages investors to seek advice from a financial advisor. The suitability of a particular investment or strategy depends on the individual situation of the investor and its goals..

Morgan Stanley at Work, Morgan Stanley Smith Barney LLC, its affiliates and their employees do not provide legal or tax advice. You should always consult and rely on your legal and/or tax advisors.

These materials may provide addresses or contain hyperlinks to websites. Except to the extent the material refers to material on the Morgan Stanley Wealth Management website, the company has not reviewed the linked website. Likewise, except as the Material refers to material on the Morgan Stanley Wealth Management website, the Company assumes no responsibility and makes no representations or warranties with respect to the data and information contained therein. This address or hyperlink (including addresses or hyperlinks to materials on the Morgan Stanley Wealth Management Web site) is provided solely for your convenience and information and the linked site content in no way forms part of this document. Accessing this website or following this link through the Company’s materials or website is at your own risk and we have no liability arising out of or in connection with any such linked website. Morgan Stanley Wealth Management is a subsidiary of Morgan Stanley Smith Barney LLC.

Morgan Stanley in action The Services are provided by Morgan Stanley Smith Barney LLC, a SIPC member, and its subsidiaries, all wholly owned subsidiaries of Morgan Stanley.

Leave a Comment

Your email address will not be published. Required fields are marked *