Life After Student Loan Forbearance — How to Cope

January 11, 2022  |  Porte Team

Right now, student loans can feel like a bad ex. Just when you thought you had a good thing going, they find a way back into your life and throw everything off—or so it seems.

If you’ve enjoyed being ghosted by federal student loans for the last year and a half, the news of them coming back in 2022 probably felt like a shot to the gut and your bank account. After such a long break, can you imagine going back to those monthly payments? Do you have to go back to the grande size when you’ve gotten so accustomed to the venti?

In this blog, we’ll share some quick tips to help you adapt to life after student loan forbearance and the continuation of monthly loan payments. By implementing these tips, you can adjust your budget and get back in the swing of things in no time.

Also, for a comprehensive article explaining the ins and outs of student loans, check out our Student Loan Guide!


1. Account for Monthly Student Loan Payments in Your Budget

A change in monthly expenses should be reflected in your budget, and the return of student loan payments is no exception. Numerous budgeting strategies can help you adjust to student loans again, and one that we love is the 50/30/20 budget strategy. This format divides your take-home income into three categories, with 50% for needs, 30% for wants, and 20% for debt repayment and savings. By introducing required monthly student loan payments to your budget, you’ll probably need to adjust your “wants” category to account for this change.

For more information about the 50/30/20 strategy, The Beginner’s Guide to Budgeting Like a Boss provides a comprehensive overview of this strategy and how to address changes in your spending.

Regardless of your budget strategy, you’ll need to account for your monthly student loan payments and adjust your other expenses accordingly. Otherwise, you may be shocked the next time you check your bank balance.

Find a Happy Medium For Your Budget

It may sometimes feel like there are only two outcomes to budgeting: enjoy life now or enjoy it later. But you don’t necessarily have to take an all-or-nothing approach. Finding the happy medium can make all the difference. As you consider your student loan payments, keeping this principle into account can help you develop a sustainable and practical monthly budget that you can stick to for the long term.

Remember — your financial goals should add value to your life both now and in the future. So yes, plan for the future, but also enjoy the present. Consistency in following your budget and moderation in how much and how often you treat yourself can make all the difference!


2. Try One Month Living Way Below Your Means

Do you think you spend more now than you did at the onset of the pandemic? Are you worried you won’t have enough to cover your general expenses and monthly student loan payments? If you answered ‘yes’ to both of these questions, you might want to try this experiment: limit your spending to only necessities. If you’re having a difficult time adjusting the “wants” section of your budget, this could provide you with the insight and clarity you need. And if you’re the type who enjoys a good challenge every now and then — you may even enjoy this!

By limiting your expenses to only pay for necessities, you’ll see how much breathing room you have in your account and which “wants” items mean the most to you. From there, you can reintroduce the items that you enjoy back into your budget but with a stronger understanding of how much you can afford to spend on things you don’t necessarily need. Of course, you’ll want to still account for emergencies and savings.


3. Quickly Pay Off Your Student Loans But Don’t Deplete Your Bank Account

Debt is annoying — we get that. And with student loan payments entering back into your life, you may be tempted to get it over with by making one or a few giant payments. Yes, paying off a loan faster can yield significant savings, but if paying it all off in one to three giant payments depletes your bank account, it’s probably not the wisest strategy for you.

It may be more practical for you to shave off a little extra each month. For instance, if your monthly payment is $500, you can pay an additional $100 or $200 towards the principal each month. The smaller the principal amount of your loan, the smaller the amount of interest that will accrue, making it faster to pay off the loan.

If you have enough funds in your account to pay it all off and live comfortably, then it could be a feasible option for you. But if doing so means you have to live off instant ramen noodles, then maybe don’t — just pay a little extra towards the principal each month, and you’ll be in good shape!


4. Don’t Keep Your Student Loans in Forbearance or Deferment

It’s certainly tempting to request a forbearance or deferment from your student loan servicer and extend the pause on your student loan payments. However, you are only prolonging the inevitable.

The sooner you accept the reality of the return of student loan payments, the sooner you can pay off your loans.

Plus, even if you do defer student loan repayment, there are several loan types for which you may still be responsible for paying the interest that accrues,A including:

  • Direct Unsubsidized Loans
  • Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans
  • Federal Family Education Loan (FFEL) PLUS Loans
  • The unsubsidized portion of Direct Consolidation Loans
  • The unsubsidized portion of FFEL Consolidation Loans


5. Find a Side Hustle

If the reintroduction of student loan payments has made your monthly budget too tight, then another revenue stream to increase your discretionary income could alleviate your financial stress. This doesn’t necessarily mean that you should find a part-time job, adding an extra 20 plus hours to your 40-hour workweek. Instead, maybe you can start a side hustle!

The ideal side hustle is flexible enough to do it when you are available and have the time. From delivering groceries to tutoring and even serving as a virtual assistant, more side hustle opportunities are popping up everywhere, especially online. For a detailed list of side hustles, check out our blog, “11 Side Hustles to Make Extra Money.”

In your pursuit to offset your monthly student loan payments, your side hustle could end up being a source of fun and even fulfillment outside of work. Consider your passions first, and who knows — you may even find some enlightenment!


6. Don’t Bank on Student Loan Forgiveness

This may be a hard pill to swallow. The idea of student loan forgiveness may bring you a sense of comfort, but the reality is that student loan forgiveness is currently not extended to all college graduates.

It can apply to graduates who work within the public sector in government organizations, non-profits, law enforcement, teaching, or the military. But even for these graduates, there can be extensive eligibility requirements that must be met to qualify, and it’s not always a guarantee.B

We’re not saying student loan forgiveness for all college graduates isn’t a possibility in the future. But, for now, we must go off what we know to wisely budget, invest, and save. If you can’t stand your student loan payments, you can get rid of them by paying them off with a solid payment strategy.

For tips on how to aggressively tackle your student loans, check out “7 Ways to Pay Off Your Student Loans Fast.

This blog is not intended to provide any tax, legal, financial planning, insurance, accounting, investment, or any other kind of professional advice or services. To make sure that any information or suggestions in this blog fit your particular circumstances, you should consult with an appropriate tax or legal professional before taking action based on any suggestions or information that we provide.

A. https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/deferment

B. https://www.joinporte.com/blog/7-ways-to-pay-off-your-student-loans-fast/

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