What to know about student loans — right now

A lot has happened with federally held student loans lately, so it can be tough to keep it all straight. As a quick recap, here’s the latest:

  • Off the table: Student loan forgiveness. The Supreme Court struck down the Biden-Harris student loan forgiveness plan at the end of June.
  • On the table and coming soon: Student loan interest and repayments. After more than three years of being on hold, interest accrual will start again by Sept. 1, and repayments must start by Oct. 2023.

This news triggers a lot of financial impacts — especially at a time when the economy and inflation are still affecting people’s budgets. If you’re taking a moment to regroup and consider what it means for you, know that you don’t have to figure it all out on your own.

The team at Spruce is here to help you unpack this topic and get ahead of any tasks you may have now and in the coming months.

Repayments start in October: Are you ready?

March 2020 feels like it was ages ago. Think of how much has changed since pandemic era relief put federally held student loan payment requirements hold. You may have changed banks, addresses, a different job, and so much more.

Now that the repayment freeze is lifting, it’s a smart idea to run through a few basics to make sure you’re ready. Missed payments can mean your credit takes a hit, so you don’t want to have any surprises. 

Student loan repayment readiness checklist

  • Check with your loan servicer to make sure your address, banking, and direct deposit information is still accurate. You want to make sure your payments will go through to the right place and on time.  
  • Update and/or recertify your income information if you have an income-driven repayment plan.
  • Revisit your budget to see where your payments fit it. If you’re like many, you may have taken on other financial obligations over the last three years.
  • Set up or update a repayment plan through the U.S. Department of Education at https://studentaid.gov/manage-loans/repayment/plans if you know you need to restructure your payments.
  • Keep good records for tax time as the interest you pay on student loans can potentially be deducted from your taxes when you file next year.

Related: How credit score is calculated, How to create a budget

How Spruce and H&R Block can help

Getting ahead of your first repayment in October is a big job. If you need help making heads or tails of your spending, Spruce’s budgeting tools can help — and you don’t even have to do anything to get started. Spruce will automatically categorize your spending for you so you can identify how much you’re spending and where, helping you look for places to redirect spending towards your loan repayments.

Don’t have Spruce yet?  Get started.

At tax time, you can rely on H&R Block Online or an H&R Block tax pro to help you claim the student loan interest deduction which can reduce your tax liability.   

This information provided for general educational purposes only. It is not intended as specific financial planning advice as everyone’s financial situation is different.

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