Here’s how to prepare for and pay off student loan repayments – and what most people don’t know about the process, according to a budgeting expert

Experts are urging student loan borrowers to take action now to ensure they are prepared for the interest that will be paid back on their debts starting Friday.

As of March 13, 2020, federal student loan repayments will begin on the first day of October, but interest will start rising again from September 1 for millions of college graduates.

The federal student loan portfolio currently exceeds $1.6 trillion, owed by approximately 43 million borrowers. According to credit reporting company Experianthe average borrower will owe $203 per month when payments resume.

Kendall Philbrick, creator of the personal finance site Babe on a budgetsays that if you plan to pay a lump sum payment before September 1 to keep interest costs as low as possible, “the time is now.”

“You have to log in to your admin and do that the next day or so to make sure it’s cleared,” she told DailyMail.com.

Some borrowers have reported having to wait on the phone for extended periods of time to contact their service provider, Philbrick said. So it’s worth getting in touch as soon as possible to avoid delays.

“Usually the interest goes back to when you paid,” she said. “So if you pay on Tuesday and it doesn’t become clear until Friday, then they shouldn’t charge those extra days’ interest.”

For many people it will not be within their capabilities to take advantage of the last days of the interest-free payment break. But at least some action is needed for all borrowers to ensure they are prepared.

“Check who your administrator is, as it may have changed,” she said. “Since 2020 there have been many changes in who manages the loans.

“New managers have been added and some managers have gone out of the game, so it’s very important that borrowers understand who actually manages their loans.”

To find out, borrowers can log into Federal Student Aid website.

While graduates should have been contacted to let them know if their administrator had changed, this information may have been lost if they changed their email address or moved home.

“Make sure your contact information is up to date with your administrator and with Federal Student Aid to make sure you don’t miss any important correspondence,” Philbrick said.

The next thing borrowers should do is review their repayment plan and make sure it still makes sense in their current situation.

“Choosing the plan for you will really be based on what you need,” she told DailyMail.com.

“If you’re trying to lower your monthly payments, an income-driven plan like SAVE — or Saving on a Valuable Education — is probably one of the better options for you.”

The SAVE plan was finalized after the Supreme Court rejected President Biden’s student debt forgiveness initiative in June, dashing the hopes of 16 million people already approved for relief.

The Supreme Court rejected President Joe Biden’s $400 billion student loan forgiveness plan in June

The Supreme Court ruling destroyed the hopes of 16 million people who were allowed to benefit from the relief

The new Income-Based Repayment Plan (IDR) allows some eligible Americans to pay $0 per month to their balances.

If you’re already in an IDR plan, Philbrick says, you should also assess whether it makes sense to re-certify your income now, especially if it’s dropped.

“Once you’re all set and decided on an installment plan, I recommend people sign up for automatic payments,” she added.

“People haven’t paid for three and a half years, so they’re out of practice — and this ensures you don’t miss a payment.

‘Moreover, if you pay automatically, you also receive an interest discount of 0.25 percent, so that also saves a bit.’

While many borrowers are struggling and may not feel ready for repayments to resume in October, they will have some leeway over the first 12 months, Philbrick said.

“If you are late or miss a payment between October 2023 and September 2024, your account will not be in arrears, they will not default you, and they will not report you to a credit bureau.

“Even if you don’t make progress on your loans and your interest continues to accrue, you remain protected against the worst consequences if you miss out on your student loan payments.

“So if you need a little more time, you can understand your situation a little bit better,” she added.