How to Start Budgeting for Student Loan Payments
The arrival of new monthly bills for student loan payments can be an unwelcome wake-up call for many — but it doesn’t have to be.
4 min read
If you’ve ever had to take out student loans, you know what a delicate topic this can be. Sooner or later, the grace period will be over, and you’ll have to start paying back the money you borrowed for school. The arrival of new monthly bills for student loan payments can be an unwelcome wake-up call for many — but it doesn’t have to be.
If you start budgeting now for your student loan payments and get ahead of the game, you’ll be able to avoid financial stress and worry down the road. Find the tools that you need to do so with N26: tools to help you organize your finances and put money aside, tools to help you understand where your money is going, and tools that make it easier to plan for the future. Discover what you can expect when your student loans are due, and learn how you can set yourself up to make your monthly payments without the unnecessary stress.
How much are student loan payments?
Monthly student loan payments vary greatly, depending on how much money you borrowed for your education and the terms of your loan. In the US, the average student loan payment is $393 per month. However it could be as low as $40 to $50 (the minimum monthly payment for federal student loans) or over $1,000 if you owe more than $100,000.
How much money will I need to budget to make my student loan payments?
You’re already planning ahead which is a great place to start. You can set a monthly savings goal for your student loan payments that fits your particular situation. Be sure to put aside a realistic amount, and not get yourself in an uncomfortable financial situation now to avoid one down the road.
Step #1: Determine your goal and plan how you will save to reach it. Calculate the total amount that you owe for your student loans. This number should be the primary goal you plan for. Ask yourself:
When do you want to have your loan paid off?
What will your minimum payment be each month? (You can use an online student loan calculator to help figure this out).
Will you be able to pay more than the minimum?
How soon do you need to start saving, and how much money will you set aside each month?
Step #2: Create a “Student Loan Payments” fund. Make sure an account separate from the primary one you use for everyday purchases to avoid accidentally spending any money you put aside for your loans. With N26, you can use Spaces to create a “Student Loan Payments” goal and use rules to add a predetermined amount from your paycheck every month.
Step #3: Track your monthly expenses. Keep your spending in check and figure out how much you can actually save by paying attention to where your money goes each month. N26 gives you automated statistics right on the app, which organizes all of your purchases into categories like transportation, shopping, and groceries. Knowing this information will help you decide where to cut back if you need to.
How do I make student loan payments?
Your student loan servicer handles payments and billing regarding your loan. Your servicer should have contacted you when you first took out the loan, but if you don’t know who it is, you can check with your school’s financial aid officer. You can also contact the Federal Student Aid Information Center at 1-800-433-3243 for federal loans. If you have any questions or are struggling to make your monthly payments, be sure to reach out to your loan servicer right away. They can work with you on repayment plans and provide options for loan consolidation.
What happens if I’m not able to make my student loan payments?
The last thing that you want to do is default on your loan. If you ignore the bills, the amount that you owe will just keep growing as it accrues more and more interest. After 90 days, your account will be considered delinquent, which will damage your credit score and result in significant fees. Plus, you will still have to pay back the money. The government can take 15% of your wages plus your tax refund until your loan is paid off. Even if you declare bankruptcy, you still have to pay back your student loans. Your best option is to work with your loan servicer to find a repayment plan that works for you.
Master your monthly student loan payments with N26
When you’re equipped with the right tools for managing your money, it can be much easier to pay down your student debt. Understanding your finances gives you the power to shape your future and N26 will be there by your side for every step of your financial journey. Sign up with N26 today and get the tools that you need to budget, save, and repay your student loans.
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The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.
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