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Student Loans Student Loan Repayment

Create a Budget for Student Loan Repayment

With the end of the COVID-19 federal student loan payment pause, you may be re-evaluating your budget to account for student loan payments again. And if you’re trying to determine what that looks like for you, you’re not alone. 

Budgeting for student loan payments can be challenging, but it is important to be proactive. By budgeting for your student loan payments, you can stay on track to pay off your loans and reach your financial goals. Find how to create a budget and several tips to stick to it. 

How to budget for student loans

Budgeting for student loans is a crucial aspect of the overall financial puzzle of managing your finances, as it’s a way to ensure you can comfortably handle your repayment obligations. 

The process is much like budgeting for other expenses, but it specifically focuses on ensuring you can afford your student loan payments. We’ll go through five essential steps to help you create a student loan budget that ensures you stay on top of your financial responsibilities.

Step 1: Determine which tool you’ll use to manage your budget

Before diving into budgeting for student loans, it’s essential to understand what a budget looks like. A budget is a financial plan that outlines your income, expenses, and savings goals. It acts as a roadmap for managing your finances.

Selecting the right budgeting tool is an essential first step in creating a well-structured student loan budget. Whether you opt for digital apps, spreadsheets, or pen and paper, choose a method that aligns with your preferences and allows for efficient tracking of your finances. 

“When choosing a budgeting tool, consider your goals (such as spending less, saving for a big purchase, or paying off debt),” advises Chloe Moore, CFP. “How much time and effort do you want to put into maintaining the system, and how much detail do you require to be successful?”

Additionally, consider leveraging online resources and student loan calculators to estimate loan repayment amounts, ensuring your chosen tool accommodates this specific requirement.

Step 2: Determine your monthly income

If you took advantage of the student loan payment pause, your income might be different than it was previously. Depending on how your income and expenses changed, you might find it harder or easier to make your student loan payments. Therefore, your first step is calculating your income.

To start building your student loan budget, calculate your monthly income sources. These may include full or part-time jobs, income from internships, or support from family. It’s crucial to be realistic about your income, considering any variations or irregular payments you may receive. 

Once you’ve calculated your monthly income, you’re ready to move on to your expenses.

Step 3: Track your spending

Keeping a vigilant eye on your expenses is vital for creating an effective student loan budget. Record all your financial outflows, including housing costs, food, transportation expenses, and discretionary spending like entertainment. Also, include all debt payments, like your student loans. 

Don’t forget to account for irregular expenses, like gifts or travel, and expenses that aren’t paid monthly, such as insurance and taxes. These are often forgotten, and they can throw off your budget.

Chloe Moore


Unless you’ve decided to get a different student loan repayment plan (e.g., an income-driven repayment plan versus a traditional one), your student loan payments should be the same as before the pause. You can check with your loan servicer to find out how much your monthly payment will be. 

You may not need to change your budget if you consistently made your student loan payments, even during the student loan repayment pause. However, if you haven’t been making student loan payments, you might need to cut your monthly expenses to incorporate this payment into your budget. 

By categorizing your expenses, you can identify areas where you might cut back or make more frugal choices. Remember to keep all receipts and transaction records to maintain an accurate overview of your financial habits.

Step 4: Balance your budget

Balancing your budget is where you ensure that your cash inflows (income) cover your cash outflows (expenses, investments, savings). Start by comparing your total income to your total expenses. This step will allow you to determine if your budget is sustainable. 

When balancing your budget, there are three possible outcomes:

  1. Budget surplus: This means your cash inflows exceed your outflows. Evaluating your financial goals will help determine what to do with the surplus. For example, you might decide to make larger payments toward your student loans to repay them more quickly. Or, you may want to build an emergency fund. 
  2. Budget deficit: This means your cash outflows exceed your inflows. This situation isn’t sustainable and requires quick action. If you can’t increase your income, you need to cut your expenses. This could include seeing if you qualify for an income-driven student loan repayment plan
  3. Balanced budget: This means your cash inflows and outflows are exactly the same. Even if your budget is balanced, you can review it to ensure it’s optimized to achieve your goals. For example, if you want to repay your student loans faster, you might decide to reduce other cash outflows.

By comparing your income to your expenses, you gauge the sustainability of your budget. Allocating a portion of your income to cover student loan payments while addressing other financial needs is vital. 

Regularly reviewing and fine-tuning your budget will enable you to meet your immediate financial responsibilities and pursue long-term financial success.

Step 5: Revisit your budget

Creating a student loan budget is not a one-time task; it requires continuous attention. Regularly revisiting and updating your budget is vital to ensure it aligns with your evolving financial situation. 

Be proactive in increasing your income or reducing expenses to free up more funds for student loan repayments. If you encounter challenges, seek advice from financial experts who can offer strategies to manage your student loans and overall financial health effectively.

What to do after budgeting for student loans

Once you’ve successfully created a student loan budget, knowing how to proceed in different financial scenarios is essential. If you’re struggling to afford your current student loan payments, for example, you have options to consider. Likewise if you’re on the opposite end of the spectrum and can now pay more than your previous payments.

Here’s a closer look.

What if you can’t afford to make your current student loan payments?

If you can’t afford your student loan payments, a few options exist:

Consider a different repayment plan

If you have federal student loans, consider applying for an income-driven repayment plan. With this repayment plan, your monthly payments are based on your income and family size. Keep in mind that you’ll need to provide proof of your income (e.g., via your tax returns) each year to qualify for this plan. 

If your student loans are private, consider reaching out to your lender to renegotiate a payment plan that better fits your current needs.

Explore loan deferment or forbearance

These can temporarily pause your payments if you face financial hardship. These are options for federal student loan borrowers, but some private student loan lenders will also offer this repayment assistance.

  1. Evaluate loan forgiveness programs

Particularly if you work in a government or nonprofit job, you may be eligible for student loan forgiveness, which offers relief after a certain number of payments. Only federal student loans are eligible for student loan forgiveness, however, so it’s important to know which type you have.


Aren’t sure if you have federal or private student loans? Check the federal student loan website. If your loan is listed, it’s federal. If it’s not listed, it’s private.

Remember that communication with your loan servicer or lender is crucial if you need to navigate changes to your payment schedule. Contact your loan servicer or lender to discuss your situation and explore the best solution for your circumstances.

What if you can afford to pay more than your previous student loan payments?

If you can afford to pay more than your previous student loan payments, it’s a great opportunity to accelerate your journey toward becoming debt-free. By allocating additional funds toward your student loans, you can reduce the overall interest you’ll pay and shorten the loan term. 

However, it’s essential to ensure that you have a solid financial foundation in place, including an emergency fund and addressing other financial goals, before significantly increasing your loan payments. 

“There are several factors to consider if you’re thinking about paying off your student loans early,” says Moore. “I recommend having an emergency fund of at least three to six months before accelerating payments to student loans. In addition, you should consider whether you have other debts at a higher interest rate, whether you qualify for loan forgiveness, or if you’re on track to fund other financial goals.”

Additionally, check with your loan servicer or lender to ensure that any extra payments are applied correctly to the principal balance and not just advance your due date.

How to stick to your budget

Ensuring you stick to your budget is crucial, especially when it comes to managing your student loan payments. Here are some tips to help ensure you’re successful:

  • Use a budgeting app. Begin by selecting a budgeting tool that suits your needs and is user-friendly. An app that offers automatic tracking can simplify the process. 
  • Prioritize your student loan payments. You can do this by automatically directing a portion of your income to your student loan payments. The same process can be applied to any other bill you wish to make a priority. This way, you ensure your obligations are met before discretionary spending.
  • Regularly assess your budget, ideally when paying your bills. This will help you gain insight into your financial health and find areas for improvement. Plus, it can be a great way to stay on track with your student loan payments and manage your finances more efficiently.
  • Set clear financial goals. Define specific goals for your student loan repayment. Whether paying off your loans in a certain number of years or reaching a specific balance, having clear objectives can motivate you to adhere to your budget.
  • Create a contingency fund: Establish an emergency fund to cover unexpected expenses. This fund will prevent you from dipping into your budget or relying on credit when emergencies arise, enabling you to maintain your loan payment schedule.
  • Seek out financial advice. If you struggle to manage your student loans, consider consulting a financial advisor or counselor. They can provide tailored strategies and guidance to help you stay on track with your budget and repay your loans effectively.

Ultimately, sticking to your student loan budget requires discipline and strategic planning. Remember that everyone’s financial situation is unique, and it’s essential to customize your budget and repayment strategy to fit your specific needs and goals.


If I didn’t make student loan payments during the pause, am I still eligible for Public Service Loan Forgiveness (PSLF)? 

Yes, even if you didn’t make student loan payments during the pause, you are still eligible for Public Service Loan Forgiveness (PSLF) as long as you meet all other PSLF qualifications. 

The U.S. Department of Education announced that all months of the COVID-19 student loan payment pause will count towards PSLF, regardless of whether you made payments during that time.

Plus, if you have any periods of forbearance or deferment on your loans, you may still be eligible for PSLF under the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. 

Under the TEPSLF program, certain periods of deferment and forbearance count even if they didn’t in the past.

How might plans to pursue PSLF change how I budget for student loans?

With the PSLF program, your student loan balance can be canceled after 10 years of public service as long as you meet all the PSLF qualifications. Pursuing PSLF may change how you budget for student loans by allowing you to make smaller payments through income-driven repayment plans.

This can free up money for other expenses. However, if you fail to qualify for the PSLF program (e.g., you leave public service), it might take you longer to repay your loans. So, you may want a contingency plan in case you don’t qualify, such as planning for a longer repayment term.  

What if I realize I can’t make a federal student loan payment after payments resume?

If you realize you can’t make a federal student loan payment after payments resume, contact your loan servicer immediately. Your loan servicer can help you explore options like income-driven repayment plans, forbearance, or deferment. 

It’s essential to stay in touch with your loan servicer and avoid defaulting on your student loans, as this can have severe consequences for your credit score and future borrowing ability.

Do any budgeting apps focus on student loans? 

Yes, there are a few budgeting apps that focus on student loans. One popular app is YNAB, which allows you to track your student loan balances and payments. Other popular budgeting tools can also work well for student loans, such as Mint and EveryDollar.  

What are the best budgeting apps for student loans?

One of the best budgeting apps for student loans is YNAB. You can use this tool to track and manage all of your finances, including student loans. It also has several features that can be helpful for student loan borrowers, such as goal and net worth tracking. 

While not a budgeting app, another popular option is Student Loan Planner, which offers one-on-one student loan consultations with a certified student loan planner to help you create a budget for your student loans. It also offers comparison tools, calculators, and resources if you want to figure it out on your own.