“Repay to Caesar what belongs to Caesar and to God what belongs to God” (Mark:12:17).

As part of the COVID-19 relief strategy, in March of 2020, the U.S. government paused federal student loan payments and dropped the interest rate on those loans to 0%. Since then, there has been a lot of discussion, debate, and proposals around student loan forgiveness.

As a result, most of the people I’ve talked to have not made payments on their student loans for three and a half years. For many, it’s been removed from their budget. However, payments are due again starting in October, and interest has already begun to accrue, leaving many people wondering what it means for them.

(For specific details and to log into your loan, you can visit the federal student aid website at StudentAid.gov. This article is meant to provide a summary of some of their recommendations and dive into how to make this budget line item come back without too much stress, overwhelm, or worry.)

Student loans are a contentious topic. The cost of higher education is astronomically high, and many people do not receive adequate education about what it means to have a student loan. Often, young adults feel as if they do not have a choice. They “have to” go to college; therefore, they have to pay for it. There are these loans that exist to make that happen; therefore, they need to take out the loan.

Without diving too much into whether or not these statements are true, it is important to note that when you take out a loan of any type, you will be required to pay it back with interest. The interest will accrue differently depending on the type of loan, but it will be at some specified rate that compounds over a specific time period. Most student loans accrue interest daily and compound daily or monthly. This means the interest you owe is added to the loan amount, so you will pay interest on the interest as well. This compounding is where all debt can get out of hand quickly, particularly if you are only making the minimum payment, and that payment is lower than the interest you incur.

Since March 2020, student loans have essentially been frozen. The balances have stayed the same, unless a borrower elected to make payments. However, a lot of things may have changed within a borrower’s life. New home? New job? New financial responsibilities? A few things borrowers need to review as soon as possible are their contact information, repayment options and plans, whether or not they qualify for forgiveness, what their monthly payment will be, and how it will fit into their budget.

Other than the last piece, more information and how-tos are available at StudentAid.gov. As soon as possible, dive into your Loan Simulator to see which option is best for you. As you explore the website, consider enrolling in autopay, as it will save you 0.25% on you interest rate. 

The payment restart will be a pretty big hit to some borrowers’ budgets. If it isn’t, or if you reallocated that part of your budget to savings, great job planning ahead! If not, it is OK: Three and a half years is a long time. There was a lot of uncertainty, job loss, and life changes. Inflation has increased the cost of living, so trying to fit in an additional payment may seem impossible.

It is possible, but it may not be easy. The most important thing to remember, as always, is that God provides. That doesn’t mean He is just going to give everyone a raise to cover the student loan payment. There will probably be some sacrifice involved. Below are two approaches to prepare for the payments: rebudget everything, or remove discretionary expenses to equal the payment amount.

Option No. 1: Rebudget Everything

Check your budget to see if there are categories where you can cut costs or categories you can remove entirely. This process will be different for everyone. It may mean saving a bit less or eating at home more often. Maybe it means finding free activities rather than ones that cost money. Most people have somewhere they can decrease their spending.

Keep your financial and personal goals in mind, and be sure to have a bit left over at the end of each month for unexpected costs. It can be a tedious process, but is worth it. Knowing where your money is going has power.

Throughout this process, it is helpful to take some time to ask God what He wants for you (and, if applicable, your family) right now and how you can simplify your life. It is important to include your spouse, if you have one, and anyone else who is directly impacted and old enough to be part of the discussion.

Remember that as time goes on, your financial situation will change. This is simply one of those moments. Adjust, trust, and pray.

If you don’t have a budget, this is a great opportunity to create one! Read this article to get started.

Option No. 2: Remove Discretionary Expenses

This option is similar to No. 1, but if you don’t have a budget or the time or desire to create one, it should work, too.

Make a list of all your discretionary expenses (spending on things that you don’t need in order to live, work, or support people entrusted to you). From this list, discern and discuss with God and anyone impacted which expenses you could minimize or remove.

Using your student loan monthly payment amount, see where you can cut costs.  At the end of the month, once you know you’ve met all your other financial needs and goals, you can add them back if you have money left..

Cutting back and changing our lifestyle is never easy, but sometimes, it is necessary. As borrowers, we have a responsibility to pay back what we owe. Attaching meaning to the sacrifice can help make it more impactful. Consider offering the sacrifices you must make for an intention that is close to your heart. It could be something specific in your life or something more broad, like the souls in purgatory or an end or abortion. Or, maybe God is asking you to fast from an attachment.

Just because repaying the government does not sound spiritual doesn’t mean you can’t bring God into it. He wants to be in every part of our life. When we invite Him in, it is amazing the surprising things that can happen! While paying student loans is probably not your favorite thing, be encouraged that you are growing in virtue through the process.

May God be with you in all you do!

Erica Mathews is a CERTIFIED FINANCIAL PLANNER™ Professional with Financial Counseling Associates, a small, family owned, independent, financial planning and investment management firm. She is passionate about helping families and individuals build their wealth so they can live out the calls God has placed on their hearts. As a wife, mom of four, and businesswomen, she understands the complexities of family life and helps relieve the burden of financial stress with organization, a plan, and automation so her clients hit their goals. She lives in Colorado with her husband and four kids. They love everything outdoors including gardening, hiking, biking and simply exploring nature. If you would like to reach out to Erica, her email is erica@fca-inc.com.