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Returning Student Loan Payments Will Put a Strain on Savings Goals. Here’s What Experts Recommend

21% of student loan borrowers plan to pause or reduce their savings efforts when payments resume.

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Starting Oct. 1, more than 27 million people will have a payment due on their federal student loans for the first time since the March 2020 payment pause. With widespread federal student loan forgiveness looking more like a pipe dream, borrowers are reevaluating their monthly budgets to find room for upcoming student loan payments. And many borrowers -- myself included -- are finding it impossible to fit savings into this plan.

Although top-yielding savings accounts are earning annual percentage yields over 5.00% right now -- a record high -- it’s a tough time to save. Inflation is still higher than the Federal Reserve’s target, and resuming student loan payments will make it more challenging to balance savings goals. A recent CNET survey found that 21% of borrowers expect to pause or delay their savings plans to accommodate student loan payments.

Having an emergency savings fund is crucial to help you weather unexpected expenses and job losses. But how do you prioritize savings if you’re worried about affording student loan payments? I spoke with experts to learn how to balance competing money goals, so you can develop a savings plan while navigating student loan payments.

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Savings rates are high, but how can you grow your money while tackling debt?

If you already have an established savings routine, student loan payments can affect how much you can save moving forward, says Tom Holtam, vice president at UMB Bank. 

“It’s important to not stop saving altogether but to adjust how much you’re setting aside to accommodate how much you owe in student loans,” Holtam said. 

Ultimately, it’s important to tailor a plan that suits your comfort level. Don’t put yourself in a precarious financial situation to take advantage of high savings rates, experts say. But you also shouldn’t rule out saving anything if you can find some wiggle room in your budget. 

Here’s what experts suggest you do to get started.

Readjust your budget and set a goal 

For three years, student loan payments haven’t been top of mind for many because of the payment pause. But as you prepare for repayment, take a closer look at your budget and realign your priorities to see if you can make space for saving.

“It’s a tough task to continue saving while adding another expense to your budget,” said Naoko McKelvey, senior financial advisor at Blue Chip Partners. You can start by seeing if there are expenses you can lower or eliminate to make room for your student loan payments, McKelvey added. 

Mark Kantrowitz, a financial aid expert and member of CNET Money’s Expert Review Board, recommends a descriptive budgeting exercise. Use a spreadsheet or a program like Quicken or Mint.com to help categorize your monthly expenses as mandatory or discretionary. 

“This will show you how much flex you have in your budget,” Kantrowitz said. It’s likely your spending habits may naturally change since increasing awareness is the first step in exercising restraint, he added.

If you find flex room in your budget, treat your savings contributions as a bill just like your rent, utilities and loan payments, suggests Leslie Tayne, founder of Tayne Law Group. Make sure your savings contribution gets “paid” before any discretionary expenses like dining out and shopping, Tayne added.  

But if you’re not in a position to save, focus on your student loan payments first. Then, as you pay down debt, focus on adding money toward your savings goals. “If you have the ability to save, then you should, but not at the expense of being late or delinquent on your payments or incurring more debt,” McKelvey said.

Take advantage of income-driven repayment plans

After reviewing your budget, if you’re worried about the size of your student loan payment, look into income-driven repayment plans such as the new Saving on a Valuable Education Plan, or SAVE, Tayne said. 

The federal government offers four IDR plans that can lower your monthly payment based on your income and family size. One of them is SAVE, a new income-based repayment plan that replaced the former Revised Pay-As-You-Earn plan, and it’s expected to lower federal student loan payments to $0 for more than 1 million borrowers, according to the US Department of Education. If you’re eligible, the lower monthly payment may allow you to better afford your student loan payment while still being able to bulk up your emergency fund or save toward other goals.

“Using an IDR plan is key to lowering loan payments for many high-debt individuals,” said Robbie Morris, a certified student loan professional. The standard repayment plan most borrowers are set up with could limit your discretionary income, delaying priorities like saving for retirement, buying a house or starting a family, Morris said.

“The ability to free up extra cash flow allows you to continue living your life without student loans being a complete drain on your life,” Morris added. 

Review existing debt and consolidate where you can

The Federal Reserve has tampered with interest rates since early last year to combat record-high inflation. While this has made savings rates more appealing, it’s also made financing, like credit card debt, more expensive: The average credit card interest rate is 20.68%, according to Bankrate.

Another key reason borrowers find it challenging to reintegrate student loan payments into their monthly budget is that many have taken on additional debt. Nearly 53% of student loan borrowers have taken on credit card debt since the beginning of the pandemic, according to a new TransUnion study. The Department of Education has requested that student loan delinquencies not be reported to the credit bureaus until Sept. 30, 2024. However, managing more than one type of debt makes these borrowers particularly vulnerable. 

If you carry credit card debt, you might find a respite from interest charges with a 0% introductory balance transfer card. Review your credit card rates and the annual fees you pay to hold these cards to figure out if transferring a balance can offer you some breathing room, Holtam said. 

A balance transfer card can help you pay off your debt without incurring interest on your balance for a period of time. This could save you money on your monthly payment and allow you to divert some of this savings toward your student loan payment or savings goals. But don’t use a balance transfer offer lightly; if you can’t pay your debt before the intro period ends, you’ll start accruing interest charges at the regular APR. 

Since balance transfer offers typically require good-to-excellent credit, you might also consider a debt consolidation loan, which may have lower credit requirements. Just be sure to review the rates and terms before committing to any consolidation option.

The bottom line

The pressure to save while also paying down debt is easier said than done, but it’s not impossible. Finding the right balance, so you’re not saving at the expense of your debt or vice versa is key. If you can comfortably pay your student loans and tuck away some money each month, a high-yield savings account can help you grow your money a little faster.


If you can’t afford to save and tackle your debt, focus on finding ways to reduce your monthly student loan payment by exploring IDR plans or reaching out to your loan servicer. Then, once you have some more space in your budget, you can shift more focus towards savings goals.

Liliana Hall is an editor for CNET Money covering banking, credit cards and mortgages. Previously, she wrote about personal credit for Bankrate and CreditCards.com. She is passionate about providing accessible content to enhance financial literacy. She graduated from the University of Texas at Austin with a bachelor's degree in journalism, and has worked in the newsrooms of KUT and the Austin Chronicle. When not working, she is probably paddle boarding, hopping on a flight or reading for her book club.