Gen Z Will Be Most Affected By Student Loan Resumption — How They Can Prepare Their Budgets

 November 20, 2023 By Jake Safane


November 20, 2023 By Jake Safane

Due to the COVID-19 pandemic, the federal government paused federal student loan payments for over three years. In October 2023, however, student loan payments resumed, and many people were not prepared to handle this expense again. In particular, Gen Z seems to be the generation most affected by student loan resumption.

A recent GOBankingRates survey found that only 5% of 18-24-year-olds have factored their student loans into their budget, while 29% say it will drastically affect their budgets.

“The reality is that most Gen Z graduates truly believed that the federal government was going to bail them out of the debt they owe. It was inconceivable to the majority of borrowers that the Supreme Court would overrule Biden’s student loan forgiveness plan,” said John Foard, CFP, co-founder of Crown Advisors, LLC.

“They have operated the past two to three years under this impression they would not be paying these loans back and thus living on a budget that had not factored in these payments. Unfortunately, it’s time to pay the piper, and many Gen Z graduates are not prepared to make that payment,” he added.

However, just because you might be unprepared now doesn’t mean that you can’t work student loan repayments into your budget comfortably. But you need to plan ahead.

Get Serious About Budgeting

To manage the student loan resumption, many Gen Z graduates and others struggling to pay back student loans will need to take a hard look at their budgets.

“Unfortunately, there is no ‘magic bullet’ to resolve this issue. You will just have to rework your budget and make difficult decisions to eliminate items that are not ‘needs’ within your monthly/annual spending,” said Foard.

In his experience as a financial advisor, though, many individuals simply do not budget in alignment with their income.

“This causes many issues and usually leads to a life of chaos and uncertainty with regard to finances, especially when an emergency arises,” said Foard. “I strongly recommend reworking your budget to a number where you are living well within your means, where you are saving money each month for emergencies as well as covering your monthly needs.”

These monthly needs include paying off student loans. To work that into your budget, you may need to make some hard cuts or find ways to earn more money, such as through a side hustle.

“The reality is everything depends on the amount of income you are bringing home each month, and if you are unable to work in the student loan payments on your current lifestyle, changes need to be made,” said Foard.

Cut Expenses

If you need to cut expenses to make ends meet when incorporating the student loan resumption into your budget, you may need to take a closer look at the small items that can add up.

Student loan payments can vary from borrower to borrower, but many can expect to pay roughly $200-$500 per month. For simplicity’s sake, suppose your monthly payment is $400. As you go through your budget, you can likely find ways to cut that much.

Reconsider Spending on Habits and Subscriptions

For example, instead of “spending $3-$6 on coffee each day, or in some cases twice a day, you can brew your coffee at home for a fraction of the cost, and these savings will add up quickly,” said Foard. If you save $3 each day, for example, that can be around $90 per month.

Streaming subscriptions are another area ripe for cutting, said Foard.

Add $20 per month from subscriptions to the $90 you might save on coffee, and now you’re over 25% of the way toward that $400 mark.

An often unpopular cut, but a potentially important one, is your gym membership, said Foard. “Try to find another gym that is less expensive but gets the job done for now, or just start working out from home instead of paying that fee at all,” he explained.

If you save $50 per month on a gym membership, plus the other savings, now you’re 40% of the way there.

“These are only a few items to consider, and there are many other places you can look to lower or cut your budget down,” said Foard. “Regardless, if you are unable to make student loan payments fit into your current lifestyle, change must happen.”

Make Lifestyle Changes

Other ways to save could include spending a few weekend nights having friends over instead of going out to dinner or a bar. If you save $50 per weekend doing that and do so two out of four weekends per month, plus the aforementioned savings, then you’re 65% of the way there.

Next, suppose that taking public transportation twice per month when you would otherwise take a rideshare or taxi saves another $50 per month. Now you’re over

75% of the way there. For the final $90 in savings, switching your cell phone to a cheaper plan and meal prepping to save on food costs could easily get you there.


These are just examples, and everyone’s different, but the point is that you can make some relatively small shifts to afford student loan payments. You can’t necessarily afford what you could during the student loan pause, but you also don’t necessarily need to make dramatic changes, like never going out with friends.

“The thing to remember is these changes do not have to severely disrupt your life. Budgeting is a huge part of financial planning, and I highly recommend using one of the many free budgeting apps available to help you establish a baseline. From there, you can start finding ways to make adjustments,” said Foard.

Methodology: GOBankingRates surveyed 1,021 Americans aged 18 and older from across the country between Oct. 12 and Oct. 16, 2023, asking twenty-three different questions: (1) How much did you spend on your pet in the last year?; (2) How much have you spent/are you planning to spend on Halloween this year?; (3) How much money do you spend on kid-related activities in a year?; (4) How much do you spend on average on your monthly utility bills (electric, heat/gas, water)?; (5) What spending/saving habits have you had to change in the last year due to inflation/rising prices? (select all that apply); (6) What was the biggest unexpected expense you had this year?; (7) How much do you currently spend on monthly car payments?; (8) Do you live in a single-income or dual-income household?; (9) In the past year, did you have to take on a side gig because of rising prices/inflation?; (10) How much do you bring home from your side job(s) each month?; (11) How much have your overall expenses gone up in the past year?; (12) What is your top financial priorities to end 2023?; (13) What is the top way you’ve earned your money/gained wealth?; (14) Have you started financially preparing for 2024?; (15) How much have you spent on home upgrades in 2023?; (16) How will the resumption of student loan repayments affect your budget?; (17) How much do you currently owe in student loans?; (18) How much do you spend on yourself (not including housing, food, etc.) out of each paycheck?; (19) How much do you spend on online purchases per month?; (20) Where do you shop for groceries most often?; (21) Do you shop around for groceries to get better deals?; (22) What are you currently invested in? (Select all that apply); and (23) What is the current value of your stock investments? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.



Get Your

The 9 Investment Pitfalls

Tips-for high net worth investors