What To Do If You Can’t Afford Your Student Loan Payments

Top view on a student with bunch of overdue bills.
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After college, real life strikes. You may or may not be able to translate your degrees into a well-paying job, and even if you do, sometimes unexpected challenges happen. You may become unemployed or suffer economic struggles such as those that have accompanied the COVID-19 pandemic. Even if you’re currently getting state or federal aid or unemployment benefits, these will eventually expire and you’ll need to plan for the future. If economic uncertainty or job loss has affected your ability to make your student loan payments, it can add a level of stress you may not have anticipated or don’t know how to deal with.

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If you’re facing an inability to make student loan payments, first, don’t panic. Keep a level head, take your situation seriously and look into one of the following options, or speak with a financial advisor to help you figure out a plan.

Cut Costs in Your Life

The first and most obvious place to start is to cut costs in your life to free up the cash you need to pay your loans. Student Loan Hero recommends assessing common expenses and asking the following questions: Do you need that service or item? Can you find it more cheaply from another provider or service, and does it really even add value to your life? Also, try negotiating the cost of some bills or switching to different plans with the provider for things such as cellphone service, cable TV or streaming entertainment services and more.

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See: 9 Ways Student Debt Is Affecting Every Aspect of Americans’ Lives

Seek New Income Sources

Depending on your situation, a lack of cash may be solvable by taking on extra work somewhere else. Consider an independent gig such as driving for a ride-share service, offering your skills in the form of consulting or even picking up a second part-time job. Alternately, look for things in your home you might be able to sell immediately.

Read: What It Would Really Mean To Cancel Student Loan Debt

Change Payment Plans

Just because you chose one kind of payment plan may not mean you’re tied to it. There are numerous kinds of loan repayment plans, from graduated plans to pay-as-you-earn plans that might be a better fit. Additionally, you might be able to extend the length of your loan, from 10 years to 25, for example, which can reduce your monthly payment.

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Apply For Deferment or Forbearance

Find out if you qualify for loan deferment or forbearance. Deferment is when you can put off having to pay principal and interest on your loan due to certain circumstances ranging from underemployment, being enrolled in school or serving in the military. Forbearance is also a form of putting off your payments, but usually for a limited time period, typically with a 12-month maximum. Your loan service will have specific requirements for qualification.

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Refinance To Get a Better Rate

Another option is to refinance your loan to reduce the interest rate, which can translate to smaller monthly payments. There is a caveat here, however. When you refinance a federal loan, it becomes a private loan, which removes your forgiveness and income repayment plan options on the federal loan. So check out a loan refinance calculator to see if it’s even worth it first.

More: 30 Ways To Dig Yourself Out of Debt

Avoid Collections

No matter what strategy, or combination of them, you employ, your goal should be to keep your loan from going to collections. This typically happens only after you’ve left your loans unpaid for somewhere between 270 and 360 days, putting your loan into default. Not only does your full loan balance become due immediately, but you will also likely incur steep fees, your wages can be garnished and your credit will take a hit.

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Last updated: Oct. 29, 2021

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About the Author

Jordan Rosenfeld is a freelance writer and author of nine books. She holds a B.A. from Sonoma State University and an MFA from Bennington College. Her articles and essays about finances and other topics has appeared in a wide range of publications and clients, including The Atlantic, The Billfold, Good Magazine, GoBanking Rates, Daily Worth, Quartz, Medical Economics, The New York Times, Ozy, Paypal, The Washington Post and for numerous business clients. As someone who had to learn many of her lessons about money the hard way, she enjoys writing about personal finance to empower and educate people on how to make the most of what they have and live a better quality of life.

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