Getting Help With Student Loan Debt

Many recent college graduates (and not so recent college graduates) are dealing with overwhelming student loan debt. If you are just considering college for the first time, one of the best ways to avoid student loan debt is to get educated on all of your financial aid options for college (not just student loans). If you have already accumulated student loan debt from college, and are now having a difficult time managing your student loan debt, there is help. For those of you with federal student loan debt, the options are greater, however there are some options out there for dealing with private student loan debt as well.

Learn About Your Student Loan Debt Options

Depending on what type of student loan debt an individual has, their options for debt relief may be different. Federal student loan debt typically offers the most options for debt relief in the form of alternate and income-based repayment programs, as well as student loan forgiveness programs. For private student loans, the debt relief options tend to be more short-term. Most private student loans will offer a deferment or forbearance option, which can help relive an individual of their monthly payment obligations while unemployed (for example), however some individuals may have the option of consolidating their private student loans, which may provide a more long-term debt relief solution in the form of a more manageable monthly payment amount. Before utilizing a debt relief program or option, be certain to understand the pros and cons associated with it. For example, a student loan consolidation may reduce your monthly student loan payments, however you may end up paying more in interest charges over the lifetime of the loan, or a deferment on your student loans may halt your payments for a period of time, but the interest on your loans will likely capitalize.

10 Real Options For Reducing Student Loan Debt
I Can’t Make My Private Student Loan Payments

What Should I Do If I Can’t Pay My Student Loans?

If you’re reading this, it’s likely you’re feeling the weight of student loan debt and wondering what to do if you just can’t make those payments. Trust me, you’re not alone. Life happens—whether it’s a job loss, medical emergency, or unexpected financial curveball. The good news? There are options, and the sooner you take action, the better. Here’s a step-by-step guide on how to tackle this problem head-on, with some pro tips along the way!

1. Reach Out to Your Loan Servicer ASAP

First things first: don’t bury your head in the sand. If you’re having trouble making payments, you need to get in touch with your student loan servicer (the company handling your loan). They’re there to help, and many are willing to work with borrowers who are struggling. It’s much better to let them know upfront than risk your account going into default.

Pro Tip: Keep your communication clear and honest. Be upfront about your situation and let them know if you’ve hit a rough patch. They might offer deferment, forbearance, or a more manageable payment plan.

2. Explore Repayment Options

Your loan servicer has a variety of repayment plans at their disposal. Some might lower your monthly payment to something more manageable. For instance, you might qualify for income-driven repayment (IDR) plans, which base your payments on your income. If your financial situation is tight, you could also look into consolidating your loans, which might make things easier by combining multiple loans into one monthly payment.

Pro Tip: Take the time to understand your repayment options. Different loans (federal vs. private) have different terms, so knowing your options will put you in the driver’s seat when it comes to managing your debt.

3. Ask About Deferment or Forbearance

If you’re temporarily struggling and need a breather, don’t hesitate to ask your loan servicer about deferment or forbearance. These are temporary pauses on payments, but they come with different terms. Deferment typically allows you to pause payments without your loan going into default, and in some cases, you won’t even accrue interest during that period. Forbearance, on the other hand, may still allow for interest to accrue, but it’s another option to buy you some time.

Pro Tip: While deferment sounds great, remember that forbearance might end up costing you more in the long run because interest keeps piling up. Make sure you understand the pros and cons before you decide.

4. Show Good Faith

Once you’ve worked out an arrangement with your servicer, it’s time to show some good faith. Follow through with everything you’ve agreed upon—whether it’s sending in forms or making payments on time. If you hit another snag, keep the lines of communication open. Ignoring your loans is the quickest way to spiral into default, so stay proactive and be responsive.

Pro Tip: Don’t be afraid to ask for help if you’re confused about paperwork or terms. There are nonprofit credit counseling agencies that can assist you for free or low-cost.

5. Don’t Wait Until It’s Too Late

If you miss a payment or can’t make the one you promised, contact your servicer immediately. The earlier you reach out, the more options you have. If you let too much time pass, you risk defaulting on your loan, which can have long-lasting consequences on your credit score and your financial future. Stay ahead of the game by getting in touch at the first sign of trouble.

Pro Tip: If you’re having trouble keeping track of due dates, set up automatic payments or alerts to make sure you never miss one.

Conclusion: Take Control of Your Student Loan Situation

Life can get overwhelming when it feels like you’re drowning in student loan debt, but there’s always a way out. By reaching out to your loan servicer, reviewing your repayment options, and being proactive, you can make your payments more manageable. And if things get really tough, there are temporary solutions like deferment or forbearance that can buy you some time. Whatever you do, just make sure you don’t ignore the problem. The sooner you address it, the easier it’ll be to find a solution that works for you.

What Happens If Student Loan Payments Are Ignored

Not repaying your student loans or simply ignoring the student loan payments, should be avoided at all costs. Borrowers who can not afford to pay back their student loans, should contact their student loan lenders immediately to find out their options. There are some federal programs set up to aid qualified borrowers in the repayment of their student loans, and some private student loan lenders may be willing to work with their borrowers who are willing to put forth a good faith effort. Ignoring student loan payments can result in the following actions being taken:

1. Your loans may be turned over to a collection agency. You’ll be liable for the costs associated with collecting your loan, including court costs and attorney fees.

2. You can be sued for the entire amount of your student loans. Your wages may be garnished. Your federal and state income tax refunds may be intercepted. The federal government may withhold part of your Social Security benefit payments.

3. Your defaulted loans will appear on your credit record, making it difficult for you to obtain an auto loan, mortgage, or even credit cards. A bad credit record can also harm your ability to find a job.

4. You won’t receive any more federal financial aid until you repay the loan in full or make arrangements to repay what you already owe and make at least six consecutive, on-time monthly payments. (You will also be ineligible for assistance under most federal benefit programs). You’ll be ineligible for student loan deferments. Subsidized interest benefits will be denied.

5. You may not be able to renew a professional license you hold.

6. You may be prohibited from enlisting in the armed forces.