What to Do If You’re Struggling to Make Student Loan Payments

By Sara Lindberg Updated on May 7, 2019

One of the worst feelings is checking your bank account and realizing there’s not enough money to cover your student loan payment.

If this is something that has happened to you, you should know that there are options other than defaulting on your loan. In fact, there are several options that can even help you lower your monthly payments

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Here are some things you can do if you’re struggling to make your monthly loan payment.

Call your lender

When you’re struggling to make student loan payments, the first thing you should do is call your lender.  They may be able to come up with a plan to lower your monthly payments or catch up if you’ve fallen behind.

When you talk with your lender, make sure to explain your current financial situation. They need to know all the details in order to get a clear picture of your overall debt.

OK, yes, it may feel a bit scary to pick up the phone and make this call but remember, ignoring the problem can increase your likelihood of default. It’s better to face the issue head-on.

See if you're eligible for help from the government

If you have federal loans, there are two programs that you may qualify for. 

The first is income-driven repayment. These repayment plans allow you to cap your monthly payment at an amount that is based on your income and family size—generally 10% of your discretionary income.

Since this repayment plan is based on your income, you must reapply each year.

The second is the Public Service Loan Forgiveness Program (PSLF). If you’re eligible, this program forgives the remaining balance on your federal Direct Loan after 10 years of payments.

In order to be eligible for the PSLF, you must work in a qualifying public-service job and have remained current with your student loan payments.

This program is available to many employees working in public service, including school districts, public hospitals, non-profit organizations, government organizations at all levels, and more.

After you qualify for the PSLF, be sure to enroll in an income-driven repayment plan. 

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Modify your repayment plan

You were likely placed into a repayment plan by your lender when you started paying on your student loan. However, if you have a federal loan, you can change repayment plans at any time. 

In addition to the income-driven repayment plan described above, there are several other repayment plan options available to you.

A standard repayment plan comes with fixed payments, so your monthly bill never changes.

The graduated repayment plan starts with lower payments, but then you will see an increase every two years.

Under certain circumstances, such as a financial hardship, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments.

You may also be able to extend the term of your loans. It will take you longer to pay them off, but you’ll have a more-affordable monthly payment in the meantime.

Look into consolidating your loans

When you consolidate your student loans, you join several loans into one monthly payment. This most often refers to federal loans, which can be consolidated through federal Direct Consolidation Loans.

Not only does this simplify your payments, your monthly out-of-pocket cost could go down since you may be able to pay off your balance over a longer period of time.

Consider refinancing your loans

When you refinance your student loans, you can save money over the life of the loan.

By swapping out your existing loan for a new one with a lower interest rate, you’ll automatically direct more of your monthly payment towards the principal and hopefully, pay down your debt faster.

Both federal and private student loans are eligible for refinancing through a private lender.

To find out how refinancing could help you stay current on your monthly student loan payments, check out our Student Loan Refinancing Calculator. 

Published in: Lower Payments

About the Author
Sara Lindberg

Sara Lindberg, B.S., M.Ed., is a freelance writer specializing in business, finance, health, and wellness. She holds a Bachelor's of Science degree in Exercise Science and a Master's Degree in Counseling. When she’s not writing, Sara can be found at the gym lifting weights, running the back roads to train for her next half-marathon, and spending time with her husband and two children. Read more by Sara Lindberg