What Can I Do if I Can’t Afford to Pay My Student Loans?
May 09, 2023
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What Should I Do If I Can’t Pay My Student Loans?
President Biden’s decision to pause student loans one more time has come as a relief to many Americans with a significant amount of student loan debt. According to a study by the Department of Education, the average undergraduate student with loans will graduate with almost $25,000 in debt. As inflation continues to rise, the cost of living has become unbearable in many areas of the country.
While federal student loan payments are on pause (and interest free), private student loans are not. So, you might wonder, “What can I do if I can’t afford to pay my student loans?”
The answer is that you have a few resources at your disposal, and all hope is not lost. If you can’t pay your student loans or are scared of defaulting on them, keep reading to learn more about student loans and the resources you can utilize if you need extra help.
What Happens if You Never Pay Your Student Loans?
If you can’t afford your student loan payments, or you simply never pay them, your loan could eventually go into default. If you default on a loan, you've failed to maintain the terms and conditions of your contract, which might require you to pay them back on time. If you default on your student loan, that status will be reported to the major credit bureaus, and that can hurt your score tremendously. Many lenders, employers, and utility companies will check your credit report, and if your creditworthiness is not up to par, defaulting on your loan could affect your borrowing ability or job search in the future.
It is extremely important to pay your student loans on time (or any loan you take out for that matter). If you cannot afford a payment, one of the options you may have is to ask for forbearance. It means you won't have to make a payment that month, or you can temporarily pay a smaller amount. It does not have a direct effect on your credit score (as long as the smaller payments are made when requested by the lender or loan servicer).
Who is Most Likely to Default on Student Loans?
Over one in five adults carry student loan debt, but the individuals that are the most likely to have debt are Americans between the ages of 25 and 34, which is not surprising. The individuals that are most likely to default on their student loans are those that are experiencing a divorce or have a ton of debt but did not obtain a degree.
If you do need to consolidate your debt or get emergency cash to handle an unexpected financial situation, title loans could be an option to consider. It’s easy to become burned by debt and other financial obligations. The costs of rent, groceries, transportation, etc., can add up, and it is not always possible to keep up with them. With inflation rising in America, it’s no surprise that the average American has over $6,000 in credit card debt.
What are My Options if I Can’t Afford to Pay My Student Loans?
Life happens, and it is easy to get overwhelmed with your financial situation - especially if you have student loans.
If you can’t afford to pay your student loans, you have a few options:
- Contact Your Loan Servicer
- Change Your Repayment Plan
- Find Out if You Qualify for Loan Forgiveness
- Consider Debt Consolidation
- Apply for Forbearance
Additionally, there are other things you can do to manage your finances. You can:
- Take a Weekend Job: Do you have any free weekends this month? You could sign up for a third-party driving app like Uber or Doordash! It’s possible to make a little extra money on the side and allocate that towards your student loan payment each month.
- Sell Unwanted Items: Do you have any valuable household items collecting dust in your garage? Get on Facebook Marketplace and start listing them! It would surprise you to find out who is willing to take an old shelf or a used refrigerator off your hands.
- Create a Budget: It can be tough to create a budget, but it is important to be frugal! Make sure to live within your means and create a realistic budget that leaves some wiggle room.