If you're feeling overwhelmed by your student loans and can’t seem to keep up with the payments, trust me, you’re not alone. We’ve been there—or know someone who has. That monthly bill can feel like a weight pressing down on you, especially if you're not making as much money as you thought you would, or life just threw a few unexpected expenses your way. It happens. And while student loans are a big responsibility, there are ways to manage them without completely sinking.
So, let’s take this step-by-step. Whether you’re just starting to fall behind or you’ve been struggling for a while, there’s always room to figure things out. The key is to stay calm and focus on realistic, manageable steps.
Step 1: Don’t Ignore the Problem—Face It Head-On
I get it—those loan statements arriving in your inbox or mailbox can feel like they're taunting you. It’s tempting to avoid them, push them to the side, and hope you’ll figure it out later. But avoiding your loans is a sure way to dig yourself into a deeper hole. The first step in taking control is simply facing the reality of your situation.
Understand Your Loans
Do you know exactly what type of loans you have? It’s important to figure that out because federal and private loans are handled differently, and they offer different options for when you’re struggling with payments.
- Federal loans: These are backed by the government, and they often come with more flexible repayment options (which we’ll get into later).
- Private loans: These come from private lenders, like a bank or credit union. Unfortunately, private loans don’t have as many safety nets, but that doesn’t mean you’re out of options.
Tip: If you’re unsure what type of loans you have, head over to Studentaid.gov to check out your federal loan details. For private loans, reach out directly to your lender or check your credit report.
Step 2: Talk to Your Loan Servicer (Yes, Really)
I know the idea of talking to a loan servicer might sound intimidating, but it’s so important. Ignoring your servicer will only lead to late fees, increased interest, or even default. The best way to protect yourself from spiraling out of control is by reaching out early—before you miss too many payments.
What to Say When You Call
When you call your loan servicer, just be honest about your situation. It’s okay to say you’re struggling to make payments. They’ve heard it all before, and they’re there to help you figure out the next steps. Here’s what you’ll want to ask about:
- Deferment and Forbearance: These options allow you to temporarily stop making payments or reduce your monthly payments. Deferment is usually a better option because, with some loans, the government will cover the interest while your payments are paused. Forbearance is more common but means interest continues to pile up, which can make your loan more expensive in the long run.
- Income-Driven Repayment Plans: If your loans are federal, you might qualify for an income-driven repayment plan, which adjusts your monthly payments based on your income. This is a great way to make your payments more manageable, especially if you’re earning less than you expected.
What Happens If You Don't Call?
Let’s be real—if you don’t communicate with your loan servicer and just stop paying, things can get worse fast. After 30 days, your payment is late. After 90 days, it’s reported to the credit bureaus, which can damage your credit score. And if your loan goes into default (after 270 days for most federal loans), the consequences can include wage garnishment, tax refund seizures, and collection calls. The sooner you reach out, the more options you’ll have to protect yourself from these outcomes.
Step 3: Explore Income-Driven Repayment Plans
If you have federal loans and you're struggling to make payments, income-driven repayment (IDR) plans could be your saving grace. Instead of your payments being based on the amount you owe, they’re calculated based on your income, family size, and the federal poverty line. This means if you're earning less, your payments will be lower—sometimes as low as $0 if your income is very low.
Types of Income-Driven Plans
There are several types of income-driven repayment plans, but here are the basics:
- Income-Based Repayment (IBR): You’ll pay 10-15% of your discretionary income, depending on when you took out your loans. After 20-25 years of payments, any remaining balance is forgiven.
- Pay As You Earn (PAYE): Similar to IBR, PAYE caps your payments at 10% of your discretionary income and forgives the remaining balance after 20 years.
- Revised Pay As You Earn (REPAYE): REPAYE is similar to PAYE but has some differences, like extending the repayment term for graduate loans and offering interest subsidies to help reduce how much interest accrues while you’re on the plan.
Pros and Cons of IDR Plans
Pros:
- Lower payments: The most obvious benefit is that your monthly payment is reduced to something more manageable.
- Loan forgiveness: After 20-25 years, your remaining loan balance could be forgiven (though note this is taxable as income).
Cons:
- Interest builds up: Because you’re paying less each month, it might take longer to pay down the loan’s principal, meaning more interest can accumulate over time. This can make your loan more expensive in the long run.
Still, if you’re feeling crushed by your payments right now, IDR plans can provide the breathing room you need. It’s a longer game, but for many, it’s the difference between staying afloat and sinking.
Step 4: Consider Deferment or Forbearance (Temporary Relief)
If income-driven repayment doesn’t feel right for you or you need a short-term break from payments, you might want to look into deferment or forbearance. These options allow you to temporarily pause your payments without going into default.
Deferment
Deferment is like hitting the pause button on your payments. In certain cases—like if you’re back in school, unemployed, or going through financial hardship—you might qualify for deferment. The best part is that if you have subsidized loans (meaning the government pays the interest while you’re in deferment), your balance won’t grow while you take a break.
Forbearance
Forbearance is a bit different. It also lets you pause or reduce your payments, but interest still accrues on your loans during this time, no matter what type of loan you have. This can make your balance bigger by the time you start paying again. Forbearance is helpful when you just need a few months of relief to get back on your feet, but it’s not a long-term fix.
When to Use These Options
Both deferment and forbearance should be used sparingly and only when you absolutely need them. They don’t reduce the amount you owe—they just give you a temporary break. If your situation looks like it might take longer to resolve, income-driven repayment might be a better option because it helps reduce the amount you’re paying each month over a longer period.
Step 5: Consider Refinancing (But Be Careful!)
If you have private loans—or a mix of federal and private—refinancing might be something to consider. Refinancing means taking out a new loan with a private lender to pay off your existing loans, ideally with a lower interest rate. This can save you money over time, especially if your current loans have high interest rates.
When Does Refinancing Make Sense?
Refinancing makes sense if:
- Your credit score has improved: If your credit score has gotten better since you took out your loans, you might qualify for a lower interest rate. This could reduce your monthly payment and save you money in the long run.
- You have private loans: Refinancing federal loans comes with risks (we’ll get to that), but if you have private loans, refinancing could lower your payments without losing any federal protections (since private loans don’t offer them anyway).
Be Careful with Federal Loans
If you’re thinking about refinancing federal loans, be cautious. When you refinance federal loans with a private lender, you lose access to income-driven repayment plans, deferment, forbearance, and loan forgiveness options. If you’re struggling to afford your payments now, refinancing might not be the best move. Instead, explore federal repayment options first to see if they can give you some relief.
Step 6: Keep an Eye on Loan Forgiveness Options
Depending on your job or life situation, you might be eligible for student loan forgiveness programs that wipe away some or all of your debt. While these programs can take years to qualify for, they’re worth keeping in mind if you meet the criteria.
Public Service Loan Forgiveness (PSLF)
If you work for the government or a nonprofit, you might qualify for Public Service Loan Forgiveness. Under PSLF, your remaining balance is forgiven after you’ve made 120 qualifying payments (which equals about 10 years of payments) while working full-time for a qualifying employer. It’s a long road, but it could be a life-changer if you qualify.
Teacher Loan Forgiveness
If you’re a teacher working in a low-income school or educational service agency, you might be eligible for Teacher Loan Forgiveness. This program can forgive up to $17,500 of your Direct or Stafford Loans after five years of full-time teaching.
Other Forgiveness Programs
There are other, smaller forgiveness programs for nurses, doctors, lawyers, and even AmeriCorps or Peace Corps volunteers. If you work in a specialized field, do some research to see if there’s a forgiveness program that might apply to you.
Step 7: Take Small, Manageable Steps Forward
When you’re staring at a mountain of student loan debt, it’s easy to feel like you’ll never get out from under it. But here’s the truth: even small steps make a difference. Every on-time payment, every phone call to your loan servicer, and every adjustment to your repayment plan brings you closer to financial stability.
Celebrate Small Wins
Paid off one of your smaller loans? Great! Managed to make your payments on time for three months straight? Amazing! These small victories add up and can help you stay motivated, even when it feels like progress is slow.
Stay Informed
Loan repayment rules and programs are always evolving, so stay informed. Keep an eye on changes to federal loan policies, new forgiveness programs, or even interest rate adjustments that could affect your refinancing options. Staying in the know helps you make the best decisions for your situation.
Step 8: Get Support and Stay Positive
Finally, know that you don’t have to go through this process alone. Whether it’s talking to a financial counselor, joining an online community of people in similar situations, or leaning on friends and family for emotional support, there’s strength in numbers. Financial wellness isn’t just for the lucky few—it’s for everyone, no matter where you’re starting from.
Empower Your Financial Future
Managing student loans when you can’t afford the payments can feel overwhelming, but you don’t have to face it alone. Whether you explore income-driven repayment plans, consider refinancing, or seek temporary relief through deferment, there are options that can help you get back on track.
Remember: every small step forward is progress. And while it may take time, you can regain control over your finances. Take a deep breath, make a plan, and keep moving forward. We’re in this together, and you’ve got what it takes to tackle those loans head-on.
