What to do if you're struggling with student loan payments
What to do if you're struggling with student loan payments
Kasasa Blog

Find tips to improve your financial well-being

What to do if you're struggling with student loan payments

Remember how much fun college was? No, not the late-night cramming, not the constant moving in and out of dorms rooms or apartments. Think about the on-campus events you attended, the general social environment. The feeling of finally being on your own, and, yes, absorbing all that knowledge to become a master in your field. Don't let the frustrations of paying for those years of study — and fun — put a damper on the rewards of getting started in adulthood.


Here's the truth: Debt is a part of adulthood. If you are feeling stressed about your student loan payments, that's going to seep out into the rest of your life. Today it's a student loan, and in the future it may be a car loan, or a home mortgage that you are paying. Learning the ways you can get a handle on your debt rather than letting that stress pile up is as much a part of your overall college education as buying and selling textbooks every semester.


Here's some more truth: You're not alone. Nearly 43 million Americans have student debt, owing close to $1.59 trillion. While managing your student loan payment is not the type of adventure and thrill you wanted for your future, it is still a part of the experience. Keeping it from becoming stressful and overwhelming is what you want to tackle, right?


Our goal is to provide you with a game plan to manage those federal student loan payments to reduce your stress and your loan amount.


Know all your dollars and cents


This may sound like another homework assignment, but the best way to know what money you have coming in and what money you are paying out is to put it together in a budget. Hear us out! We know you thought that homework was behind you, but the reality is it's going to be with you forever — except the stakes are much higher than grades. It's for your own financial well-being.


If you are feeling the pinch of your student loan payment every month, it makes sense to see where all your money is going. You might have to put a tight leash on extra purchases like clothes, entertainment, dinners out, and other fun stuff. Cutting out all of the good stuff may prove unrealistic, so knowing how much you are really spending in each budgeting category (bills, housing, transportation, emergency fund, video games, etc.) may help you avoid common budgeting mistakes. More importantly, it will help you see where you can find a little extra — or where to pare down — to get the bottom line to balance.


If the prospect of a compiling a budget and dropping numbers into a spreadsheet immediately gives you hives, maybe think a little differently about your finances. You have debt, and your money is the tool to help you reduce your student debt. Knowing how your tool — your money — is going to help you improve your overall financial self-care plan does require you to know where you are spending your money, and where you might need to adjust those expenses to keep your self-care on an even keel.


If the thought of a sheet full of tiny boxes gives you anxiety, you can get a hand from J. Money from Budgets Are Sexy. You'll find free, downloadable money management templates to help you design a budget or build a financial self-care plan — whichever approach helps you get into the student loan payoff zone.


See the bigger repayment picture


This may sound absurd, especially if you're struggling to make your monthly student loan payment as it is, but if you can tighten your budget to the point where you can pay $20 or $30 more each month, you'll see a big difference. 


These small extra payments have a snowball effect on your student loans that could save you thousands of dollars over the life of your loan. If you're still in school, these small payments will go even further, as you will not be paying interest yet.


Also, take a close look at those loans. Many students have multiple loans, and one may have a higher interest rate than another. Consider paying any extra towards the loan with the highest interest rate first to make a bigger dent where it will matter.


Federal student loans may also have different repayment options than a private student loan, so it's important to have a clear picture of the entire loan, how much you owe, and at what interest rate. Much like the budget, getting a clear picture of all your loans individually may help you find the best way to manage multiple debts.


Change the flow of money


Just paying the minimum can be challenging enough. If you've already taken our first piece of advice and the money coming in is not equal to the money going out, it's time to consider your outgoing payments. Do you also have credit card debt? Are your private student loans causing a bigger struggle than your federal loan? Is your repayment plan outpacing your post-college income?


There are two clear paths here: increase the money coming in or reduce the money going out. While that sounds simplistic, the solution may not be.


Let's consider the money coming in. Using your free time to pick up a side hustle might be an immediate option. Slightly longer term, you might want to consider your current income versus potential income. Keep looking if you want your employment position, and your income, to improve.


If your student loan debt is the pinch point in your financial plan, reach out to your loan servicer. Find out about all your payment options, not just the initial ones given to you when you began making loan payments. Many student loan borrowers don't consider that there may be some flexibility if your lender knows you want to make an effort to make payments.


If that proves to be a dead end, don't give up. Your repayment option may lie with another loan servicer, including your own community bank or credit union. Again, the solution isn't always easy, but refinancing a student loan may broaden your options and narrow your outgoing expenses each month.


Keep in mind that with federal loans or a direct loan, there may be benefits you can lose if you refinance, so ask questions, know your options, and understand the specifics of federal student aid programs.


Seek the help of an expert


Depending on your loan type and your career path, you may have student loan forgiveness options; but how will you know? The secret is that you need to ask the right people the right questions. For example, public service loan forgiveness requires a multi-year commitment on your part, but if you are eligible, it's best to ask sooner rather than later.


Again, speak to a lending professional. Consider how much you knew when you started college — when you agreed to your first student loan — and how much you know now as you are paying it off. In addition to changing economic conditions, your financial position and your income might be able to help you get a private loan. Even just student loan consolidation may allow you to pool all of your loans into a single payment. 


And remember those 40-plus million other student loan borrowers? Some of them have turned their experience into their expertise. Numerous bloggers have documented their repayment journey, and you might find their path worth following to help you get your money working for you. At the very least, they might be a voice to help you deal with the stress of student debt.


Apply for assistance


Help is out there. Services like Student Loan Borrower Assistance (SLBA) and the U.S. Department of Education's student loan forgiveness program provide invaluable resources that can help you defer payments, lower your monthly payment, and even forgive a portion of your loans. The options and resources you'll find on these sites can help you in any stage of your student loan repayment.


Not everyone qualifies, but it's important to know what extra resources are out there. Sure, it feels like homework, but this assignment will help you improve your own financial plan for this month, and the duration of your student loan repayment.


Don't put the cart before the horse


If you're a new college student (or soon-to-be college student) in the process of applying for a student loan, don't be alarmed by the news and coverage about federal loans to help you through college. But you should definitely be informed. Read up about the benefits and requirements of private loans. Understand if a parent loan, like a PLUS loan, is viable for you and your family.


For now, your best first steps are to consider all your financial aid options, beginning with applying for student financial aid and continuing until you graduate. With a bit of advance planning and managing your expenses during college, you can be well positioned for crossing that bridge when it's time.


Yes, the challenge of paying off your student loan debt after you graduate is one of the realities of the post-collegiate experience, but there are ways to plan and prepare for that day when it finally arrives. Try not to let the stress of student loan payments overwhelm you — you still have plenty of other college experiences to enjoy first.

Tags: Student finances, Borrowing

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