8 Ways To Keep From Falling Behind on Your Student Loan Payment

After about three and a half years, the student loan payment hiatus has officially ended: Interest on federal loans begins accruing again on September 1st, and monthly payments will become due in October. Do you have a plan laid out to help manage your student loans? 

Many borrowers are dreading squeezing that payment back into their monthly budget, especially with the increases in the cost of living. But falling behind on student loan payments can have serious consequences for your financial well-being and credit score. 

To avoid this situation, here are eight strategies to help you stay on track with your student loan payments:

Know How Much You Owe

There is a saying that says “ out of sight, out of mind”, and with student loans being paused for three years, your current balance may not have been something you have paid any attention to. Start by understanding the total amount that you owe. Only by knowing the amount of your total debt can you develop a plan to pay it down, consolidate it, or possibly apply for and receive forgiveness.

Understand Your Loan Terms

Understanding your student loan terms is crucial to managing your student debt responsibly. Know the interest rates, repayment options, and due dates for each loan. By better understanding the terms you are able to create a repayment plan that works for you  and avoid financial challenges down the road.

Set Up Auto-Payments

Enroll in automatic payments through your loan servicer. This ensures that your payments are made on time and helps you avoid late fees. Many lenders also offer interest rate discounts for auto-payments.

Make sure to have this payment budgeted on a monthly basis and ensure that you have sufficient funds in your bank account on the designated payment date to prevent overdrafts or failed payments.

Consider Income-Driven Repayment Plans

If your monthly loan payments are significantly higher compared to your income, explore income-driven repayment plans offered by the federal government. These plans adjust your payments based on your income and family size. Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be as low as $0 per month.

There are four type of Income-Driven Repayment Plans:

Apply for Deferment or Forbearance 

If you’re facing temporary financial hardship, you may be eligible for deferment or forbearance. These options allow you to temporarily postpone or reduce your loan payments.

There are a variety of circumstances that may qualify you for a deferment on your federal student loan. these includes: 

You may qualify for this deferment while you are undergoing cancer treatment and for the six-month period after your treatment ends.

  • Economic Hardship Deferment

You may qualify for this deferment if you

  • are receiving a means-tested benefit, like welfare (e.g., Temporary Assistance for Needy Families (TANF));
  • work full-time but have earnings that are below 150% of the poverty guideline for your family size and state of residence; or
  • are serving in the Peace Corps.

Explore a Public Service Loan Forgiveness

This program allows qualifying federal student loans to be forgiven after 120 qualifying payments (10 years), while working for a qualifying public service employer. If you work or have worked in public service such as the government (federal, U.S. Military, state, local, or tribal) or certain non-profit organizations, you might be eligible for the PSLF Program.

You can also explore other Loan Forgiveness if you experience an extreme circumstance, such as your school closed before you finished your degree, you become totally and permanently disabled, or if you’ve declared bankruptcy.

Prioritize High-Interest Loans

If you have multiple student loans, focus on paying off the loans with the highest interest rates first. This minimizes the overall interest you’ll pay in the long run. Once that loan is paid off, apply the total monthly amount on that loan (the regular payment plus the overage) to the loan with the second-highest interest rate, then the third-highest, and so on until you’re free of debt. This is a version of the technique known as a debt avalanche.

Make Extra Payments to Principal

Whenever you have extra money, such as a tax refund or a work bonus, consider making extra payments on your student loans. The faster you reduce the principal, the less interest you pay over the life of the loan.This can help you pay down the principal faster and reduce the overall interest cost.

Closing Remarks

Remember that ignoring your student loan payments can lead to default, which can have severe consequences, including wage garnishment, damage to your credit score, and even legal action. It’s essential to take proactive steps to manage your student loans such as paying more than your minimum monthly payment, sticking to a budget, looking into loan forgiveness, and exploring different payment programs to avoid falling behind. 

If you’re unable to make a payment, contact your loan servicer immediately. They can provide guidance on alternative ways to manage your student loans including: loan consolidation or loan rehabilitation programs.


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