Here’s how to relieve the financial burden that came with your college degree.

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According to a 2021 report from the Federal Reserve, more than half of young adults who went to college took on debt of some sort. Eighteen percent of borrowers are behind on their student loan payments, a two percent decrease from before the pandemic.

The typical monthly payment is up to $393 per month. The harsh reality is that many graduates have no idea how they’ll repay their loans. If you think you can somehow ignore your payments, think again. Don’t risk harming your credit score, which can prevent you from borrowing again in the future. You also run the risk of having your wages garnished or being sued by a lender.

Fortunately, there are other options.

Below are prudent strategies to earn your degree in student loan repayment:

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1. Contact the student loan lender and let them know your situation

Contact the student loan lender and let them know your situation.

Being proactive is better than hiding from your student loan servicer and hoping it doesn’t notice that you aren’t making payments.

Instead, let your lender know you cannot make your regular payments. Ask the lender to let you know what options they may have to keep you in good standing and out of default.

2. Negotiate with the lender

Negotiate with the lender for an adjustment of your loan repayment schedule, including loan deferment.

When you are proactive about reaching out to your student loan servicer, it may be more willing to adjust your loan repayment schedule. Ask for an adjustment of your loan repayment schedule, including loan deferment. It could even agree to a loan deferment for a certain amount of time.

As the saying goes, “Don’t ask, don’t get.”

3. Apply for an income-driven repayment plan

Apply for an income-driven repayment plan

Many federal student loans qualify for migration to what is known as an income-driven repayment plan. These plans cap your monthly payment to anywhere between ten and 20 percent of your discretionary income.

Discretionary income is the difference between your income and as much as 150 percent of your state’s poverty guideline for your family size. If you are already on a limited income or out of work, this could mean that your required monthly payments are zero until you see an increase in your discretionary income.

There are many types of repayment plans. You might choose a standard plan with a fixed monthly payment, or a graduated repayment plan, which starts with a lower amount and gradually increases over time.

You may also choose an extended payment plan that lets you select either fixed or graduated payments. The repayment period can be up to ten years on individual repayment plans, 25 years on extended repayment plans, and 30 years for consolidated loan repayment.

Other options include pay-as-you-earn repayment plans, including the REPAYE and PAYE plans. Be careful and compare each plan’s terms before signing on the dotted line, because one of the traditional repayment plans already mentioned could be cheaper.

Visit the U.S. Department of Education website to learn more about the different repayment options.

4. Refinance your student loan or consider debt consolidation

Refinance your student loan or consider debt consolidation.

With lower interest rates, now may be the time to refinance your private or federal student loan. Refinancing may help you to get a longer repayment term, thereby reducing your monthly payment. Or, you can request a lower interest rate, which can save you money and lower your monthly payment.

Another option you can explore is a consolidation loan for your federal student debt. If you have multiple student loans, then you are paying interest on each one. By consolidating those debts into one payment to one lender, you may save money.

Most federal (but not private) student loans qualify for the consolidation process.

A consolidation loan for your student debt could give you up to 30 years to pay off what you owe, which could significantly lower your monthly payment. In the long run, though, you will end up paying considerably more interest.

You’ll also lose access to interest rate discounts and the ability to cancel your student loan debt. The good news is that if your income situation improves, you could start to pay that debt down faster with larger payments.

5. Investigate the potential of student loan forgiveness

Another option you may want to consider when you cannot pay your student loans is loan forgiveness. This is the last-ditch tactic to try after you have exhausted the other options.

Through the Public Service Loan Forgiveness (PSLF) program, federal student loan borrowers who work in the public services sector, such as a qualifying nonprofit or government agency, may have their loans forgiven after ten years of qualifying monthly payments.

Student loan borrowers who are currently on an income-driven plan can qualify for loan forgiveness on their remaining loan balance. However, they must have already made qualifying monthly payments for 20 to 25 years.

Therefore, it may not be the best option for you if you already have another assistance plan in place.

What not to do

Although it may be tempting to just decide not to repay your student debt, this is the worst choice you can make. Of course, it’s understandable in some situations: job loss, health issues, and world events that you have no control over, where you must choose between taking care of yourself and your family and making your student loan payment.

The burden of a large amount of student debt can create tremendous stress. Know that you have options that are worth considering other than simply walking away and defaulting on your responsibility to repay these loans.

Explore the options listed here first. Also, check with your employer. Many companies offer assistance to top talent including student loan repayment. Be proactive and address your debt. That way, you can regain your financial freedom and put that degree to work by making money rather than repaying it.

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About the Author

John Boitnott

John Boitnott

I am a tech writer and journalist for more than 20 years who contributes to several respected online publications including BusinessInsider, Inc., and Entrepreneur. In addition to journalism, writing about social good companies and in-depth research, I’m also active in my community and enjoy metaphysical book reading groups, as well as hiking on the amazing trails of the San Francisco Bay Area.

Published by Debt.com, LLC