What to Do if You Can't Pay Your Student Loans

Struggling to make your monthly student loan payments? Here’s what to do.

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When you took out loans for college, you knew paying them off wouldn't be fun. But repaying student debt could be even more difficult than you realized.

Maybe you hit a temporary financial setback. Or the monthly payments are just too high. No matter the cause, you can’t make your student loan payment. Don’t throw your hands in the air and give up. If you’re delinquent on your loans, your credit score will take a major beating.

Worse yet, if you go too long without making a student loan payment, you'll default on that debt. Then lenders can garnish your wages, compounding the financial problems that made repayment difficult in the first place.

Take these steps to avoid kickstarting a series of negative consequences that will haunt you for years.

1. Apply for an income-driven repayment plan

Federal loans provide certain protections if you struggle to pay back your debt on schedule. One such protection is the option to get on an income-driven repayment plan. These plans drop your monthly loan payments to a reasonable percentage of your income. By capping your payments at a certain level, they make it easier to keep up.

2. Defer your loans

Another option you have with federal loans is hitting pause on your student debt. This is known as deferment. If you prove that you can’t make payments because of your financial circumstances, you may be able to stop making loan payments for up to three years.

Deferment isn't a perfect solution -- in many cases, you'll continue accruing interest on your debt. That prolongs your repayment period. But it’s worth looking into if you're desperate.

3. Negotiate with your lender

If you borrowed from a private lender for college, you have fewer protections than those who took out federal loans. But you still have options. If you're struggling to make your student loan payments, contact your lender. Explain the situation and aim to negotiate a more manageable repayment plan. Some lenders will agree to lower your monthly payment or allow you to defer your payments.

Private lenders aren’t required to help you when you have difficulty, so why would they? It's simple: Your lender wants to get paid. They don't want you to become delinquent on your debt or go into default, because you might not pay your loan back. Lenders may be willing to change your loan payment terms so you can stay current.

4. Refinance your loans

Refinancing is the process of taking out one loan to pay another. If your student loans have a high interest rate, getting a new loan with a lower rate could make your monthly payments more affordable.

This is often a good strategy if you have private student loans. Keep in mind that it generally doesn’t pay to refinance federal loans. Their interest rates are pretty low to begin with.

Deal with student debt problems sooner rather than later

Falling behind on your student loans could wreck your credit or put you at risk of having your wages garnished. Be proactive to avoid that. Reach out to your lender to see what payment options you’re eligible for.

This might be uncomfortable, but it’s far better than resigning yourself to a host of negative consequences that will stick with you for years.