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17 (Realistic) Options if You're Struggling to Pay Your Student Loans

·6 min read

As prices for gas, food, and other necessary products for daily life increase because of inflation, your budget might be getting tighter and tighter. You might find yourself living paycheck to paycheck, and you might even realize that you can’t pay some of your bills, like your student loan payments.

If you can’t afford your student loan payments anymore, don’t panic. There are many options to make your loan payments more affordable or even disappear, just by officially requesting a change and filling out some forms.

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1. Public Service Loan Forgiveness

If you work for a governmental or non-profit organization, and you make 120 qualified monthly payments through a regular loan repayment program, you may qualify to have the remaining amount of your loans forgiven under the Public Service Loan Forgiveness (PSLF) program. PSLF applies to Direct Loans.

2. Teacher Loan Forgiveness

The Teacher Loan Forgiveness (TLF) program forgives up to $17,500 in Direct Loans and FFEL Program loans after you work for five complete, consecutive years teaching in a low-income K-12 school or educational agency. Note that you cannot receive credit for PSFL and TLF programs for the same time periods.

3. Closed School Discharge

If the school you took loans out for closes while or shortly after you enrolled, you may be eligible to have those loans discharged. The Closed School Discharge program applies to Direct Loans, FFEL Program loans, and Perkins Loans.

4. Perkins Loan Cancellation and Discharge

You may be eligible to have part or all of your Federal Perkins Loan forgiven or discharged if you are a teacher in a low-income school, a special education teacher, a teacher of science, foreign languages, or any other field that is in-demand, a law enforcement officer, a firefighter, an early education teacher, a professor at a tribal college or university, or several other occupations.

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5. Total and Permanent Disability Discharge

You may be eligible to have a Direct Loan, FFEL Program loan, or Perkins Loan discharged if you are totally and permanently disabled. You will need to show documentation from the U.S. Department of Veterans Affairs, the Social Security Administration, or a physician to prove eligibility.

6. Revised Pay As You Earn Repayment Plan

If you can pay some amount each month, you may be eligible for reduced payments based on your income. The Revised Pay As You Earn Repayment Plan (REPAYE Plan) is an income-driven repayment plan that is usually 10% of your discretionary income. You’ll pay for 20 years if the loans were for undergraduate education only, and 25 years for any combination of loans involving graduate education.

7. Pay As You Earn Repayment Plan

The Pay As You Earn Repayment Plan (PAYE Plan) is another income-driven repayment plan. It is similar to the REPAYE Plan in that your monthly payments are usually 10% of your discretionary income, but are not more than the amount of the 10-year standard repayment plan. This plan lasts for 20 years.

8. Income-Based Repayment Plan

The Income-Based Repayment Plan (IBR Plan) is another income-driven repayment plan, but there are two levels available. If you are a new borrower on or after July 1, 2014, you’ll pay 10% of your discretionary income for 20 years, and if you’re not a new borrower on or after July 1, 2014, you’ll pay 15% of your discretionary income for 25 years.

9. Income-Contingent Repayment Plan

The Income-Contingent Repayment Plan (ICR Plan) asks you to pay either 20% of your discretionary income, or your payment for a fixed 12-year repayment plan adjusted for your income, whichever is smaller. This plan lasts for 25 years.

10. Apply for general forbearance

Forbearance means a temporary hold on making payments, whether it’s for one month or for more than one month. You can apply for general forbearance for up to 12 months if you have financial difficulties, medical expenses, a job loss, or another reason your lender accepts. You can apply for general forbearance for up to three consecutive years.

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11. Apply for mandatory forbearance

Mandatory forbearance must be granted to you by your lender if you work for AmeriCorps, are a member of the National Guard and have been activated by your governor, are eligible for the Department of Defense Student Loan Repayment Program, are in a medical or dental internship or residency, or if your total student debt burden is more than 20% of your total monthly gross income.

12. Apply for a deferral

A deferral is similar to forbearance in that it is a pause in payments, but in forbearance, interest continues to accrue for all loans. For a deferral, interest does not accrue on Direct Subsidized Loans, Federal Perkins Loans, Subsidized Federal Stafford Loans, and the subsidized part of FFEL Consolidation Program loans. You can apply for a deferral if you are in school, in cancer treatment, suffering economic hardship, unemployed, and several other situations.

13. Refinance your loans

You could refinance all your student loans into a Federal Direct Consolidation Loan or a private consolidation loan. (You will lose federal benefits if you consolidate a federal loan to a private one.) The loan you consolidate to will likely have lower payments, but at the very least, it will be easier to keep track of one loan instead of many.

14. Bankruptcy

In rare circumstances, you can have your student loans discharged in bankruptcy. You have to file a separate action and show the court that repaying your loan would cause “undue hardship.”

15. Earn more money or cut expenses

You may be able to make your current student loan payments if you can cut enough from your budget by driving less, moving home or to cheaper housing, or taking on a roommate. Or you could take on a side gig to make a little extra to pay your student loan payments, and maybe even get ahead of the rest of your budget, too.

16. Ask family for help

Your parents, grandparents, or siblings who have already paid off their student loans might be delighted to help you make your payments when things are getting tight. If you have a reputation in your family for being responsible with money, your family may see this as a chance to help you out and strengthen the family unit at the same time.

17. Just pay something

Whatever you do, don’t just stop paying on your student loan. That can have serious consequences for your credit score, which will prevent you from getting loans to buy real estate or a car, can prevent you from being able to rent an apartment, and may prevent you from being able to get a mobile phone and sign up for utilities.

Instead, communicate with your loan servicer. Let them know you’re having trouble paying and that you need to explore options for lowering your payment.

Bottom line

There are so many options for you to earn more each month and ask to have your monthly loan payment reduced, that you are not out of options if inflation is making it tricky for you to avoid your student loan payments.

All kinds of options, from applying for forbearance to refinancing student loans to applying for forgiveness to changing to an income-driven repayment plan can lower your monthly payments enough for you to handle them. And if you can increase your monthly earnings or get help with payments, you won’t have to change the terms of your plan and will still be able to make the payments.

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