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30% of Student Loan Borrowers Fall Behind After Only 6 Years

Maurie Backman, The Motley Fool

The fact that there's a student debt crisis out there is nothing new. At present, Americans owe over $1.48 trillion in student debt, with 44 million individuals on the hook in some shape or form.

It stands to reason that many of those with mountains of debt might struggle to keep up with their payments. But new data from The New York Times tells us that as many as 30% of student loan borrowers fall behind on their payments after only six years. And while some of those folks merely make their payments late, others stop making them altogether.

Green sign saying student loans in white letters.

IMAGE SOURCE: GETTY IMAGES.

Of course, the problem with falling behind on your loans is that in doing so, you risk damaging your credit on a long-term basis. So if you're having a hard time making your monthly payments, here are some options you might consider.

1. Changing your loan-repayment terms

Most people who take out federal loans for college are put on a 10-year repayment plan automatically. And while that can help ensure that your loans don't drag out for too long, it can also put a strain on your budget. A better bet, therefore, may be to look into an income-based repayment plan where your monthly payments are determined based on what you can more reasonably afford.

The downside, of course, is that in going this route, you risk extending the life of your loans. The upside, however, is that it might instantly lower your monthly payments, thereby making it possible for you to make them on time.

2. Refinancing

Just as you're allowed to refinance a mortgage, you also have the option to refinance your student loans. When you refinance, you essentially swap one loan for another, so this option is a good one if you're paying a high interest rate at present and are eligible to get a lower rate elsewhere

Generally speaking, refinancing is a smart choice if you took out private loans for college, because unlike federal loans, where interest rates are regulated and capped, private loans can impose whatever interest rates they want. As such, there's a good chance you'll find a more competitive rate elsewhere.

3. Deferring your payments

If changing your repayment plan or refinancing doesn't do the trick of helping you keep up with your student loans, then consider deferring your payments until you're in a better place financially. This option may be available if you took out federal loans, and it effectively allows you to put a halt on your payments for six months all the way up to three years, depending on your needs and circumstances.

Of course, you'll be responsible for those payments eventually, and you'll continue accruing interest on your outstanding debt while in deferment, thereby making this a less-than-perfect choice. Still, it's a good way to prevent your credit from getting damaged if you're truly unable to make your payments.

4. Getting a side hustle

Gone are the days when you go to your main job and leave things at that. At present, millions of Americans have some sort of side hustle, and the reason often boils down to needing money. If you're having difficulty keeping up with your student loans, a second gig might be just the thing to help you stay on track. Since the money you earn from that extra work won't already be earmarked for other purposes, you should, in theory, be able to apply every additional cent you earn to your student loans.

5. Moving back home

Moving back home to live with your parents after an extended period of independence certainly isn't ideal -- but it's a far better bet than defaulting on your student loans. If you're struggling to make those monthly payments, consider unloading some of your largest expenses, like rent and utilities, and asking your parents for a free place to stay for six months or a year. Doing so will not only free up more cash at present, but also allow you to sock some away so you have a safety net going forward.

If your student loans are downright unmanageable, it pays to explore your options for easing the burden. Remember, student debt is one of the hardest types of debt to shake. You can't get rid of it in bankruptcy, which means you're basically stuck with it until you pay it off. But if you play your cards right, you'll knock out that debt eventually and even manage to keep your credit intact in the process.

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