January 12, 2022

What To Do If You Expect Trouble Making Student Loan Payments Again

Repayment

If you’re paying off a student loan, you probably know how big a toll it takes on your mind and finances. The fact that banks or lenders may collect following the post-pandemic reopening doesn’t do struggling borrowers any favors.

Indeed, the Department of Education has announced the deferment of student loan collections. According to Nerd Wallet, lenders will not collect on student loan payments until May 2022. While this might give some time to plan financial obligations and priorities, problems with payment may come to the fore.

You may be able to pay with no problems, or you may not. Either way, it pays to have contingency plans set up for when you foresee payment issues.

Read on to learn more about what you can do when you think you’ll have problems making your student loan payments.

Ensure that Your Loans are Federal

You have several options to consider if you’re looking for forbearance or forgiveness on your loans. However, many if not all of these will not be available to you if your loans are private and not federal.

The first step to take before you map out your options is to ensure that you have a federally issued loan. If not, the best thing you can do is combine your loan into a federal direct consolidation loan. By doing this, you will be able to apply for loan forbearance. Also, a federal direct consolidation loan can reduce your overall repayment amount.

Consider an Income-Driven Repayment Plan

Income-driven repayment clans can do two things for you.

  1. Income-driven repayment allows the maximum payable amount to be just a portion of your income. This can spread out the costs.
  2. Income-driven repayment can extend your repayment period. This makes repayment flexible.

Look Into Loan Forgiveness Programs

Federal loan forgiveness programs like the Public Service Loan Forgiveness (PSLF) program are available for borrowers. The PSLF forgives the remaining balance of borrowers.

The Teacher’s Loan Forgiveness Program can also “forgive” anywhere from $5,000 to $17,500.

To be eligible for the above loan forgiveness programs, you need to have worked in government or low-income areas. In the case of the PSLF, you need to be employed by an eligible employer. Eligible employers are usually government institutions, the military, or non-profit organizations.

Key Takeaway: There’s Hope

Paying off a student loan is tough. Nonetheless, even if you don’t know what to do, and you expect trouble making student loan payments again, know that you have options.

The first step is to determine the source of your loans. Federal loans are the ones most eligible for forbearance, repayment, or forgiveness. Once you’ve determined the source, you can consolidate your loans into a federal loan. By doing this, you can look into repayment plans and loan forgiveness programs.

The options mentioned here are just the tip of the iceberg. Overall, there’s hope when it comes to paying off your loans.

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