September 24, 2017
 
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What if You Can’t Afford your Student Loan Payments?

So you’ve found yourself unable to afford your student loan payments. Maybe you just graduated, lost your job, had to buy a car, or your rent increased. Whatever the reason, you need to take immediate action or the rest of your finances will go downhill as well.

Here are options to consider:

1.  Consolidate.  If you’ve just graduated with a lot of debt, you may benefit from consolidating your loans. Although this will lengthen the repayment period, and you’ll pay more interest over the life of the loan, your monthly payment will go down. Also, the longer repayment periods aren’t a bad thing necessarily as federal loans can be paid early with no prepayment penalty!

2.  Deferment. Find out if your loan company will give you a temporary reprieve.  Essentially, you may be allowed to stop paying monthly payments for an agreed-upon period of time.   In order to do this, you MUST call your loan company and get qualified. Legitimate reasons may be going back to school or loss of employment.

3.  Forbearance. Forbearance is for those who have difficulty repaying their loans but don’t qualify for deferment, which has stricter guidelines. Payments are postponed or reduced temporarily, and interest accrues while you are in forbearance. Again, you MUST call your loan company to qualify.  Go to the US Department of Education’s website at
www.ed.gov for more detail.

4.  Budget Makeover. If you haven’t lost your job but your expenses have increased, and money is just harder to come by, you have to look at your own budget and begin trimming. Your student loan probably isn’t the only bill in jeopardy anyway. Add up your income and expenses. If you spend more than what you bring in, you have to cut back on spending. Evaluate your needs vs. wants. Cable TV isn’t a necessity. Stop using your
credit cards and pay them off. Are you using your credit cards to pay off other debt? If you’re feeling overwhelmed by your budget and mounting bills, it may be a good idea to seek credit counseling and enroll in a debt management plan.

These programs offer consumers a reasonable way to repay unsecured debt. They can
help you by creating a customized plan to solve your financial problems and help you become debt free without ruining your credit. Credit counselors will negotiate lower interest rates, lower payments, and waive late fees so that you can afford your payments.

 

 

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