Student loan payments are super awesome aren’t they? Just kidding! They are pretty terrible as they are, but when you can’t afford your payment they become even worse.
Depending on the amount you owe, on a standard 10-year plan you could be paying thousands a month! My private loan at a standard payment is $310/month, but if I had my federal loans on the standard payment they would be around $800-1200/month.
Combined that would be over half of my monthly income! I just can’t do it.
There are some Do’s and (big) Don’ts when it comes to not being able to afford your student loan payment. Here are some of the big ones.
Do THIS not THAT with Your Student Loan Payment
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The Do’s of Student Loan Payments
1. DO get yourself financially organized. This is key to your long-term success. Organize your income, debt, and other monthly expenses so that you know where your finances stand. If you need some help, I created a free printable to help organize your student loans.
2. DO figure out how much you can afford to pay by creating a budget. Once you have organized your finances, you need to create a budget. I didn’t really make any real progress with my debt until I set up a budget with You Need a Budget (YNAB). You can sign up for a free 34-day trial to test it out and see if it works as well for you as it did for me. You can also check out my five easy steps to creating a budget.
3. DO try to cut out unnecessary expenses. Set your priorities. Do you really need that spa day every month? You can have fun on a budget! Try to cut those extra expenses and add them to your debt payments. A little every month can really add up overall.
4. DO try to bring in extra money when possible. In addition to cutting unnecessary spending, you can also try to bring in some extra month through side hustles or selling unwanted items. It may not be much, but every little bit counts.
5. DO determine if this is a temporary situation or more long term. In temporary situations, you can defer or go into forbearance with your loans. This generally lasts for a couple months and no more than one year. Keep in mind, when you stop making payments temporarily, your interest is still accruing and whatever you don’t pay will capitalize at the end of your deferment. With long-term situations, your best bet may be to go on an extended or income-based repayment plan.
6. DO talk with your lender to discuss your options. Not sure which option is right for you? Talk with your lender! They will talk you through all your options and help you determine which plan is right for your situation. (NOTE: some lenders seem to be difficult to work with. I am doing some research on this and will create a post on how to deal with that kind of situation.)
7. DO determine which repayment plan is right for your situation. There are many different income-based plans available to you. Do your research and decide which has the best terms for you.
8. DO consider refinancing private loans if your credit score allows. Refinancing your private loans can be a great option if you can do it. It took me a few tries with other lenders before I was able to refinance with LendKey. This can cut your interest rate which means more money going to your principal instead of interest. You may also have lower monthly payments. Do consider the pros and cons of refinancing before you do it.
9. DO try to pay as much interest as you can while on a lower payment. This was mentioned above, but unpaid interest can capitalize when finishing deferment/forbearance or switching repayment plans. Also, the more interest that accrues, the harder it will be to pay down your principal amount.
10. DO submit annual documentation for income-based repayments. If you don’t, your plan will end, your interest will capitalize, and you will go back on a high payment plan.
Stop the repayment confusion!
Start understanding your student loan repayment options with my FREE PDF guide! It includes information on standard, graduate, extended and income-based repayment plays. It also talks about consolidation, forebearance, and loan forgiveness. Get the PDF that gives you your information all in one place! FOR FREE!
The Don’ts of Student Loan Payments
1. DON’T ignore your loans! Ignoring problems only makes them worse and will lead to missed payments or even default. I wrote a post about other things ignoring your student loan payments can lead to as well as other mistakes to avoid. You can find out more here.
2. DON’T miss payments! Obvious right? Missing payment can cause damage to your credit score or even lead to defaulting on your loans if you miss too many payments. Make sure you make your payments on time!
3. DON’T keep switching repayment plans! The problem with switching repayment plans is that your unpaid interest will capitalize and make your principal owed even bigger. The more you switch, the more this will happen. Try to stick to one payment plan. You can always pay more towards your loans.
4. DON’T overspend on things you don’t need! This goes along with cutting your unnecessary expenses. If you can’t afford your student loan payment, then you probably shouldn’t be buying that new iPhone, Xbox, or whatever other big purchase you are thinking of. Focus on making sure you are able to pay your loans first!
Notice that there were more things to do and less don’ts with your student loan repayment? That is because there are so many things that you need to think about or that can help you with your student loans. On the other hand, the things you should avoid are all MAJOR things that could really hurt you financially. They are not to be taken lightly.
What You Need to Do
- Get financially organized and start a budget!
- Talk with your lender and/or do research on what plan is best for you
Tools to Help You
- YNAB– the budgeting tool I use. Try it free for 34-days!
- Undebt It– FREE debt organizational tool. It will help you figure out the best method for paying down your debt.
- A free student loan organization printable
- This free PDF of student loan repayment options
- My free checklist of the steps I took to pay off massive amounts of debt
Stop feeling overwhelmed!!
Get yourself organized and set a plan of action for your student loans using my FREE printable!