Student loan payments can be tough for some new graduates to manage. It's a stressful time in your life. You are just starting a career or still looking for a job and trying to manage life as an adult. But there are many long-term consequences to defaulting on a student loan, so you want to avoid it at all costs. These consequences impact your credit which can leave lasting marks that affect your ability to buy a house, a car, or even get a job.
If you are having trouble meeting your student loan payment, don't stress! Know there are some strategies that can help you manage payments and help you avoid state-based or private student loan default.
This is the worst thing you can do. Your lender isn't out to get you! They are simply doing their jobs, which is to contact you and either get you paying or find another option to keep you from becoming delinquent. You may be eligible for a program that can delay or reduce your payments. Just talk to them and ask! At RISLA, we offer deferment options for those in school or deployed in the military, income based repayment for students and cosigners, forbearance for economic hardship, and forgiveness programs for permanent disability. These benefits aren't automatically applied to your account, so if you need them, ask!
2. Consider taking advantage of benefits on your federal student loans.
Your federal student loans likely have more repayment flexibility than your private student loans. If you are employed and can make some student loan payments - but just can't seem to fit all of them into your budget, you may be able to take advantage of income based repayment, extended repayment, forbearance or deferement on your federal student loans that will help you free up some cash for your state-based or private student loans. You can also consolidate your federal student loans into a single loan which can extend your repayment term and reduce your monthly payments.
3. Re-evaluate your budget.
No one really likes this tip! But keep in mind that even though things may be tough right now, that college education you got is said to be worth over a million dollars (maybe more!) throughout your lifetime, making paying for college totally worth it. Yes, there are exceptions to this rule, but for the most part college pays off.
If you are having trouble making your student loan payments, think about where you can cut back. Can you cut your cable bill and watch TV online to free up $100 a month? How much are you spending on groceries every week? Do you eat out a lot (or spend a lot of time at the bar)? Are you always buying coffee instead of brewing at home? Buying lunches out instead of bringing bagged lunches? Living alone instead of with roommates or (gulp) your parents?
Create a budget and make some tough choices to make sure you can repay your loans. If you don't, there can be some big consequences. Use this budget calculator that comes up with a plan that works for you or consider using an online budget tracking system like mint.com (my personal favorite!)
4. Ask your co-signer for a hand.
If you have a co-signer on your loan, they are legally obligated to pay on the loan if you don't - and your lender will be reaching out to them if you fall behind on payments. Before you get behind on your payments, have an honest conversation with your co-signer (as de-moralizing as it may feel!). Review your budget with them so they can help you find ways to cut back, and be frank (and kind!) if you need their help. You may have had a deal with your co-signer that you would be responsible for paying your loan - but it will hurt their credit just as much as it will hurt yours - if you default, so they have an interest in keeping the loan in good standing. Come to them with an exact figures and the amount of time you will need help for - and a plan for paying them back if necessary - so they know you have thought about the decision to come to them long and hard.
We hope these strategies hel pyou with your private or state-based student loan payments!
If you have a loan with RISLA and are having trouble meeting your payments, call us at 1-888-897-4752 toll-free to learn about your options or visit our Manage Your Loans page.