How to Stop Your Student Loan Payments From Wrecking Your Budget
Student loans allow tens of millions of Americans to attend and graduate college with little financial strain despite their economic background. But if you benefited from one, you probably know that it’s your responsibility to repay the borrowed money.
You may also know that in these tough economic times where many people struggle to make ends meet, student loan repayments can be a piece of gum on the foot as far as your monthly budget is concerned.
However, they don’t necessarily have to put your budget in complete jeopardy. Read on for tips on how to stop your student loan repayments from wreaking havoc on your budget.
It might surprise you to learn that in every seven Americans, one of them has a student loan to pay. And as far as recent statistics go, America looks at a whopping $1.7+ trillion in outstanding federal loans, accounting for more than 92 percent of student loan debt in totality. And if this doesn’t sound astonishing just yet, almost 5 million borrowers were in default on their student loan repayments as of 2022.
Ways to Stop Student Loan Payments from Wrecking Your Budget
1. Start Paying As Early As Possible
It might sound a little far-fetched but you could save a lot of money if you started paying back interest or a portion of your loan while still in college. This might require finding a job while in college that earns you an income to sustain your study and personal needs.
If the income is decent enough, you could put some towards repaying your student debt so that your interests and principal will be significantly lower by the time you find a stable job.
2. Refinance Your Student Loans to Lower Your Monthly Payments
If you’re struggling to make your loan payments, you may want to consider refinancing. This can get you a lower interest rate, which can save you money over time.
As long as you pick the right lender, refinancing student loans can also help lower your monthly payments by slightly extending your repayment term. It’s easier and often cheaper than having to approach your private lender or Federal Student Aid to renegotiate your repayment term.
3. Start a Side-Gig
Getting a side job is another great way to protect your budget from being wrecked by student loan repayments. With a side gig, you’ll not only have an additional source of income but you’ll also make extra money to cover those pesky student loan payments.
4. Make a Budget That You Can Stick To
This may seem obvious, but it’s important to know where your money is going. Make a list of all your income and expenses, and track it over time. This will help you identify areas where you can cut back, and give you a better idea of how much you can realistically afford to pay toward your loans.
If you’re keen enough, you might even spare enough to make extra payments when you can, which can help you pay off your loans faster and save you money in the long run.
5. Automate Your Payments
Setting up automatic payments can help you stay on track with your loan payments. You can usually do this through your lender’s website. This way, you don’t have to worry about forgetting to make a payment, which could mean having to pay late fees and punitive penalties that end up hurting your budget.
6. Consider Loan Forgiveness Programs
Loan forgiveness programs are designed to forgive student loan borrowers so they don’t need to pay part or all of their outstanding student loan debt. Typically, student loan forgiveness is offered to federal employees like public servants and teachers, or other professionals in non-profit organizations. Check with your loan servicer or the Federal Student Aid to see if you qualify for loan forgiveness.
The honest yet sometimes hurtful truth is that a student loan must be repaid. And it’s not unusual to sometimes feel financially pegged by the monthly repayments. Hopefully, the tips above will help you stay on track without having to leave your budget in shambles.