What To Do If You Can’t Afford Your Student Loan Payments

It’s the beginning of a new year and you may be catching your “financial breath” after the holidays. One welcome piece of news to those with federal student loans is that payments have again been extended — this time through May 1st, 2022. 

If you have been worrying about how you would start making your student loan payments again, you now have some breathing room. But rather than sitting back and finding yourself in the same position a few months from now, you have time to prepare and we have tips on how to do that!

Track down or estimate your student loan payments

If it’s been a while since you made your student loan payments, you might not remember exactly how much you were paying. Review your student loan accounts online or give your servicer a call to find out your payment amount. 

If you are a recent grad and haven’t started paying on your loans yet, you can use the loan simulator to estimate your payment under different repayment programs.

Readjust your budget

Start by taking stock of your expenses. I recommend going through your recent statements and/or transactions for all of your debit and credit cards. Did I say all? Yes, ALL of them. To streamline this process, load your accounts into a budgeting app like Personal Capital or Mint so you can review all of your transactions under one umbrella. 

After reviewing your expenses, cut what you don’t use or need. Then, practice that future student loan payment. You don’t need to actually start paying it, but you should allocate the monthly amount to a savings account. This will allow you to get used to living without that money so you are more prepared when your payments resume.

Lower your payment through consolidation or alternative repayment plans

Consolidating can help simplify and lower your monthly payments by resetting or extending your repayment period. Beware of consolidation if you are already making payments towards your loans under the Public Service Loan Forgiveness program: consolidating will restart the clock on your 120 payments.

You may also be eligible for a lower monthly payment under a different repayment plan, such as an income-driven repayment plan. Contact your loan servicer to review your options. 

Find out if you’re eligible for deferment or forbearance

Both deferment and forbearance offer temporary relief from student loan payments. They can help when you need to pay less or nothing at all while you work on cutting expenses and finding additional income to meet your student loan obligations. These options are typically only available if you are experiencing financial difficulties or meet other specified criteria. You can review the requirements for deferment and forbearance at

If your loans are approved for forbearance, interest will continue to accrue. You have the option to make monthly payments to cover the interest or allow it to be added to your principal at the end of your forbearance period. 

If you qualify for deferment, any subsidized loans will not accrue interest, so this is usually a better option if it’s available to you. If your loans were given based on financial need, they are considered “subsidized,” but check with your loan servicer to be sure.

Refinance private student loans

By this point, if you have private student loans, you may be wondering, “What about me?” Some private lenders offer forbearance but it’s typically not as common or generous as federal forbearance. 

Refinancing is your best option to reduce your monthly payment. Unlike consolidation, this gives you the opportunity to actually lower your interest rate — especially if your credit score is excellent or it has substantially improved since you took out the loan. 

Although federal student loan borrowers can also potentially reduce their interest rate and payment by refinancing, we generally don’t recommend it. Refinancing a federal student loan will remove all of the benefits that federal student loans offer — for example, a pause on interest and payments during a pandemic for 2+ years.

Meet with a Financial Gym Trainer! 

We have a Trainer-on-Demand service that can help you work through these options and other personal financial questions as well! If you want a dedicated trainer, you can check out our personal 1-on-1 coaching service.

Happy New Year and best of luck! Don’t forget to check out our partners at our B.F.F Approved financial products page.

What To Do If You Can’t Afford Your Student Loan Payments is written by Kylie Lipinski, A Certified Financial Trainer for

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