As of the second quarter of 2023, the total student loan debt held by Americans stands at $1.77 trillion, reflecting a 1.25% increase since the same period in 2022. Out of this total, private student loan debt accounts for $128.77 billion as of March 31, 2023.
While the Supreme Court has temporarily blocked President Biden’s wide-scale student loan debt forgiveness program, other options for relief remain available for borrowers. The Biden administration has made several changes to income-driven repayment plans to help borrowers qualify for loan forgiveness sooner. The Department of Education under Biden has also aided defrauded students in receiving refunds from fraudulent colleges and granted relief to disabled borrowers. Additionally, a new income-driven repayment plan known as SAVE could cut monthly payments in half for millions of borrowers if implemented.
Despite the setback of the debt forgiveness plan, the administration continues pursuing avenues to ease the student debt burden through regulatory changes and existing programs. Borrowers should examine their options, such as income-driven plans, disability discharge or fraud claims, to determine if they qualify for current student loan relief options.
While you’re trying to find ways to get help with your finances, it’s still a good idea to pay what you can. We know it’s tough right now, so we’ve talked to experts to give you some simple advice if you can’t make payments.
I’m a Financial Expert With Student Loans: Here’s My Plan To Tackle Repayment
Contact Your Lender Immediately
The first thing you should do if you’re struggling with student loan debt repayments is contact your lender. They may be more amenable and/or flexible than you may think.
“Lenders may be able to work out a repayment plan that fits your budget,” said James N. Osborn, Jr., the founder and partner at Envest Asset Management. “They may also be able to offer some temporary reduction in payments or even suspend payments for a period of time. But you’ll want to contact them before you start missing payments. Missing payments can lead to late fees, lower credit score, or worse, like garnished wages.”
Refinance Private Student Loans
One option that borrowers who are paying back private student loans right now should consider is refinancing their loans to a lower fixed interest rate.
“For borrowers that have private student loan debt that are currently making payments, it is best to refinance the loans to a lower fixed interest rate that is affordable for their budget and pay these off as fast as possible with what the borrower can manage,” said Zack Geist, founder of Student Loan Tutor.
Don’t Refinance Federal Student Loans to Private Loans
Note that it is not the best course of action to refinance federal student loans to private loans because you will “lose out on all federal benefits available through the Department of Education and no longer take advantage of Income-Driven Repayment Plans, where the remaining balance at the end of a 20-to-25-year term is forgiven in as a taxable event of canceled debt,” Geist said.
Consolidate Your Loans
Balancing a few different loans? Consider consolidating them.
“If the reason you’re struggling to keep up with your loans is because you have several loans with different payment dates and amounts, consolidating your loans may be a good bet,” said Jonathan Petts, a former bankruptcy lawyer and the co-founder and CEO of Upsolve. “You’ll only have one loan payment to keep track of and consolidating often lowers your monthly payments.”
Talk To Your Employer
Some workplaces provide tuition assistance as a perk for their employees. Yours may be one of them. It surely doesn’t hurt to ask.
“Make sure you understand the benefits that your employer provides so you can take advantage of them,” Osborn, Jr. said.
Increase Your Income
Increasing your income could be the best way to keep up with student loan repayments. This is especially effective while lowering your expenses.
“If you’ve changed your repayment plan to an IBRP and you’re still struggling to pay your loans, consider asking for a raise at work, looking for a higher paying job, or taking on gig work,” Petts said. “You can also take a look at your biggest expenses like housing and transportation and see if there are ways to save there.
Seek Legal Advice or Help From a Financial Advisor
Talking to a lawyer or financial advisor who specializes in student loan debt can help you understand what is available to you and what your rights are.
“Lawyers can provide insight on potential legal strategies to help reduce your student loan debt,” Osborn, Jr. said. “Financial advisors can also help you understand your options and help you create a plan to help you manage your debt.”
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Laura Beck contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: Student Loans: 7 Steps Experts Say To Take If You Can’t Make Your Payments
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