How to Survive Student Debt

You made getting a college degree a goal, but the cold, hard truth is, college is expensive. Student loans seemed like a logical option at the time. Now that it’s time to pay that money back, though, it’s a mixed bag. In one hand, you’ve got your hard won diploma. In the other, a stack of bills big enough to crush the life out of you. How the heck are you going to pay those loans back?

When you started school, you didn’t imagine the economy would be in such shabby shape when you finished. Unemployment is high and wages are…well, let’s just say they’re not what you hoped they would be. Now you need to pay your student loans and provide for your basic needs, like rent, transportation, the occasional pizza and beer. Can it really be done?

Start with a Plan

Tackle your student loans the same way you earned your degree. You chose a major and followed a set course to reach that goal. Do the same with your student loans. Study the payment options and decide which is most feasible with your current income. Determine the least amount you need for necessary expenses, a bit of savings, and your loan payment. That is your budget. Do what you must to make it work.

Don’t Increase Your Cost of Living

You’ve been living like a student for years now, so you can do it a little longer. Keep the same inexpensive apartment, drive the same car, and keep your expenses down. You won’t have to live like that forever, but for now, it’s a smart move. It allows you to keep up with the loan’s interest payments and maybe even pay extra towards the principal. By making extra payments on the principal, the loan will be paid off sooner and you can get on with your life.

Consider Consolidation

If you have loans from more than one place, consider loan consolidation. Your loans would be lumped together into one and you’ll only pay one payment instead of multiples. The payment will be smaller, but you’ll pay longer, which translates to paying more in the long run.

Deferred Payments

Sometimes circumstances make it impossible to make your payments even if they are at the minimum. Don’t just ignore your obligation. That will lead to major trouble down the road, including ongoing harassment from collectors and confiscated tax returns. If you must defer, negotiate with your lender and come to a mutually agreeable timeframe for your excused absence. Your lender will require proof that you are financially wounded at the moment, so only attempt this in true financial droughts. Keep in mind that if your loans are unsubsidized, interest will continue to accrue even while payments are deferred.

Forbearance for Financial Crisis

If you have a major expense suddenly arise you can ask for a 3-month leave of absence from your payments. Call your lender and give a good reason for the need, such as you’re temporarily on sick leave or you’re moving to a new location to take a better job. It’s up to the lender whether you receive the grace period or not, but if you have a good, valid reason, it can happen.

Dealing with student loan debt is now a fact of life for millions of college graduates and college dropouts as well. Even if you don’t complete your education, you’re still required to pay those loans. With careful planning and some self-restraint, though, you can survive student debt and eventually wipe out those burdens.

George Gallagher is a finance and education author and blogger. He is an expert at helping graduates with their student loan consolidation requirements.

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