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

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

It seems like overnight, the world has changed completely. The COVID-19 pandemic has affected nearly every aspect of life on a global scale. As we are forced into quarantine, many people are unable to go to work. The layoffs have already started and many people are concerned about if and when they’re getting their next paycheck. During this time, your other payments don’t just go away. If you find yourself in this situation and you have student loan debt, you might be worried about making payments. What can you do if you can’t afford student loan payments?

The current situation 

As of Friday, March 20th federal student loan borrowers will have their interest rates slashed to 0 percent for a period of sixty days. On top of that, the federal government is granting a sixty day administrative forbearance to any borrower who contacts their loan servicer and requests one. That means your student loan repayment can be put on pause for two months as we adjust to this new reality. If you’re having trouble making the monthly payment, take advantage of this time and put your payments on hold. In addition to this measure, here are other steps you can take if you’re facing economic hardship so you can avoid defaulting.

Get info on your loans 

Putting your payments on pause will require you to take an inventory of your student loan situation. You might have a combo of federal loans, which come from the U.S. Department of Education and private loans, which come from private financial institutions. For federal student loans, check the Federal Student Aid website to determine who your loan servicer is. 

If you’re unsure of your lender and you have private loans, you can check your credit report for free at AnnualCreditReport.com. When you get the info for your loan servicer and/or lender, find their contact information so you can take action so you can put your monthly loan payments on pause. 

You can also easily check out which federal repayment programs you are eligible for using FutureFuel.io’s Reassess tool. It’s a way to optimize your payments and find the right repayment plan for you, with borrowers saving an average of $254 a month.  

Talk to your loan servicer or lender 

If you feel like you can’t afford student loan payments, now is the time to talk to your student loan servicer. You don’t want to bury your head in the sand and end up being delinquent, or worse, in default and ruin your credit. Taking action now can help you manage this. Your loan servicer can discuss options with you. If you have federal student loans, here are some options if you can’t afford student loan payments. 

Deferment or forbearance 

If making your student loan payments will become an issue, you can consider putting your loans in deferment or forbearance. Through these options, your monthly payments are put on hold for a period of time. 

There are various types of deferment and forbearance, so talking with your loan servicer is a good idea to see what you’re eligible for. 

For example, there is an Economic Hardship deferment, which is available for up to three years. There’s also Unemployment Deferment, Military Deferment, In-School Deferment and more. 

When you put your loans on deferment, interest still accrues on your student loans and you’ll be responsible for paying that. So your loan balance may still increase during this time. The good news is that if you have Subsidized loans, the government will cover the interest that accrues during deferment. 

If you decide to put your loans on forbearance, you’ll need to qualify for a general or mandatory forbearance. A general forbearance is typically granted if there is a change in employment, medical issues, or financial difficulties. 

Mandatory forbearance is based on certain circumstances such as being in AmeriCorps, the National Guard or in a Medical or Dental Residency. Both types of forbearance are granted 12 months at a time. 

You must apply and be approved for deferment and forbearance. That’s why it’s important to discuss your options and eligibility with your loan servicer and submit any required paperwork or information to put your loans in deferment or forbearance. 

Income-driven repayment (IDR)

Another option to consider is going on an income-driven repayment (IDR) plan. This plan is a good option if you feel like you can’t afford student loan payments right now. Why? Because under one of the four repayment options under IDR, your monthly payments are tied to your income. 

You’ll pay between 10 to 20 percent of your discretionary income. The good news is that if you have no income or are near the poverty level, you can get approved for zero dollar payments. So in other words, you pay nothing but still remain in good standing with your payments and avoid delinquency and default.  

You’ll need to apply for income-driven repayment and update and recertify your income as well as family size each year. You can apply online and submit an Income-Driven Repayment Plan Request. If you don’t rectertify, your payments could change. 

Income-driven repayment may be a better, more sustainable option if you can’t afford student loan payments right now. Also, income-driven repayment offers student loan forgiveness if there is still a balance at the end of the repayment term (20 to 25 years). 

Direct Consolidation Loan

During this time, if you want to combine several of your federal loans to make repayment easier you can look into a Direct Consolidation Loan. Through loan consolidation, you can lower your monthly payments and extend your repayment period. 

You can contact your loan servicer about this option. It can make things more manageable, but something important to note is that if you have been making payments under any of the income-driven repayment plans like Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), etc. toward Public Service Loan Forgiveness you will lose the credit toward forgiveness. 

Private student loans 

If you have private student loans, unfortunately, your options aren’t as generous. Private student loan lenders might offer some forms of deferment or forbearance. Each lender may have different policies and timeframes. For example, Sallie Mae offers several deferment options if you’re in school or in a fellowship or residency. The company also offers forbearance for three months at a time for a total of 12 months. 

If you have private student loans and can’t afford student loan payments call your lender right away to discuss your options. 


If you’re having trouble making student loan payments, student loan refinancing might not be the best fit right now. But it could be something that could save you money later on. Student loan refinancing from private lenders offers a new loan at a lower interest rate. 

The refinancing loan pays off your debt and helps you save money on interest with the new loan. You may also have better repayment terms and a new monthly payment amount and loan repayment plan. If you want to refinance, you want to make sure your credit score is strong, you have money in your bank accounts and a stable job. Refinancing can save you money but it can also be risky as you lose all of the federal benefits mentioned above. 

Final thoughts 

Dealing with all of the changes going on and trying to manage student loan payments can be stressful. If you feel like you can’t afford student loan payments right now, take action today. There are options available that can put your payments on pause or make payments more manageable, so you can avoid going into delinquency or default during this difficult time.