How to Responsibly Pay Off High Student Loan Debt

girl with book in the grassA student loan is a contractual agreement between someone who needs money and someone who agrees to provide that money for a price. Students who take out these loans sign these documents, essentially promising that they’ll pay back the funds with interest. But sometimes, people who take out these loans choose to walk away instead of keeping their promises. For example, research suggests that college dropouts default on their student loans at a rate that’s four times higher than the rate seen in graduates. It’s suggested that these students think the loans are invalid, because they didn’t see a good return on their loan investments.

It’s easy to get mad at a lender, and at the system in general, when loan balances are high and income is low. But there are much more helpful ways to approach the problem. In fact, there are a number of things students can do to be responsible with the debts they’ve agreed to carry.

Research Options

Borrowers with huge debts often resort to DIY solutions to address their concerns. These borrowers might:

  • Take on extra jobs
  • Slash the family budget
  • Hold off on making major purchases
  • Move to areas in which good-paying jobs are plentiful

All of these options involve sacrifice, of course, but they can sometimes allow borrowers to meet their debt obligations. Sometimes, however, these steps are simply inefficient. The debt is too high and the income is too low in order to make ends meet.

Borrowers in this situation need to move away from the solitary mentality and ask for help from their lenders. Often, there are solutions available that can make budgeting for loan payments a bit easier. For example, students with federal loans might qualify for pay-as-you-go options that tie their payments to their income. Others might qualify for similar income-based repayment programs, but the Obama administration suggests that fewer than 450,000 of the 36 million Americans who have federal debt participate in this program.

Students in need should reach out long before they miss even one payment, and see what options are open to them. They may find that lenders are more than willing to restructure the loans they provided, so students will pay their debts without defaulting.

Keeping in Touch

Availability of restructuring programs can vary from year to year, particularly in the private marketplace. This could mean that students who don’t qualify for aid in one year might do so in the next, and the reverse might also be true. As a result, borrowers simply must stay in touch with their loan servicers, updating these officials with the details of their current financial situations. Sometimes, they may get relief when they least expect it.

But keeping in touch also means making those payments regularly. Skipping payments could leave a student open to wage garnishment, along with expensive debt collection fees that could make the debt owed even more challenging to manage.


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