On May 5, the U.S. Department of Education (DOE) began collections on defaulted federal student loans as part of a broader effort to eliminate loan forgiveness programs initiated during the Biden administration.
More than one-fifth (20.5%) of federal student loan borrowers who owe debt are 90 days or more past due — qualifying them as “seriously delinquent,” according to a new analysis of DOE data conducted by TransUnion. That figure is up from 11.5% in February 2020, during the early stages of the COVID-19 pandemic and before a subsequent student loan pause that was put into place during President Donald Trump’s first term.
If you are way behind on your student loan payments as collections resume, here are four things you can do to get current again.
Any loan repayment strategy should include eliminating unnecessary expenses to free up more money for debt payments. Here are three costs you can cut right now:
Home services: This might include getting rid of cleaning or yard services you currently pay for, along with taking a DIY approach to repairs and maintenance rather than hiring a professional handyman or repair service.
Eating out: If you regularly spend money on restaurant visits or takeout, you can save $100 or more by making your own meals at home.
Unused subscriptions: Nearly all U.S. households have some kind of streaming service subscription along with cable, internet, media and other subscriptions. Getting rid of the subscriptions you don’t need can free up a lot of money to repay student loan debt.
If you’re juggling several different student loans from multiple lenders, then you might find yourself missing payments just because you can’t keep track of them all. Consolidating those loans into a single loan will simplify the process considerably. In many cases you can also lower your monthly payments.
If you have good credit and a steady income, you can reduce your student loan payment by refinancing into a loan with a lower interest rate. A lower interest rate also ensures that more of your monthly payment goes toward paying down the principle, which helps you get out of debt faster.
Increasing your income could be the best way to keep up with student loan repayments because you have more money to apply to your debt. Asking for a raise is one way to increase your income. If that’s not an option, consider a side gig. Here are a few of the higher paying options, according to a GOBankingRates analysis:
Story Continues
