What to do if you can’t pay your student loans

Learn your options if you can’t make payments.

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Key takeaways

  • If you can't pay your student loans, look for ways to cut your other expenses or earn additional income.
  • Also contact your loan servicer, and consider options such as deferment, forbearance, or consolidation.

For more than 2 years, federal student loan payments have been paused. The pause was recently extended by President Biden in November 2022, as his administration's student loan forgiveness program faces court battles. The extension will last until 60 days after the court case(s) are resolved or 60 days after June 30, 2023 (whichever occurs first), if the program hasn't received the green light.

When that day comes, former students with federal loans will need to start paying them like it's 2019 again. But 58% of federal student loan borrowers expect to not be able to afford payments, according to an August 2022 survey by research firm Morning Consult.1 And not all repayments on loans have been paused, so some borrowers may already be struggling to meet those minimums.

Here's what you could do if you can't afford to make your student loan payments.

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1. See if you're eligible for student loan assistance

More employers are offering help with defraying student loan payments in their benefit packages. This could go a long way toward knocking down debt. Contact your HR department to see if this perk is available to you. Or, if you're on the job hunt, see which companies provide this benefit. Factor in the amount of aid you'd be entitled to as you weigh job offers.

If you work for a federal, state, local, or tribal government or a not-for-profit organization, you may qualify for public service loan forgiveness. This is separate from the broader program that's currently held up in the courts and requires making 120 qualifying loan payments to be eligible.

2. Contact your loan servicer

Although it can seem like an awkward conversation, call your loan servicer and explain you can't make your loan payments. Many servicers have trained professionals on the other end of the line who can talk you through your options to avoid defaulting on your loans, including the ideas outlined below. It likely won't be their first or last time having this conversation with someone in your position.

3. Change your repayment plan

If you have federal loans and can't make your payments as they're scheduled, you could change how you pay. Federal student loans have several different options.

  • Standard repayment plans are available to all borrowers. These require you to pay a fixed amount every month for 10 years. This could extend to 30 years with consolidation, or when you combine multiple loans into a single larger loan. The consolidated loan may have a longer repayment period than any of the individual loans, which can lower monthly payments but be more expensive over the life of the loan because you're paying interest for longer.
  • Graduated repayment plans are also available to all borrowers. These start with smaller payments and gradually increase every 2 years over a 10-year payment period (or up to 30 years for Consolidation Loans). These may be a good option if you're in a career in which salaries grow significantly over time, as a future earnings boost could help cover the later larger payments.
  • Extended repayment plans are only allowed if you have more than $30,000 in Direct Loans, which are loans made directly from the US Department of Education. Instead of the usual 10-year payment period, there's an extended 25-year period and, as a result, lower monthly payments.

If you have relatively high debt compared to your income, you may want to look into an income-driven repayment plan. These calculate your monthly payment amount based on your income and family size, and you need to recertify that info each year, which could cause your monthly payment amounts to change. Bonus: Some of these programs offer eventual loan forgiveness. To enroll, call your federal loan servicer. They must help you apply for income-driven repayment plans for free.

Keep in mind that although some repayment plans could result in lower monthly payments, they could end up being more costly over time if you don't qualify for forgiveness. Look into resources, such as Fidelity's Student Loan Calculator and Federal Student Aid's Loan Simulator, to help determine what may be the best plan for your needs.

4. Consider asking for deferment or forbearance

If none of the options above help you afford your payments, consider asking your service provider about deferment or forbearance. Loan deferment means a temporary pause on loan payments, which could extend up to 3 years for some types of deferments. To qualify for deferment, you must submit a request to your loan servicer and provide proof of eligibility. You could be eligible if you're undergoing cancer treatment, on military duty, or working fulltime with earnings below 150% of the poverty guideline for your family size and state. Keep in mind: While you don't have to make loan payments during a deferment, interest may still accrue on your loan.

Or you could find out if you're eligible for forbearance, where you can pause or reduce your payments for up to 12 months. Like deferment, you request loan forbearance from your loan servicer. You must pay any interest that accrues on your loans during your forbearance period. You could be eligible for general forbearance (meaning at the discretion of your loan servicer) if you're unable to make your payments due to financial difficulties, medical expenses, or a change in employment. You could be eligible for mandatory forbearance if you're participating in qualifying education programs or serving in qualifying branches of the military.

Student loan deferment or forbearance can give you some breathing room—but take this decision seriously. It's also good to know that deferment and forbearance don't impact your credit score.2

5. Consider consolidating or refinancing

If you have multiple federal loans that require multiple different payments, you could consolidate them into one larger loan with a new repayment period and interest rate. The new interest rate for your consolidated federal loans would be based on the weighted average of their interest rates, rounded up to the next 1/8 of 1 percentage point.

This could simplify bill-paying and lower what you pay on your loans each month. Again, extending your loans may end up being more expensive over time—you're likely to make more payments overall because of the extended repayment period. Most federal student loans are eligible for consolidation, and the application is free. If you have loans from private lenders, consolidation may be more complicated, or your loans may not be eligible at all. Generally, you cannot consolidate private and federal loans together.

You could instead refinance your loans, but this can only be done through a private lender, such as a bank. Like consolidation, refinancing combines all or some of your existing loans into a single, private loan with a new repayment schedule and interest rate, influenced by your personal credit score or a cosigner's. That could lead to lower monthly payments, a longer repayment period, or even a shorter one. But refinancing your federal loans with a private lender could disqualify you from using any federal repayment plans or loan forgiveness, so consider this option extra carefully for federal loans.

Even though debt can be overwhelming, knowing your options if you can't repay your loans could bring you closer to coming up with a financial plan—and help you balance tackling your debt with reaching your other financial goals.

Next steps to consider

Plan your attack on loans

Our student loan tool can help you evaluate repayment options.

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