What If You Can’t Pay Your Student Loans?

Hey guys, Bridget from Money After Graduation here and I wanted to talk to you about what happens if you can't pay your student loans Many of us are so busy complaining about our student loan payments, we never acknowledge that some people actually can't make them, and the stress that really weighs on your shoulders if your loans go into default and the consequences thereof

Truthfully, up to 40% of student loan borrowers are not making payments This means they're either participating in some kind of student loan repayment relief program or their loans are actually in default and hurting their credit I don't want you to get into this position where you're missing payments and it's harming your long-term financial health So in this video I have some suggestions of what to do if you can't make your student loan payments The first thing to do is to notify your creditor immediately

If you know that you're not going to be able to make your student loan payment this month or next month, call them and tell them This is really important so that they can work with you Whenever I talk about debt in my youtube videos I always want to emphasize that your creditor wants to be paid and therefore they're usually really receptive to working with you if you're not able to make the payments that they've outlined in your contract Student loans are no different, but they're way more important than other consumer credit vehicles that you might be using This is because student loans cannot be discharged in bankruptcy

Even if you're really struggling to make these payments, they're never going to go away So it's way better to just find a way to deal with it rather than put your credit at risk by not making payments The reason it's so important to let your creditor know that you might be missing an upcoming payment is because sometimes missing a series of payments will disqualify you from seeking student loan relief options So make sure you let them know so you don't take any of your future opportunities off the table to find a way to pay off these debts Once you've notified your creditor that you're going to miss a payment, they'll probably come up with some solutions to help you out

One of these is student loan repayment assistance In Canada if you're single and earning less than $25,000 per year and have no dependents, you don't need to make payments on your student loans The government will give you a six-month relief period where you don't have to make any payments on your student loan debt and you can use this time focus on increasing your income and managing your other financial obligations to get back on track Enrollment in this program is not automatic, which is why it's so important to contact your creditor either by phone or online to fill out the necessary application in order to get the student loan repayment assistance Furthermore, re-enrollment is not automatic

So if at the end of 6 months, you still can't make your student loan payment, it's really important that you reapply Even though you're not required to make student loan payments during the time that your student loans are in repayment assistance, they will still be accruing interest So it's really expensive to ignore them You definitely don't want to leave it like this for the long term but it is a great option if in the short term you're really struggling financially In the US, one of the options available to you if you can't make your student loan payments is deferment

This works similarly to the repayment assistance program in Canada where you don't have to make payments for a certain period of time if you qualify Some of the qualifications are either you're returning to school, you're unemployed, or you have a disability that prevents you from earning the money necessary to make your student loan payments If you don't qualify for a deferment, one of your other options is student loan forbearance And this works exactly like the Canadian repayment assistance programs where you won't have to make student loan payments for a certain period of time due to financial hardship These are typically granted one year at a time, so that can give you 12 months of student loan repayment relief if you're really struggling financially

Finally, one of the options that many people don't explore fully is student loan forgiveness and there's certain instances in both the US and Canada when this is available for large student loan balances Sometimes student loan forgiveness is tied to a certain profession or working in a certain geographical area For example, in Canada, medical professionals like doctors or nurses can receive student loan forgiveness if they work in a rural community In the United States the public service student loan forgiveness program is in place to forgive your student loan balances if you work in public service for a number of years Student loan forgiveness is extremely rare so if you qualify for one of these options definitely take advantage

It's important to remember that if you're unable to make it payments on your student loans you're definitely not alone so don't feel embarrassed by your struggle There are options available to help you, all you need to do is reach out to your creditor and learn what's available and start taking steps now The most important thing is just that you start taking action before your loans actually go into default and you miss payments because that can negatively impact your credit which takes years to recover from I hope you guys found this content helpful, if you did please give it a thumbs up and subscribe to my channel and I will see you again next week!

Source: Youtube

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