4 Reasons Why You Are Struggling With Student Loans Right Now

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If you are a millennial and you aren’t currently buried in student loans, consider yourself lucky! One of the most common issues that I deal with as a financial coach is working through budgeting problems caused by student loan debt and high payments. The average student loan payment for millennial graduates is more than $350/month. Add that to the rising costs of rent, utilities, groceries, and everything else that we need to survive, it’s no surprise that a lot of us are struggling to make our student loan payments. If you’re experiencing this struggle, explore these reasons why and consider making changes to the things that are within your control.

You have multiple loans and can’t keep track of them all.

Most of us fall into this category. We have separate loans for each semester/year, and may even have several different loan providers. Research the pros and cons of consolidating or refinancing and see if either option would benefit you. This will move all of your loans to one provider and you’ll only have one payment to keep track of. They offer debt consolidation and lender comparison with no impact on your credit score. If consolidation or refinancing isn’t beneficial, create a spreadsheet to organize and track your loans in one place.

You’ve fallen behind on payments.

If you’re in this situation, contact your loan servicer ASAP. Most of the time they are willing to work with you to make payment arrangements or set up forbearance/deferment. You can also explore other repayment options that could lower your payments. Missing payments or making late payments will affect your credit and those marks will stay on your report for several years. Contact your loan provider before your loans go into default and could potentially be sold to a credit collector or garnished from your wages.

You aren’t earning enough money.

I feel like 99% of us are struggling with student loans because of this issue. It’s more of an issue with employers rather than OUR issue, but we are having to deal with stagnant salaries while the price of everything else rises. If your 9 to 5 doesn’t pay well enough to cover necessities and your loan payments, scout out new employment if you are able. If you have a skill or hobby that can be monetized, consider starting a side hustle to bring in more cash. Budget and look for ways that you can cut expenses to pay down your debt more aggressively and get rid of your student loans sooner rather than later. Also, use cash windfalls to help pay down your student loan debt.

Most (or sometimes all) of your payment is going towards interest.

I see this happen quite often on income-based repayment plans for loans with a high balance. A big chunk of the payment goes towards interest and your principal balance never seems to go down. Your payment pays the interest and then you’re charged interest on your principal balance that never seems to budge! Honestly, it can be difficult to get around this. Most would suggest paying more than the minimum payment to combat this, but that can be extremely difficult if you’re already struggling with your payment. If you are able to make additional payments, do so. Again, consider refinancing your student loan or consolidation. If you are in a better financial position (better credit score, income, etc) than you were when the loans were issued, then you may be able to get a lower interest rate with refinancing/consolidation.

Student loan debt is no joke. In the grand scheme of budgeting and taking care of necessities, student loan payments often fall to the bottom of the list. Salaries have plateaued as prices rise simultaneously while loan servicers are breathing down our necks wanting their money. It can be very difficult to climb out of student loan debt given these conditions. But it can be done. It is possible to ditch debt but it takes some determination and effort. Use these points to get a headstart on making adjustments and gaining control over your student loan payments. We’re all dealing with this. You’re not alone. You got this.

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