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

2 comments on “What If You Can’t Pay Your Student Loans?”

  1. Carolyn Devine says:

    I am sick knowing my daughter got scammed out of 2 yrs by getting bad advice from college counselor. Her credits didn’t transfer. After 100k she still has to get a loan. Now it’s crazy to see her struggling to make payments when some people never has to borrow or pay. Any advice please?

  2. Carolyn Devine says:

    Public service?

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