5 Strategies When You’re Broke and Can’t Pay Your Student Loans

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If you can’t pay your student loans back, you probably have other expenses that seem unaffordable too. Maybe you’re tired of checking a bank account balance that always seems to fall short.

So how can you pay back student loans when you can barely pay your bills? We’ll walk you through these five steps — they may not be easy, but they could help you pay off debt on a limited income.

5 strategies to consider if you can’t pay your student loans

1. Be a cost-cutting machine
2. Find ways to earn more money
3. Adjust your loan repayment plan
4. Consider loan consolidation and refinancing
5. Try something unconventional

1. Be a cost-cutting machine

When you’re broke and can’t afford student loan payments, try to evaluate each of your other expenses. Ask yourself:

  • Do I need this?
  • Can I get this cheaper from somewhere else?
  • What value does this add to my life?

For basic needs, like rent, food and transportation, look for ways to lower costs. For instance, you could consider:

  • Getting a roommate
  • Renting out your apartment through Airbnb
  • Downsizing to a cheaper home
  • Finding ways to lower food costs
  • Negotiating lower payments for your bills
  • Going to local schools and community clinics for things like haircuts and dental care
  • Selling your car
  • Shopping for cheaper insurance
  • Walking or biking when possible

Comb through all of your expenses to see where you can make adjustments. Remember, it’s not that you are cutting these things out forever — it’s just a temporary measure until your situation improves.

Cut out most of your “wants,” but not all of them. You should keep one thing for yourself, as this can help you feel like you haven’t lost everything. Maybe remove one of your streaming services, or forego your morning latte and make coffee at home.

Being broke and paying off debt isn’t about never having fun — it’s more about being creative with your resources. Remember, you can still check out books from the library for free, attend free concerts, visit museums during free hours and go on nature hikes.

Cutting back on your spending is the first thing you can do to pay back student loans when you have little to no resources, but it’s not your only option.

2. Find ways to earn more money

Cutting back is a great way to do something today and see results. But when you’re broke, this strategy often isn’t a choice but a necessity. Luckily, there is another way to improve your situation when you can’t afford your student loans: Earn more money.

Earning more money requires you to embrace a different mindset than cutting back, and it can help you boost your confidence. Instead of being a cost-cutting machine, start thinking of yourself as the boss of your own life. You are a business owner. How can you make and earn more money?

There are countless ways to bring in a little bit of extra income, such as:

  • Selling your old stuff, like CDs and books
  • Freelancing as a coach, consultant, tutor or writer
  • Being a background actor in film and television
  • Adjusting your tax withholding so instead of getting a refund, you earn more per paycheck
  • Using a cashback credit card and paying it back in full each month
  • Opening a new bank account for the cash bonus
  • Picking up a second job, like working as an Uber or Lyft driver
  • Becoming a virtual assistant

Keep in mind that these are just some ideas. The ways you can earn extra cash are only limited by your imagination.

3. Adjust your loan repayment plan

When you’re broke and can’t pay student loans back, everything can seem like a struggle. You might have even considered the possibility of ignoring your loans, only to bail on that idea upon learning the consequences of not paying your student loan debt.

To make your repayment more doable, consider ways to lower, pause or receive relief on your payments.

For your federal loans, consider:

  • Income-driven repayment (IDR): Cap your monthly payment at 10% to 20% of your discretionary income.
  • Deferment or forbearance: Pause your payments temporarily at the risk of interest accruing and capitalizing on your balance.
  • Loan forgiveness programs: Public Service Loan Forgiveness, Teacher Loan Forgiveness and other federal initiatives could deliver partial or full cancellation.

For your private loans, contact your lender or loan servicer to explain that you can’t make your payments, and ask about its support programs. While modified repayment plans are rarely offered by banks, credit unions and online companies, economic hardship forbearance is a common option. Just keep in mind that interest will continue to stack on your balance for any period you’re away from repayment.

No matter your loan type, also investigate loan repayment assistance programs offered by state governments and agencies, as well as employers. You could receive meaningful assistance based on where you live or what you do for a living.

The most important thing to remember is to stay in touch with your lender. If you can’t afford your payments, contact your lender right away. If you can’t pay your student loans and neglect to contact your lender or take action, you could face student loan default, which has serious ripple effects.

4. Consider loan consolidation and refinancing

If you have multiple federal student loans and are having a hard time keeping up with numerous payments each month, another option to consider is to consolidate your student loans. By taking out a Direct Consolidation Loan, you’ll be able to combine multiple federal loans into one loan, resulting in a single monthly payment as opposed to multiple ones. There are no application fees, and the interest rate is fixed.

To be eligible for a Direct Consolidation Loan, there are some requirements, including that the loans you consolidate must be in repayment or in the grace period. However, be mindful of the potential drawbacks of a loan consolidation. For example, while your monthly payments may be lower, the term of your loan may be longer, which means you might end up paying more in interest than if you didn’t consolidate.

Additionally, private loans aren’t eligible for a direct consolidation loan, so if you have a mix of both federal and private student loans, you’ll only be able to consolidate your federal loans. You do have the option of refinancing private loans, often with a new repayment period and a different minimum monthly payment amount and interest rate. Be cautious about refinancing federal loans, however, as you will lose certain perks, such as income-driven repayment plans.

5. Try something unconventional

If you want to pay back student loans but have a limited income, you may want to try some unconventional strategies to get out of debt, such as:

  • Find a job where your rent is covered: This could include roles like a camp counselor, hostel worker or, in some cases, a teacher working abroad.
  • Use your tax refund: With this lump sum, you’ll be able to make great advances toward your repayment.

Focus on solutions when you can’t afford your student loan payments

Debt can feel like a huge burden when you are struggling to pay basic expenses and can’t repay your student loans. But don’t give up hope — be creative. Consider looking for better-paying prospects, saying yes to overtime and being open to new opportunities coming your way.

Your self-worth is not your net worth, so don’t beat yourself up. Understand that student loan repayment is a marathon, not a sprint. You’ll get there in time.

Andrew Pentis and Yael Bizouati contributed to this report.