Living with Student Loan Payments

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Living with Student Loan Payments

College graduates often leave their universities with student loan debt.

It is important to note how much student debt has grown over the last five years. According to's latest report, student loan debt has increased from $1.15 trillion in 2013 to $1.766 trillion in 2023. And according to that same report, the average student loan debt is currently at $40,499.

This means the odds are good that college graduates will leave school with at least some debt to repay. It also means that students could use some guidance when it comes to paying back this amount of debt after entering the workforce.

The good news is there are options for graduates who cannot afford their monthly student-loan payments.

Don't ignore it

It is tempting for students to ignore their late bills and hope the problem goes away. However, it will not. Graduates who do not make their student loan payments on time could face serious financial penalties. They'll also see their credit scores take a hit. Lenders of all kinds -- mortgage, auto and personal -- rely on these scores when determining who gets loans and at what interest rates. Those borrowers with weak credit scores will either not qualify for loans or credit cards or have sky-high interest rates for loans they can obtain.

So what should graduates do if their loan payments become too much? They should call their lenders. Most times lenders will work with graduates to come up with a solution to their financial woes.


Many graduates choose to consolidate their student loans. Under consolidation, multiple loans are combined into one. This simplifies paying back these loans: Graduates now have to make just one payment every month. Consolidation can also lower the monthly payments of graduates because the process gives them up to 30 years to repay their loans.

However, graduates who increase the length of their repayment period will pay far more in interest during the life of their student loan debt. This is why loan consolidation is not always the best financial solution for college graduates.


Some lenders might allow graduates to postpone their loan payments during times of unemployment or other financial crises. This gives graduates extra time to shore up their finances or find a better-paying job.

Postponing will result in adding months to the lifespan of a student loan, which means that borrowers will usually have to pay more interest over the life of the loan. The best way to handle student loan debt is to pay it back as quickly as possible. Postponements instead make debtors spend more months paying back their loans.

Payment plans

Another option for borrowers is to request a new payment plan from their lenders. Lenders might be willing to lower the amount of money that borrowers have to pay each month. They might also be willing to reduce the interest rate attached to the loan.

Borrowers who took out federal student loans might qualify for income-contingent repayment plans. Under these plans, graduates only pay a monthly payment that is a set percentage of their monthly incomes. Such plans are a boon for borrowers whose monthly incomes are low.


Graduates can also sign up for certain careers or programs to reduce the amount of student-loan debt they owe. For instance, graduates who sign up for the Peace Corps can eliminate 70 percent of their student loan debt from Perkins loans. Those who took out Stafford and consolidated loans can receive a deferment of up to 27 months.

Graduates who sign up as volunteers for AmeriCorps can after one year of service receive nearly $5,000 to pay off their student loans.

Those students who want to overcome their debt, will have to be proactive. There are options out there. It is up to graduates to do the research necessary to find the best ones for them.

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