What Happens If You Can’t Afford To Pay Your Student Loans?
Can’t pay your student loan? Well, you’re not alone. Many students are on student loans and they can barely afford to pay the house rent or electricity bill. So they keep on ignoring them.
But what if the grace period is over and you still can’t pay it? What if you have missed many due dates? Six months? One year? Many bad things could happen to you. The worst is getting kicked out of your house. But, there’s good news too. You can fix this.
However, the process can be difficult. You may have to make sacrifices, but, in the long term, it’s going to be worth it. So, if you’re on a student loan, barely surviving, and desperately trying to get out of the situation then this guide is for you. Let’s start with the consequences of not paying student loans.
Account Goes In Default State
The rate of accounts going in the default state is high. How high? According to Pew research, out of 43 million in America, one million student loans end up in the default state. But what is the default state? It is the promissory period of 270 days (can be different) during which no loan payment is made. After this duration, the lender can file a case against you. So, it’s better to use this period to find ways to pay your student loans.
Credit Score Impacted
The credit score decreases with irregular bill payments. Similarly, irregular loan payments affect your credit score. It’s crucial because student loans are one of the first loans you take. You wouldn’t want to begin with a bad credit score.
Rejection From Jobs
Most companies check the person’s profile before hiring them, including their credit profile. So if your credit score is bad then you may be rejected. Remember, that’s not why you took the loan in the first place.
How To Avoid The Consequences Of Not Paying Student Loan
Not paying the student loan is scary. So get out of this situation soon. Luckily, it’s not the end. You can pay your student loan by following these smart tips.
1. Talk To Your Lender
Reach out to the loan provider and ask if you can get some more time. Or bargain the interest amount. Try to get to the lowest monthly instalment so that you can afford it. Note that bargaining with the lender is not possible in federal loans because of their strict rules. However, with SoFi private student loans, you can not only talk to the lender but also nurture the relationship for future help.
2. Get A Second Job
Maybe your current job income is low such that you can hardly afford basic needs. If so then you have two options: find a higher paying job or get a supplementary job. When you’re starting out in your career, it can be difficult to find a good-paying job, meaning many are left with the second option. Find a part-time job and manage some time to work. This is a great way to make extra money that you can set aside only for loan payments.
3. Cut Unwanted Expenses
This one can be difficult but try to cut unwanted expenses at least until you neutralise the situation. Set yourself a budget for essential expenses. Discipline yourself and don’t exceed the limit. For example, set aside $100 a month for groceries. You can also save money on things you don’t need urgently. For example, buying new clothes in alternate months.
Not being able to pay your student loan is so common now that it can be ignored for once, but its consequences can not be. Therefore, you will have to take action to pay it quickly. On the bright side, these things will turn you into a better person who will value small things in life. And of course, you will have paid your student loan.