The U.S. Department of Education (DOE) has recently resumed collections on defaulted federal student loans, as part of a broader effort to eliminate loan forgiveness programs that were initiated during the Biden administration. This move comes as more than one-fifth (20.5%) of federal student loan borrowers are 90 days or more past due, qualifying them as “seriously delinquent,” according to a new analysis of DOE data conducted by TransUnion. This figure has increased from 11.5% in February 2020, before a student loan pause was put into place during President Donald Trump’s first term.
For those who are behind on their student loan payments as collections resume, there are four key things you can do to get back on track. One important strategy is to eliminate unnecessary expenses in order to free up more money for debt payments. This can include cutting costs in areas such as home services, eating out, and unused subscriptions. By making simple changes like taking a DIY approach to home maintenance and cooking more meals at home, you can save significant amounts of money that can be put towards your student loan debt.
If you have multiple student loans from different lenders and find it challenging to keep track of them all, consolidating your loans into a single loan can simplify the repayment process and potentially lower your monthly payments. Additionally, if you have good credit and a steady income, refinancing your loans into a loan with a lower interest rate can help you pay off your debt faster by reducing the amount of interest you pay each month.
Increasing your income can also be a powerful way to keep up with student loan repayments. Asking for a raise at your current job or taking on a side gig are both effective ways to bring in additional income that can be used to pay down your debt. According to a GOBankingRates analysis, there are several high-paying side gig options that you can explore to boost your earnings.
In summary, managing and repaying student loan debt can be a challenging task, especially as collections resume and delinquency rates rise. By implementing these strategies and making small changes to your spending habits, you can take control of your debt and work towards a more financially secure future.
