Six Ways Student Loan Debt Can Get Out of Hand

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Brian O'Connell

By Brian O'Connell

January 10, 2019

Too many U.S. college borrowers are drowning in student loan debt, and the problem is only getting worse.

According to the Pew Charitable Trusts, “student loan borrowers who do not encounter repayment problems or interruptions are more the exception than the rule.”

The organization also states that one in five college loan borrowers – approximately eight million Americans – are mired in student loan default scenarios, and millions more of them are having major problems paying back their loans.

Stop Student Loans from Spiraling Out of Control

The last thing student loan borrowers want to experience with their student loans is to reach that “tipping point” between having manageable student loan debt and unmanageable student loan debt.


Because when you land on the wrong side of that tipping point, student loan debt can easily spiral out of control.

That leads not only to non-payment of the student loan, but also to the potential for ruined credit, late payment penalties, collection charges and wage garnishment, and a long road back to personal solvency.

Reading the Tea Leaves

That’s why it’s so important for student loan borrowers to recognize the “red flags” that can lead to an unmanageable student loan debt problem, and take direct action to eliminate that problem.

These warning signs are at the top of the list:

You’re going to drop out of college. Students who drop out of college are four times more likely to default on their student loans than students who graduate. Two-thirds of borrowers who default on their student loans are college drop-outs. They have the debt, but not the degree that can help them repay their student loans.

The fix. Talk to your academic advisor, the college counseling center and the college financial aid office about options for staying in school. Some colleges have emergency aid funds that can provide small grants for unanticipated expenses, so that small problems don’t snowball. If you do drop out of college, choose an income-driven repayment plan for your student loans to keep the payments affordable.

You’re not paying down the principal on your student loan debt. Take a look at your latest student loan statement. Does it show that you’re paying only the interest on your loans, and not the loan principal? If that’s the case over a long period of time, especially if you miss a few payments, your total loan debt is growing, and it’s going to be significantly more difficult to pay off.

The fix. Try adding an extra $50 to each loan payment on an ongoing basis, or if you’re still in college, make smaller, bur regular payments on your loan to help eat into the loan principal sooner rather than later.

You’ve applied for an economic hardship deferment – and got it. If you can’t land a decent job right out of college, you could be eligible to postpone your student loan payments via the economic hardship deferment. That could be your only choice, but know that the interest keeps accumulating on your unsubsidized loans, adding thousands of dollars to your student loan burden.

The fix. Even if you’re struggling to afford your monthly student loan payment, at least make a partial payment to cover the interest portion of your loan. That will slow the growth of your total loan debt when you’re back paying off the loan.

You’re taking time off your loan payments via forbearance. College loan borrowers who take time off from paying their student loans via forbearance also fall behind on their student loans. With forbearance, student loan interest accrues on both subsidized and unsubsidized college loans.

The fix. Again, try to make regular, moderate payments on the interest from your student loan. Remember, the idea is to keep that debt from getting out of control. Interest payments during forbearance can help you do so. Some lenders offer a partial forbearance which lets you make interest-only payments for a period of time.

You’re only making sporadic payments. If, for whatever economic reason, you’re only making intermittent payments on your student loan, the loan will keep accumulating interest and the principal still needs to be paid off. On-again, off-again student loan repayment habits are a huge reason why $30,000 student loans turn into $50,000 student loans. Establishing an automatic payment plan can help, too.

The fix. It’s simple – make regular payments. Yes, it’s easy to blow a payment or two off but you wouldn’t do so if you could look into the future and see the financial damage you’re accumulating. If money is an issue, take a side job and wait tables, drive for Uber or Lyft, or do whatever it takes to keep paying off your student loan on a regular basis.

You default on the loan. This is the nuclear option, and it’s the fastest path to a ballooning college debt burden. By defaulting on the loan, you’re not paying principal or interest on the loan at all, while the interest on the debt keeps growing and growing, until the debt is paid or the issue is resolved. An extended period of non-payment will cause your debt to double, triple or balloon without end.

The fix. If you find yourself in dire straits financially, and can’t repay your student loan, contact your loan servicer straightaway. Let them know there’s a problem and you’re willing to repay the loan when you get back on your feet again. One good option – get on an income-driven repayment plan that keeps you paying your debt down, even at a reduced rate. When you’re cash flush again, increase the payments aggressively.

Stay Focused and Stay in Control

Job one for any student loan borrower looking to keep debt manageable is to pay close attention to their bills, make all the payments they can, at the maximum possible amount, and have a good plan on hand if disaster strikes and they can’t pay their bill.

In other worlds, stay focused and keep your eyes on the prize – a manageable student loan debt that you can pay off before it becomes a burgeoning problem.


A good place to start:

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