What to Do If You Can't Pay Your Private Student Loan

While your private student loan seemed like a good idea when you were pursuing a degree, now it might feel like an unbearable weight — especially if you didn't get the job or paycheck you were hoping for after graduation. If you are struggling to pay your student loans, know that you are not alone: American grads share over $1.48 trillion in student loan debt, with a delinquency rate of 11.2 percent.

Private student loans add an extra layer of difficulty for borrowers. While federal student loans offer various repayment programs to those struggling to make payments, private loans notoriously have less leeway.

Not paying back your student loans is not an option. Not only can defaulting on your student loans hurt your credit score, but it can eventually lead to calls from collection agencies and having your wages garnished. Here are several options to consider instead when you are struggling with your private student loans. (See also: What Really Happens When You Don't Pay Your Student Loans)

1. Refinance your loans

Are you paying a lot of interest for your student loan? Get quotes from private student loan lenders to see if you can land a lower interest rate. Decreasing your interest rate by 1 percent might not save you a lot each month, but it can save you thousands over the life of your loan.

If you are really in a pinch financially, and you have exhausted your options, you can refinance your student loans to a longer term. This can dramatically decrease your monthly payment, but it will mean that you are paying more overall over the life of the loan. Consider the long-term effects of refinancing your loan from a 10-year term to a 20-year term before finalizing that decision. (See also: Should You Refinance Your Student Loan?)

2. Increase your income

Earning more at work can help ease your budget woes. However, getting a bigger paycheck is easier said than done. For employees that have been on the job for a while, ask for a raise or look for opportunities for in-house promotions. Many companies like to hire current employees for higher positions because in the long run, it is more cost effective and timesaving for the company. Don't see a new job listing? Don't let that stop you from asking your employer. They might be too busy to post a new job listing. (See also: How to Negotiate a Raise Out of the Blue)

3. Look for jobs with student loan repayment perks

Many companies are starting to offer student loan repayment options as an employee benefit. Companies like Staples, Fidelity, and Aetna offer this perk, so it might be worth looking at job listings with these companies. (See also: These 17 Companies Will Help You Repay Your Student Loan)

4. Find a side gig

If you can't increase your income through your regular paycheck, try earning money on the side. There are many avenues for earning extra cash through a freelance or side gig; you just have to find the right fit for you and your schedule. Driving for Uber or Lyft, housesitting, or dog walking are all easy ways to earn extra income each month. For those with more specific experience, try freelance writing, social media managing, or virtual assisting. (See also: 14 Best Side Jobs For Fast Cash)

5. Sell unused items

You might have extra money taking up space in your closet or garage. Go on a decluttering mission this weekend and find everything you don't need or want anymore. Sell smaller, valuable items, like a name brand sweater, on eBay. Sell larger items on Craigslist or Offerup. For everything else, sell in a yard sale. People buy junk at yard sales, so don't be surprised if your old towels or comforter set fetch you a few bucks. (See also: 12 Garage Sale Items That Sell Like Hotcakes)

6. Get real about your budget

If you can't find room in your budget for your student loan payments, it might be time to get a new budget. Take a hard look at what expenses can be cut. This can be a painful exercise, but if it means being able to stay current with your student loan bills, it is worth it.

Cut the fun stuff from your budget first, like coffee runs and shopping trips. Downsize your cellphone and cellphone plan and cancel any monthly subscriptions. This includes magazines, Netflix, gym memberships, and anything else you can live without.

If you still cannot afford your student loan payments after cutting out the fun stuff, it may be time to adjust your way of living altogether. As hard as it may be, consider ditching your car with a car payment for an older vehicle that can be bought with cash. Live with a roommate or move back home temporarily while you get ahead on your debt.

Paying off private student loan debt is a huge chore and making the sacrifices to do it can seem impossible. However, it is better to live with your parents or a drive around town in a clunker than to be delinquent on your student loans. (See also: 5 Ways to Pay Off Your Student Debt Faster)

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