Help! I’m going to be stuck paying student loans the rest of my life!

Michael Lux Blog, Lower Payments, Student Loans 5 Comments

This is something that I often hear, but the truth is, it is rarely the case.

Without question, student loans can be really overwhelming.  In fact, many borrowers are staring at a mountain of debt that they couldn’t pay off even if they used every dime they made for years.

The good news is that there are a number of different ways that borrowers can manage their loans in order to see the light at the end of the tunnel.  Things may seem bleak, but there is a path to student debt freedom in nearly every circumstance.

But I cannot afford my student debt!

If you have federal student loans, you should always be able to afford your debt AND know that they will eventually be paid off in full.  The federal government has income driven plans that only require a portion of your discretionary income.  If you don’t make any money; you are not required to pay any money.  Best of all, if you stay enrolled in the program for 20 to 25 years, the remaining student debt can be forgiven.

Private loans are far less flexible for people who cannot afford payments.  These lenders can be especially ruthless.  However, some lenders are slowly starting to realize that collecting some money towards the debt is better than not getting any at all.  As a result, some have created programs that temporarily reduce your interest rate during a period of hardship, at Navient for example, it is called the rate reduction plan.  Lenders are hesitant to offer these programs and they do not advertise them, but if you are diligent, it can be done.

I make too much money to get help on my loans, but I can barely keep up.

When you can only afford making the minimum payments on all of your student loans, it really can seem like you will be stuck paying them forever.  With an income too high to qualify for interest rate reductions, but insufficient to attack the debt, it is easy to seem trapped.

Making minimum payments is the exact recipe to be paying student loans the rest of your life.  It is also exactly what your lenders want you to be doing.  Fortunately, it is an avoidable situation.

These three steps can get you on the road to debt elimination:

Step 1: Try to get all of your minimum payments lowered.  With federal loans, this usually means signing up for an income driven plan such as Income Based Repayment or Pay As You Earn.  These plans only require a small portion of your income and can free up cash to attack your highest interest debt.

Step 2: Get your interest rates lowered.  If you don’t qualify for a need-based rate reduction, you may be able to refinance your loans on the private market.  Lower interest rates mean more of your payments attack the principal balance and less goes towards lender profits.

Step 3: Pick one loan and attack.  Even if you only have an extra $10 per month to pay beyond the minimum payment, use it.  As soon as you are able to eliminate one of your student loans, you now have extra cash each month to attack another loan.  With each loan defeated, the next battle gets easier.


If you are buried under private loan debt that you have no meaningful chance at every paying off, you could potentially get them discharged in a bankruptcy.  The process is very difficult, but not impossible.  The key here is finding a local attorney who specializes in student debt.

However, it is important to note that this option will only work for people in truly impossible repayment situations.  If you are able to earn an income and pay towards your student loans, bankruptcy will be a very tough sell to a judge.

Bottom Line

Regardless of what you specific situation is, odds a pretty good that there is a route to freedom, even if it doesn’t seem like it.  If you have questions or what ideas for ways to manage your student debt, stop by the student loan forums to get some suggestions.