student loan repayment dilemma with interest-only payments

If you’ve recently graduated, you may have noticed that repaying your student loans is feasible and doable, but you may have also noticed that there’s a good chance you’ll only be paying the interest. There are a few options available to you if this is the case (which it frequently is).

Your Choice

1. Finding a way to pay more than the interest on a loan is the rational decision in this situation. Making only interest payments is the equivalent of wasting money. By paying interest alone, you won’t really reduce the loan balance.

2. Try to lower your living expenses. You might be able to put more money toward your loan payments if you make less of the regular out-of-pocket payments you make for other aspects of your life (home, rent, car, etc.). But doing so is frequently challenging, which is one of the reasons why many recent graduates struggle to balance having a family, buying a home, and paying off student loans.

3. An alternative with a lower payment may be available to you. If your income is modest or you qualify for another type of repayment (for example, if you are in the military, etc.), you may be eligible for a loan.) you may have some additional options available to you.

4. It might be more difficult to come up with a plan if you do earn a respectable living and are not qualified for any type of reduced repayment option, but you still don’t want to just keep paying the interest on a loan. However, you might still have other choices besides defaulting or paying interest in perpetuity. To prevent the loan from defaulting, give the lender a call and ask if there are any internal payment options available.

The Default Status

Simply because there are no other options or because the options that are available are not helpful, recent graduates all too frequently end up defaulting on a loan. This is a problem that needs to be solved, but in the interim, many recent graduates will find themselves drowning in debt and having to deal with lenders frequently, which is a bad way to live.

But more people than you might imagine go into default on their student loans. In fact, you may feel extremely alone in this situation, but I assure you that you are not. With the right legal team on your side, you may also be able to put an end to your student loan issues.