Feeling the weight of student loan payments can be incredibly stressful, especially for Wisconsin residents navigating the cost of living. If you're finding it impossible to keep up with your monthly obligations, know that you're not alone, and there are steps you can take to find relief. Ignoring the problem will only lead to more serious consequences like default and damage to your credit score.

Here's a comprehensive guide on what to do if you can't afford your student loan payments in Wisconsin:

1. Don't Panic, But Act Immediately

The worst thing you can do is ignore your inability to pay. This can lead to delinquency, default, and ultimately, wage garnishment or other collection actions. Instead, take a deep breath and start exploring your options proactively.

2. Understand Your Loans: Federal vs. Private

The first step is to identify whether your loans are federal or private, as the available repayment options differ significantly.

• Federal Student Loans: These are loans provided by the U.S. Department of Education. They typically offer more flexible repayment options and protections.
• Private Student Loans: These are loans from banks, credit unions, or other private lenders. Their repayment options are generally less flexible and are determined by the terms of your loan agreement.

You can usually determine the type of loan by checking your loan servicer's website or your credit report.

3. Explore Options for Federal Student Loans

If you have federal student loans, you have several avenues to explore:

• Income-Driven Repayment (IDR) Plans: These plans base your monthly payment on your income and family size. After a certain number of years of qualifying payments (typically 20 or 25 years), the remaining balance may be forgiven. There are several IDR plans, including:
  • Income-Based Repayment (IBR): Generally caps monthly payments at 10% or 15% of your discretionary income.
  • Pay As You Earn (PAYE): Generally caps monthly payments at 10% of your discretionary income. You must demonstrate a partial financial hardship to qualify.
  • Saving on a Valuable Education (SAVE) Plan (formerly REPAYE): Calculates payments based on 10% of discretionary income above 225% of the poverty guideline. It also offers interest subsidies.
  • Income-Contingent Repayment (ICR): Bases payments on your adjusted gross income, family size, and the total amount of your Direct Loans. Payments are adjusted annually based on income and family size. You can apply for IDR plans online through the Federal Student Aid website ([invalid URL removed]).
• Deferment: This allows you to temporarily postpone your loan payments for a specific period. Interest may continue to accrue, depending on the type of loan. Common reasons for deferment include economic hardship or unemployment.
• Forbearance: This also allows you to temporarily postpone or reduce your loan payments. Interest will continue to accrue. Forbearance is usually granted for situations where you don't qualify for deferment.
• Loan Consolidation: If you have multiple federal student loans, you might consider consolidating them into a Direct Consolidation Loan. This can simplify your payments and may make you eligible for certain IDR plans.
• Public Service Loan Forgiveness (PSLF): If you work for a qualifying non-profit or government organization, you may be eligible to have your Direct Loans forgiven after making 120 qualifying monthly payments under a qualifying repayment plan.

4. Explore Options for Private Student Loans

Private student loans typically have fewer built-in safety nets compared to federal loans. However, you still have options to explore:

• Contact Your Lender: Reach out to your loan servicer immediately. Explain your situation and inquire about any available options, such as:
  • Temporary Forbearance or Deferment: Some private lenders may offer short-term relief during financial hardship. Understand the terms, including whether interest will continue to accrue.
  • Modified Payment Plans: In some cases, lenders might be willing to adjust your payment schedule or interest rate, although this is less common.
• Negotiation: You might be able to negotiate a settlement with your lender, especially if you are facing severe financial difficulties. This could involve paying a lump sum that is less than the full amount owed. Be cautious and get any settlement agreement in writing.
• Refinancing: If your credit score has improved since you took out the loan, you might be able to refinance your private student loans with a different lender at a lower interest rate or with different repayment terms. However, be aware that refinancing federal loans into private loans means losing federal protections like IDR and PSLF.

5. Seek Professional Help

Navigating student loan repayment can be complex. Consider seeking help from the following resources:

• Your Loan Servicer: They can provide information about your specific loan terms and available repayment options.
• Non-Profit Credit Counseling Agencies: Agencies like those affiliated with the National Foundation for Credit Counseling (NFCC) can provide free or low-cost financial counseling and help you create a budget. They may also be able to work with your lenders on your behalf. Be wary of for-profit debt relief companies that charge high fees.
• Student Loan Ombudsman: The Federal Student Aid Ombudsman Group can help resolve disputes with your federal loan servicer.
• Consumer Protection Attorneys in Wisconsin: Attorneys specializing in consumer protection can advise you on your rights and potential legal options, especially if you believe you have been treated unfairly by a lender or servicer.

6. Understand the Consequences of Default

Defaulting on your student loans can have serious consequences, including:

• Damaged Credit Score: This will make it harder to borrow money in the future, rent an apartment, or even get a job.
• Wage Garnishment: For federal student loans, the government can garnish your wages without a court order. Private lenders typically need to obtain a court order for wage garnishment.
• Tax Refund Offset: The government can seize your federal and sometimes state tax refunds to offset your defaulted federal student loan debt.
• Collection Fees: You may be responsible for paying collection costs and fees.
• Ineligibility for Future Federal Aid: You may become ineligible for future federal student aid for yourself or your children.
• Lawsuits: Private lenders can sue you to recover the debt.

Don't let student loan debt control your life. By understanding your options and taking proactive steps, you can work towards a more manageable financial future in Wisconsin. Start exploring these resources today and reach out for help when you need it.

Attorney Nathan DeLadurantey offers free consultations to explain your legal rights in Wisconsin. Free consultations can be scheduled online.