It’s not ideal, but there are times when your financial situation takes a hit and you fall behind on a student loan payment. Whether it’s car repairs, an unexpected medical bill, or a steep rent increase, life can hand out some pretty big surprises that require a short-term shuffle of financial priorities. It can definitely be discouraging to know you’ve missed a payment, but it’s crucial to remember there’s still a way to get back on track. Many people have recovered from financial missteps with new wisdom and fresh motivation to keep going on the road to becoming debt free. Here’s how to bounce back after a missed student loan payment.
Understand the impact
Depending on the circumstances, the stress of missing a student loan payment, even by a few days, may be enough motivation to course correct. If you need more of a nudge to take a missed payment seriously, consider potential consequences like late fees and/or a majorly hurt credit score. A damaged credit score touches nearly every part of your finances, from buying a car and renting an apartment to applying for a new job.
While the realities of missing a payment are weighty, don’t let this information overwhelm you or keep you from moving forward. Instead, focus on taking action to recover.
Communicate with your lender
Your first action item? Call your lender. It can be a little intimidating (or even embarrassing), but rest assured, lenders have dealt with this before and prefer to speak with you about how to move forward. In situations like this, it’s better to address the problem and resolve things as quickly as possible. Have a conversation with your lender about where you’re at and how to make things right. Here are some questions you can ask as part of that talk:
- How many days am I officially past due?
- What happens now that I missed a payment?
- Do I need to make up the payment? If so, what are my options and how quickly does this need to happen?
- What fees or penalties should I expect? Will this affect my credit?
- What’s the best way to resolve this so it doesn't happen again in the future?
In order to bounce back, you need to understand exactly what the consequences of late payment are and the best steps to address it, so don’t delay. Drop the feelings of dread and connect with your lender as soon as possible.
Plan for the future
After you’ve gained a clear picture of how to work with your lender on your missed payment, reflect on what led you to this point and how you can prevent the same situation in the future. Here are some tried-and-true ways to make sure you don’t miss another student loan payment:
- Put payments on auto-pilot: Something as simple as setting your payments on auto-pay ensures you won’t accidentally miss a payment when life gets busy. For most lenders, including CommonBond, auto-pay comes with the added bonus of lowering your interest rate somewhere around 0.25 percent.
- Make some changes: If missing a payment had more to do with money troubles than forgetfulness, you can look into building a budget or brainstorming ways to increase your income. In the case of extreme economic hardship you may also ask your lender about forbearance as an option to postpone making monthly loan payments for a specific period of time.
- Be realistic: If you’ve tried making changes but truly can’t afford your loan, it’s time to get back on the phone with your lender. Most companies are open to creating a payoff strategy instead of letting your loan go delinquent. This is especially important if you are experiencing a job loss. Your lender may have some options you hadn’t considered before, so it’s worth asking.
- Find a community for support: You’re not the first person, and you won’t be the last, to have ever missed a student loan payment. There are thousands of people like you trying to pay off their student loans and improve their finances every day. Instead of losing hope, see this tough situation as a way to find others like yourself who are focused on making positive changes with their money to build a brighter future. There are many personal finance bloggers and communities online. And networking opportunities focused on careers or finance can give you a chance to meet others paying off their student loans while following professional aspirations.
Regardless of the circumstances that brought you to this point, remember the best and first thing you should do is connect with your student lender. This will open up communication, help you gather information about what happens next, and empower you to map out proactive steps focused on improving your financial situation. Yes, the initial conversation may be hard, but the good news is everything is solvable if you’re willing to do the work—so take the first step now.