Can't Afford the Student Loans

Tina has a lot of student loan debt she can't afford to pay right now. The lenders want minimum payments she can't pay. Should she not pay anything at all or pay what she can?

QUESTION: Tina in Wisconsin has a lot of student loan debt she can’t afford to pay right now. The lenders want minimum payments she can’t pay. Should she not pay anything at all or pay what she can?

ANSWER: You can do either, because they’re not going to quit bothering you, and they’re not going to quit adding late fees unless you pay the agreed amount. The benefit of sending even $5—even if they’re wanting $500 and you send $5—A) you get on a written budget and you’re doing all you can do with your written budget and you’re not going out to eat and not paying your bill. You’re not going on vacation and not paying your bills. You’re not buying gifts for your sister and not paying your bills. As long as you’re really living on a tight beans-and-rice, rice-and-beans scorched-earth budget and you’re putting all you can toward it, then give them all you can. And all you can is all you can.

Now sometimes when people say, “We simply cannot afford that,” what they really are saying is, “We simply will not give up the other things that we’re purchasing in order to honor our obligations.” I’m not going to be on your team then. You do need to give up things in order to honor your obligation. You made this obligation. “Well, we can’t go on vacation and pay our student loan bill.” Then you don’t get to go on vacation. You’ve got to pay the student loan bill. “We can’t travel and see my mother and pay the student loan bill.” You don’t get to travel and see your mother then because you honor your obligation. That’s the moral, spiritual and legal thing to do.

If you are living on scorched earth and you can only afford to send them $5, then send them $5. But here’s what will happen: As soon as you start living on scorched earth where you have no life and you’re paying all of the money that you have first toward the operation of your household and then second toward your creditors, pretty soon you’re going to start finding ways to make more money, and pretty soon you’re going to start finding ways to stretch the dollars that you have in order to get this mess cleaned up. It sounds like you’ve got pretty substantial student loan debt, and it’s going to take you a while to clean up your mess.

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