6 Tips for Managing Student Loans After Dropping Out of College

Not everyone that goes to college graduates. Managing student debt after dropping out is a challenge, but it's a doable one. Here are 6 tips to get yourself on the right track.Since the ripe old age of 3, I have known what I wanted to do with my life. The plan solidified over the years, and I selected an appropriate degree to help make my dreams a reality.

Based on the scores I received on my college entrance exams, I had the opportunity to attend in-state colleges for free. However, none of the in-state college offered the exact degree I wanted to pursue.

Instead of opting for a closely related degree, I chose to attend a rather affordable out-of-state private school.

Despite the fact that the private school wasn’t overly expensive, and that it offered me a scholarship, I had to take out student loans.

I took out the minimum amount of loans required. I studied hard and did above average in school. Eventually, I became a resident assistant, so my room and board was covered

When College Doesn’t Go as Planned: Dropping Out

Meanwhile, the signs of a serious medical condition began presenting themselves. With each passing semester, my condition grew worse and worse. Finally, I couldn’t ignore the signs anymore. I spent three days in the ICU.

It became harder and harder to stay on top of my school work. I dropped out of college and eventually moved back home with my mother.

Not long after dropping out of college, I got coupon books from my student loan providers. College loans were coming due soon. I was well enough to work, but without a college degree, I could only find a job that paid just over minimum wage. Since my mother wasn’t charging me room or board, I was able to pay my college loans, but that was it.

Perhaps you or someone you know is in a similar situation. You went off to college to earn a degree, assuming you’d make enough money to cover your loans after graduating. Then something happened that forced you to leave school without a diploma, and now you have loans to pay.

This is a situation that can seem particularly hopeless, especially since you never planned to be here. Something got in your way, and it’s easy to get wrapped up in the frustration of your circumstances.

It might not seem like it now, but this is a manageable situation. Read on for 6 tips to manage your student loans after dropping out of college.

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1. Don’t Withdraw if You Can Help It

First things first – if you haven’t yet withdrawn from your school, don’t. That’s not to say that you’re still going to attend classes full-time. Maybe dropping down to a part-time schedule solves your problem.

You can also check to see what other options your school has. For example, I could have taken a leave of absence. This would have helped me immensely. You see, I re-enrolled a few years later, but tuition had spiked. Had I taken a leave of absence, I would have been grandfathered under the old tuition plan. Instead, I was forced to pay a 300% increase.

Furthermore, once you drop out, you’re much less likely to go back to school. Don’t make a potentially permanent decision based on a temporary set-back.

2. Use Your Grace Period Wisely

If you’ve already withdrawn from school, you’ll have a grace period with your lender (usually 6 months), and then you’ll have to start making student loan payments. During that grace period, don’t sit around eating Cheetos and watching daytime TV, bemoaning the degree and profession you hoped to pursue.

No, it’s important to start getting your finances in shape for making those loan payments. If you don’t have one already, then it’s time to make a budget.

While you’re not currently repaying your loans, go ahead and account for them in your budget because you’ll be paying them soon enough. If you don’t know how much you’ll be paying, contact your former school’s financial aid office.

With your spending plan laid out, you can now easily see how much money you’ll need to earn. If you aren’t currently working, now you have a target for how much money you need to make.

If you have a job, but don’t think it’s going to be enough to cover your bills, at least you know. You have a couple of months to add on a second job, a side hustle, or find new employment altogether.

3. Weigh Your Loan Options

Depending on why you left school, you might have additional options for temporary loan relief. You can check in to deferment and forbearance options (read more about them here). However, just because your loan program offers relief doesn’t mean you should jump on it.

If you created a spending plan (see #2), then you might have discovered that you can currently pay your loans. This is not a bad thing. Go ahead and pay your loans. They’re not going anywhere, and one day, you’ll have to start paying for them.

Your situation right now might make you feel entitled to some help, but you never know what’s around the corner. You don’t want to run out of deferment or forbearance options, only to find out that you really need the help in ten years.

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4. Work in Your Field

Let’s say you were waitressing your way through college, but you dropped out to care for an ailing family member while you continue to waitress. However, you were in school to become a teacher.

If you’re holding firm on going back to school one day, then don’t totally put your dreams on hold for your situation. Instead of waitressing, could you tutor? Or does your state allow you be a substitute teacher without a degree? Could you do some before/after school care for your sister’s children?

All of these things would be great to eventually put on a resume for your teaching career. When you graduate from college (whenever that is), you can point to the experience you gained during a personally trying time. The fact that you have extra experience could help you leverage a higher starting salary. That higher starting salary will help you pay off your loans quicker.

Maybe you’re waitressing because it allows you to work flexible hours, and with the tips, you’re making decent money for someone who doesn’t have a college degree. This is not an all-or-nothing decision. You could cut back on your shifts to allow you some time to pursue work in your field.

5. Reduce Living Expenses

Assuming you created a spending plan (see #2), you might be tempted to skip this section. After all, you’ve already figured out how to make this work financially.

However, if you can reduce your living expenses further, you’ve created a larger buffer in your budget. You can use this additional buffer to help you pay off your loans quicker (or, depending on your situation, save up to go back to school).

Paying off the loans quicker gives you flexibility in life. Perhaps you’re working as a fast food manager right now. That’s probably not where you want to be in 5 years, but it’s paying the bills. If you can reduce living expenses and pay off the loans, you can now afford to take more control of your career.

6. Go Back to School

Yes, go back to school. This isn’t meant to be a frustrating suggestion. After all, you dropped out of school for a reason. However, let’s be honest, you started college for a reason, too.

Maybe you dropped out of school because you couldn’t afford it. Okay, is there a more affordable education option? Perhaps that means transferring to a community college, getting a two-year degree, and then using that degree to land a job that can help you pay for a four-year degree.

Maybe you dropped out of school because of illness (your own or that of a family member). Perhaps you can find a way to stay in school part-time, even if it’s by using long-distance options. This would keep you from having to pay back your loans right now, and will reduce the total amount of time it takes to graduate.

I stayed out of school for around 2 years, only making ends meet because of my loved ones. I often felt discouraged. If I hadn’t gone to school and taken out loans, I could have made ends meet at many of the jobs in my small town. But with my loans, my only option was to live at home until they were paid off – 20 years later!

When I was well enough, I returned to school (greeted by the huge tuition hike I mentioned). I graduated about two years later, and I’ve always earned enough to pay my loans since then.

While you might feel discouraged about your current circumstances, realize that you’re in a temporary situation. Make solid plans for staying in good graces on your loans, while also making solid plans for your professional future, whether or not you return to school.

Did you drop out of college? What did you learn about your loan situation through that experience? Have you thought about the options you have?