Payments on federal student loans resumed in October. For one-third of American households with student loan debt, that means fitting an extra $1,000 expense into an already stretched budget. To offset costs, 32 percent may resort to credit card debt.

Roughly a third of households to take on more credit card debt to afford student loan payments

Stubborn inflation and rising interest rates have been eating away at Americans’ budgets over the last several months. However, the situation could worsen for those with federal student loans.

According to a recent Empower survey, 1 in 3 American households with federal student loans expect to get hit with a bill of at least $1,000 this month. To offset the added expense, 32 percent are considering turning to credit card debt. However, that’s not the only measure borrowers are taking to afford their new student loan payment.

About 60 percent of respondents said they also plan on cutting back on discretionary spending and dining out. Meanwhile, 31 percent are considering trading their cars, and 41 percent will be slashing their vacation and travel budgets.

Many millennial and Gen Z borrowers will also be delaying homeownership, finding roommates or moving to a more affordable area as part of their budget recalibration strategy.

But cutting back on certain expenses may not be enough. More than half of the surveyed (52 percent) also said they are thinking about switching to a higher paying job, while 48 percent are planning to take on a side hustle to increase their incomes.

What to do if you can’t afford your student loan payments

Credit cards may work as a temporary solution to offset costs. However, this practice can harm your credit and financial health. Credit cards have some of the highest interest rates in the market compared to other lending products. This alone can make it harder to dig yourself out of debt, especially in a tough economy.

You could also get hit with additional fees if you pay late or miss a payment. Your credit score will likely drop when companies will report this negative activity to the bureaus.

If your student loan payments are too high, consider the following:

  • Income-driven repayment (IDR): When you apply for an IDR plan, your monthly bill gets adjusted based on your salary and household size. In some cases, payments could be as low as $0.
  • Forgiveness: The Department of Education has changed its student loan forgiveness programs to reach more borrowers. Check out the full list of programs on, as you may qualify for relief.
  • Loan consolidation: Unlike refinancing, which turns your federal student loans into private ones, consolidation offers some of the same benefits while keeping your loans in the federal system. Applying for consolidation could help you lower your monthly payment by extending your repayment term or offering access to additional repayment programs.
  • Forbearance or deferment: If you can’t make any payments and don’t qualify for any of the options above, then forbearance or deferment could be your best bet. Both of these temporarily pause your payments for a few months. However, interest may continue to accrue during this time, which is something to keep in mind. To apply for forbearance or deferment, you’ll need to contact your student loan servicer.

The bottom line

If you’re spread thin, it can be tough to fit student loan payments into your budget. There are solutions you can explore that can make your payments more manageable without digging yourself deeper into debt.