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The student loan servicing industry has had better days.

Over the last several months, many servicers – companies that contract with the federal government to manage billing, customer service, etc – are stepping out of the loan servicing business.

Here’s a quick breakdown:

• In July, FedLoan said it didn’t plan to renew its contract with the government, which ends in December. More than 8 million borrowers will be affected and transitioning to a new servicer.
• Granite State Management & Resources services loans for 1.3 million borrowers and also will not be renewing its contract with the Department of Education at the end of 2021.
• And, in September, Navient – one of the largest servicers in the country  – will transition its 6 million student loan accounts to another servicer, Maximus.

Richard Cordray, COO of Federal Student Aid, recently gave a policy speech to the Education Finance Council. His remarks were given to Politico.

He said in the speech that part of renegotiating with the loan servicers will be new performance and accountability metrics. According to Cordray, that didn’t sit well with some servicers, so they split.

“Some servicers have decided to exit the program rather than contend with these new realities. Others have caught the spirit of what we are intending and have embraced a new normal of putting borrowers first.”

What Does This Mean for Borrowers?

The pause on payments that started in March 2020, known as student loan forbearance, is coming to an end on January 31, 2022. That means 43 million borrowers are due to start paying on their loans again early next year.

In theory, they’ll just be making payments to a new loan servicer. No big deal, right? The problem, though, is the short transition time. The timing isn’t ideal.

Cordray said the payment pause is “an unprecedented challenge” because of the complications of restarting tens of millions of payments at the same time. He said that the political debate over student loan forgiveness hasn’t helped when it comes to borrowers’ expectations.

“We can expect that many, many borrowers will not be eager to return to repayment when they have been led to believe, or even to hope, that was never going to happen,” he said. “Getting over that psychological hurdle with millions of Americans may be a much harder job than we know.”

How to Tackle Student Loan Repayments

Here are a few actions we suggest to pay down your loans.

1. Build an Emergency Fund.

“I need to pay something off, and you’re telling me to save?” Yes!

A $1,000 rainy day fund will help you pay cash for those everyday emergencies that could really slow down paying off your loans. When it comes to student loans and their accompanying interest, every $50 matters.

2. Determine Your Eligibility for Income-Driven Repayment Plans.

Federal student loans have a standard repayment plan of 10 years.

If you’re struggling to make those payments, you have several payment plan options that include an Income-Based Repayment Plan, Income-Contingent Repayment Plan, Pay-As-You-Earn Plan, and a Revised Pay-As-You-Earn Plan.

3. Lower Your Interest Rates.

Lowering the percentage you pay in interest always helps, no matter how small of a decrease. Federal loans are typically lower interest than private loans, but you can still look into lowering those rates.

Many websites allow you to compare rates across companies to refinance your loan, assuming you have a steady income and good credit. Some servicers will also reduce your interest by 0.25% if you set up an automatic payment.

If you have a private loan, it never hurts to call your servicer, explain your situation, and ask for a new, lower rate.

4. Choose a Debt Payoff Method

Sometimes just making a simple, concrete plan helps with motivation. You can see exactly what your payment future looks like, and you know exactly what you need to do to get out of debt.

The debt avalanche is one such plan. You start with your highest interest loan, then focus on putting as many extra payments/cash toward that loan. Once it’s paid, you move onto the next highest interest loan. The avalanche continues until you’re out of debt.

Another plan is the debt snowball method. With this plan, you start with the lowest balance first. Put everything toward paying it off, then move onto the next lowest balance. So an and so forth and you’re eventually out of debt.

5. Make Sure You Have a Budget.

A zero-based budget is built to pay off debt fast.

Every month, you list out your expenses and prioritize them. Using your income as the starting point, you “spend” all your money on those expenses until you reach zero.

With a zero based budget, you’re in charge of how much you spend on debt every month, unlike percentage-based budgeting. If you’re attacking that student loan debt, you can change the percentages based on your other monthly expenses.

One month you can use a quarter of your monthly income, and the next month you might go wild and use half. It’s up to you. Plus, any money leftover you can also put toward that debt.

6. Find a Side Gig.

The best way to pay off debt? Make more money!

Whether it’s tutoring, freelancing, working odd jobs, teaching ESL, online transcribing, and even renting your friendship, there are myriad ways to make some extra money. In fact, we have 50 unique ideas to get you started.

7. Cut Expenses.

Yes, that’s no fun. But if you really want to get out of student loan debt, and you want to do it faster, some other stuff has to go.

• Cut out the gym membership by trading your neighborhood sidewalk for the gym’s treadmill.
• Take a look at all your subscriptions, whether it’s monthly box subscriptions, online memberships, or television subscriptions, make sure you’re using what you’re actually paying for. 
• Take a break from dining out. Go on a meal plan instead and you could save a lot of money on food.
• Need more advice? Here’s how to build a bare-bones budget.

The exodus of student loan servicers is just one of many that have plagued the student loan industry in recent years. Our best advice? Do everything you can to get out of student loan debt as quickly as possible and eliminate this ongoing financial headache from your life.

Robert Bruce is a senior writer for The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.