How to Lower Your Student Loan Payments

If you’re struggling to make your student loan payments each month, you’re not alone. Here are some tips on how to lower your payments.

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Introduction

If you’re struggling to make your monthly student loan payments, you’re not alone. In fact, according to a report from the Federal Reserve, as of 2019, around 40% of Americans with student loan debt said they couldn’t make their payments.

There are a number of reasons why you might be struggling to make your student loan payments. Perhaps you didn’t realize how much your monthly payments would be when you took out the loans. Or maybe you’ve experienced a change in your financial situation, such as a loss of income or an increase in your cost of living.

Whatever the reason, if you’re struggling to make your student loan payments, there are a number of options available to help you lower your payments and get back on track. Here are five things you can do to lower your student loan payments:

What You Need to Know About Student Loans

If you’re struggling to make your student loan payments, you’re not alone. In fact, according to a recent report, about 40% of Americans with student loans are delinquent or at least behind on their payments. There are a few things you can do to lower your student loan payments, and we’re here to help. We’ll go over some of the most common options, as well as some other things you can do to ease the burden of your student loan payments.

The Different Types of Student Loans

There are four main types of student loans: federal loans, private loans, Parent PLUS Loans, and Graduate PLUS Loans.

Federal Loans: Federal student loans are made by the government and they have fixed interest rates. The most common type of federal student loan is the Stafford Loan.

Private Loans: Private loans are made by banks or other financial institutions. They usually have variable interest rates.

Parent PLUS Loans: Parent PLUS Loans are federal loans that parents can take out to help pay for their child’s education.

Graduate PLUS Loans: Graduate PLUS Loans are federal loans that graduate or professional students can take out to help pay for their education.

The Various Student Loan Repayment Plans

There are a number of different repayment plans for federal student loans, and each plan has its own eligibility requirements, benefits, and drawbacks. You’ll need to decide which plan is best for your unique circumstances.

The Standard Repayment Plan is the default repayment plan for federal student loans. Under this plan, you’ll pay a fixed monthly amount for up to 10 years. The monthly payment will be higher than it would be under other repayment plans, but you’ll pay off your loan more quickly and save money on interest in the long run.

The Extended Repayment Plan is available to borrowers with high loan balances. Under this plan, you can extend your repayment period to up to 25 years. This will lower your monthly payments, but you’ll pay more in interest over the life of the loan.

The Graduated Repayment Plan is similar to the Extended Repayment Plan, but your payments will start out low and increase every two years. This can be helpful if you expect your income to increase over time. However, like the Extended Repayment Plan, you’ll pay more in interest over the life of the loan.

The Income-Based Repayment Plan (IBR) is available to borrowers with high levels of debt relative to their income. Under this plan, your monthly payment will be capped at a percentage of your income (15% for new borrowers as of July 1, 2014). Your repayment period will also be extended to up to 25 years.If you still owe money after 25 years (or 10 years if you’re on the Pay As You Earn Repayment Plan), the remaining balance will be forgiven. You should note that any forgiven debt may be taxable as income.

The Pay As You Earn Repayment Plan (PAYE) is similar to IBR, but it’s only available to new borrowers as of October 1, 2007 who also have a “partial financial hardship” (your payments under PAYE would be less than they would under the Standard Repayment Plan). Like IBR, your monthly payment will be capped at a percentage of your income (10% for new borrowers as of July 1, 2014). Your repayment period will also be extended to up to 25 years. If you still owe money after 25 years (or 20 years if you have Direct Loans), the remaining balance will be forgiven. You should note that any forgiven debt may be taxable as income.

How to Lower Your Student Loan Payments

If you’re struggling to make your student loan payments, you’re not alone. In fact, you’re in good company. According to a report from the Consumer Financial Protection Bureau, more than 40% of Americans who have student loans are behind on their payments. If you’re struggling to keep up with your student loan payments, there are a few things you can do to lower your payments and get back on track.

Refinance Your Student Loans

If you have private student loans or federal student loans, there are a few different repayment options available to you. You can lower your monthly payments by:
-Extending the term of your loan
-Consolidating your loans
-Refinancing your loans

If you have private student loans, you may be able to lower your interest rate by refinancing your loans. You can compare student loan refinancing rates and terms from a variety of lenders to find the best option for you.

If you have federal student loans, you can lower your monthly payments by consolidating your loans into a Direct Consolidation Loan. This will give you a single loan with a fixed interest rate for the life of the loan. You can also choose to extend the repayment term of your consolidation loan, which will lower your monthly payments.

Apply for Student Loan Forgiveness

If you work in certain public service jobs or for a qualifying nonprofit organization, you may be eligible for student loan forgiveness after making 120 monthly payments on your Direct Loans. To learn more, contact the Public Service Loan Forgiveness (PSLF) Help Desk.

Other repayment plans that are based on your income are also available, and you may qualify for forgiveness of the remaining balance due on your loan after making 240 monthly payments under an income-driven repayment plan.

Enroll in an Income-Driven Repayment Plan

If you’re struggling to make your student loan payments, you have options. One option is to enroll in an income-driven repayment plan.

Income-driven repayment plans are designed to make your student loan payments more manageable by basing your payment amount on your income and family size. There are four major types of income-driven repayment plans:

-Pay As You Earn Repayment Plan (PAYE)
-Revised Pay As You Earn Repayment Plan (REPAYE)
-Income-Based Repayment Plan (IBR)
-Income-Contingent Repayment Plan (ICR)

You can find more information about each of these repayment plans, as well as how to apply, on the Department of Education’s website.

If you enroll in an income-driven repayment plan, your monthly payment will be capped at a certain percentage of your disposable income. This means that your payment could be lower than it would be under a standard 10-year repayment plan.

Keep in mind that while an income-driven repayment plan can make your monthly payments more manageable, it will also increase the total amount that you pay over the life of the loan because you will be repaying the loan for a longer period of time.

Conclusion

There are many options available to help ease the burden of student loan debt. You can make payments based on your income, extend your repayment timeline, or even qualify for loan forgiveness. So, if you’re struggling to make your student loan payments, don’t despair — there is help available.