Millions of Americans are struggling to repay their student loans. If you’re one of them, you may be looking for ways to reduce your student loan payment. Check out these four options.
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If you’re buried in student loan debt, you’re not alone. In fact, according to Make Lemonade, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the United States alone. And the average graduate from the Class of 2017 has $28,650 in loans, according to Student Loan Hero.
But just because you have student loans doesn’t mean you’re doomed to a life of debt. There are several options available that can help you lower your monthly payments and get out of debt faster. Here are some strategies to consider.
Overview of the Different Types of Student Loans
There are four main types of student loans: federal loans, private loans, co-signed loans, and parent PLUS loans. Each type of loan has its own terms and conditions, and it’s important to understand the difference before you borrow.
Federal loans are student loans provided by the government. They typically have lower interest rates than private loans and offer flexible repayment options, including income-based repayment and deferment or forbearance for financial hardship. Federal Loans also offer borrower protections such as death or disability discharge. Private loans are student loans from banks or other financial institutions. They typically have higher interest rates than federal loans and may not offer the same repayment flexibility or borrower protections. Co-signed loans are student loans that require a creditworthy cosigner. These loans usually have lower interest rates than private Loans, but the cosigner is legally responsible for repaying the loan if you can’t. Parent PLUS Loans are federal student Loans that parents can take out to help pay for their child’s education. These Loans have higher interest rates than federal Direct Subsidized and Unsubsidized Loans, but they offer flexible repayment options including deferment and forbearance.
How to Lower Your Student Loan Payment
If you’re struggling to make your monthly student loan payments, you’re not alone. In fact, you’re in good company. According to a report by the Federal Reserve, nearly 40% of Americans say they couldn’t cover an unexpected $400 expense. If you’re looking for ways to lower your student loan payment, you’ve come to the right place. In this article, we’ll give you some tips on how to reduce your student loan payment.
Refinance Your Student Loans
ReFi your student loans to lower your monthly payments. Refinancing is when you take out a new loan with a different lender to replace your current student loan. It usually has different terms than your old loan, which can include a lower interest rate, monthly payment, or both. You might even be able to refinance multiple loans into one new loan, which could save you money and simplify your finances.
To qualify for refinancing, you’ll need good credit and steady income. And because it’s a new loan, you’ll have to go through the application process again and may have to pay some fees. But if you can get a lower monthly payment, it could be worth it.
Extend Your Repayment Term
If you’re struggling to make your monthly student loan payment, you may be able to lower it by extending your repayment term. This will increase the amount of time you have to repay your loans, but it will also reduce your monthly payment.
To extend your repayment term, contact your loan servicer and ask about your options. You may be able to switch to a different repayment plan that offers a longer repayment period. For example, if you have Direct Loans, you could switch from the Standard Repayment Plan to the Extended Repayment Plan or the Graduated Repayment Plan.
Keep in mind that extending your repayment term will also increase the total amount of interest you pay over the life of your loan. If you can afford it, you may want to consider making some extra payments on your loans to pay them off more quickly.
Enroll in an Income-Driven Repayment Plan
Income-driven repayment plans are designed to make your student loan payments more affordable based on your income and family size.
There are four different types of income-driven repayment plans:
-Revised Pay As You Earn Repayment Plan (REPAYE Plan)
-Pay As You Earn Repayment Plan (PAYE Plan)
-Income-Based Repayment Plan (IBR Plan)
-Income-Contingent Repayment Plan (ICR Plan)
you may be eligible for. To find out which plan is best for you, contact your loan servicer or visit www.studentaid.gov/ibr.
There are multiple ways to lower your monthly student loan payments. To find the option that best suits your needs, contact your loan servicer and ask about:
-Income-driven repayment plans: These plans base your monthly payment on a percentage of your income and family size.
-Deferment or forbearance: You can temporarily stop making payments or lower your monthly payment for a limited time if you’re facing financial difficulties.
-Loan consolidation: You can combine multiple federal student loans into a single loan with a lower interest rate.
You may also be able to lower your interest rate by refinancing your student loans. When you refinance, you take out a new loan with a private lender to pay off your existing loans. You may be able to get a lower interest rate, which can lead to lower monthly payments or help you pay off your debt more quickly.