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3 Ways to Lower Your Student Loan Payments


Student loan debt is a hot button issue these days with students coming out of college with more and more debt every year. It can be a great feeling of accomplishment to finish school, but then the reality hit that all the money you used to get through needs to be paid back. If you find yourself struggling to repay your loans because of job availability or other hardships such as being laid off, there are a few things you can do to lower your monthly payments:

Many people struggle to make these payments, but don't research anything or take advantage of these programs that are in place. Depending on what types of loans you have, you can drastically lower your monthly payments. Whatever you do, don't just stop making payments. That makes your loans go into default, leaving a serious blemish on your credit report that could take years to clean up.1

Consolidation of Loans

Consolidating your student loans is a good place to start if your having trouble repaying your loans. It will extend the payment period, but lower your payments. Only certain types of loans are eligible, and consolidation can have other cons too. It can make the overall cost of the loan more, because you are paying over a longer period of time. 2

If you are consolidating federal loans it is very dangerous to put into a private consolidation loan. You will lose the rights that are given to you under the federal student loan program once you consolidate with a private lender. Consolidating is a great way to lower monthly payments and get out of defaulting on your loans.2

Enter an Income-Driven Repayment Plan

It is amazing how few people know about this. Only about 14% of Americans who have federal loan debt are using this program to lower their payments if they can't make enough money to repay them.3 These plans are not advertised very well, but are very good at reducing the amount you have to pay monthly. Not only that, but after 25 years of on time payments your loan can be forgiven. Many young graduates struggle to find jobs and are mislead about the prospects they should have when they leave school. These repayment plans are essential for students having trouble paying back loans. 3

There are a few different plans, but the basic proponent is it is based on your discretionary income. They forgive your debt after 25 years of on time payments. If you work in public service or teach in certain low-income neighborhoods, or work in the healthcare field you can get it forgiven much sooner if you meet certain criteria. So a single person making less than 18,000 dollars a year can have a repayment plan where they pay nothing. Its important to know the guidelines specifically to make sure you are in the right plan for you.3

Refinance Loans to a Lower Interest Rate

This is one of the few options for borrowers who took out private loans to pay for school. This process requires you to take out another loan from a private lender to pay off your old loans. The goal is to achieve better terms with your new loan, like a lower interest rate or different ways to repay. This is based on your credit worthiness where as the federal repayment plans are open to anyone who took out federal loans. This, unfortunately is one of the only ways for private borrowers to lower payments, and it might not even lower it that much.4

Tackling Student Loan Debt

Student loan debt is a serious problem in this country. Many people thought that was the American dream: go to school, get a good job, have a good life. Only after they racked up tens of thousands of dollars in debt did they realize that it is hard to clear this debt. Using one or all three of these ways to reduce your payments is a good way to give yourself some breathing room. Just make sure you understand the ins and outs of these plans.,

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Sergio Cruz

Head Writer

Sergio has been writing for online blogs and news sites for almost 10 years! There isn't a topic he hasn't written about. When he's not busy researching and writing articles, Sergio likes to spend his time traveling and playing guitar.