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The average monthly student loan payment is $393. With it being so high, you may struggle to afford the daily essentials. Here are several different ways you can lower your student loan payments to give you some room in your budget.
How Do You Refinance Your Student Loans
If you have federal student loans and need a lower payment and are willing to make payments over a longer repayment period, an Extended Repayment Plan could be for you. Under this approach, your repayment term could be up to 25 years, dramatically reducing your monthly payment. To qualify, you need to have at least $30,000 in direct federal loans or FFELs.
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Because of the longer repayment term, you may pay thousands more than you initially paid in interest. However, the trade-off could be worth it to get a lower payment and make room in your budget now.
A Graduated Repayment Plan is perfect for someone who doesn’t qualify for an income-driven repayment plan for their federal loans, but can’t afford their payments under a standard 10-year term.
With a Graduated Repayment Plan, your payments start very low, regardless of your income. Every two years, your payment increases. After 10 years of payments, your loans are paid off.
Under an Income Sensitive Repayment Plan, your federal loan payments are based on your income. After 15 years, your loans are paid in full. You’ll pay more in interest than you would under a Standard Repayment Plan, but you’ll have more breathing room in your monthly budget.
Your “personalized” Student Loan Management Strategy
If you have Federal Direct Loans and need to lower your monthly bill, consider applying for an income repayment plan (IDR). With IDR plans, your repayment term is extended to 20 to 25 years, and the loan servicer sets your monthly payment at a percentage of your discretionary income. Some people qualify for a payment of up to $0.
If you sign up for automatic payments, some lenders will reduce your interest rate from 0.25% to 0.50%. It might sound like a small difference, but that interest rate adjustment can add up to significant savings over time.
Check with your lender to see if they offer an autopay discount, so you can take advantage of it.
Make sure you make all your payments on time. Not only will it help you avoid extra charges and late fees, but you may also qualify for a discount. Some lenders give discounts of up to 0.25% for making your payments consistently on the due date.
Should You Refinance Your Student Loans?
If you have multiple federal loans, one way to simplify your payments and qualify for a lower payment is to consolidate your student loan debt with a Direct Consolidation Loan.
With this approach, you take out a Direct Consolidation Loan for the full amount of your current federal loans. Moving forward, you will only have one monthly payment and one due date. You can also extend your repayment term, which will help reduce your monthly bill.
But keep in mind, extending your term means that you will pay your loans longer and end up paying more interest over the life of your loan. So carefully weigh the pros and cons before doing it.
It might sound too good to be true, but some employers will help you with your student loan payments. According to the Society for Human Resource Management, 4% of employers offer reimbursement assistance to their employees.
How To Refinance A Student Loan
Contact your company’s human resources department to see if this benefit is offered – or if it may be offered in the future.
Depending on your occupation, you may qualify for repayment assistance. For example, doctors, lawyers and MBA graduates can qualify for thousands of dollars to pay off their loans. In return, you are expected to dedicate a part of your career to the underwriting areas, but it can be a great way to significantly reduce your loan balance.
If you have private student loans, you don’t qualify for federal programs like income-based repayment plans or Direct Consolidation Loans. However, there is still a way to lower your repayments: student loan refinancing.
With refinancing, you take out a new loan for the amount of your current student loans (federal and private loans). The new loan has different repayment terms, including the interest rate and the length of the loan. If you qualify for a lower interest rate or opt for a longer repayment term, you can significantly reduce your monthly payment.
How To Refinance Student Loans
If you decide to move forward with this approach, be sure to compare the offers of several student loan refinancing lenders, so you can find the best lender for you.
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Refinancing Student Loans: Who Should Do It
If you’re wondering how competitive your loan is, the loan scoring tool below can help. Just enter your APR, credit score, monthly payment and remaining balance (estimates are good) to see how your loan stacks up.
Where you live can have a big impact on your student loan balance. Some states offer student loan repayment assistance to attract professionals to the area. For example, North Dakota has a program that gives STEM professionals up to $6,000 in reimbursement assistance.
Keeping up with your student loan payments can be stressful and overwhelming. But if you’re wondering how to reduce your student loan payments, you should know that there are several options available to you.
For more ideas on how to tackle your student loan debt, check out our guide on how to decide which loans to pay off first.
What Student Loans Can & Can’t Be Used For
Kat Tretina is a freelance writer covering everything from student loans to personal loans to mortgages. His work has appeared in publications such as Huffington Post, Money Magazine, MarketWatch, Business Insider, and more. If you have student loans hanging over your head, you know how difficult it is to pay, especially if you have. You have an interest rate higher than the Empire State Building which is slowing down your progress.
But one way you can speed up paying off your debt — and save a ton of money in interest — is to refinance. (Yes, that’s the only kind of “funding” we’re cool with.) Chances are you’ve asked at least once,
We’re here to answer all of your questions about student loan refinancing and help you decide if it’s right for you, so you can get rid of your student loans once and for all!
Student loan refinancing is when you take your private loans — or a combination of federal and private loans — and turn them into a new loan. But keep in mind, refinancing can only be done through a private lender.
Should You Refinance Your Student Loans?
Here’s how it works: The private lender pays off your current loan balances and becomes your new lender. At that point, you have a new loan with a new interest rate and new repayment terms. The goal here is to get a better interest rate or to combine several loans in one payment.
But what if you only have federal student loans? With the help of the student loan that ends sometime in 2023, we know that you can look for a way to soften the blow of the payments that start again.
While you can’t refinance your federal student loans through the government, you can through a private lender (and yes, that includes Parent PLUS Loans). But you are not guaranteed to get a lower interest rate on your federal loans when you refinance. In addition, you will lose access to federal relief programs and other rights that protect federal loans.
So, if you’re struggling to keep up with multiple federal student loan payments, it’s best to look into student loan consolidation instead (which we’ll get into later).
Refinance Your Student Loans
Consolidation and refinancing are like the Jonas brothers – they are related, but different. The goal with the consolidation is to roll several loans into one loan. The goal with refinancing is to get a new interest rate (even if you can consolidate your loans for a refinance).
Whether or not you should consolidate depends on the type of student loans you have. Federal loans can be consolidated for free through the government with what’s called a Direct Consolidation Loan, while private loans (or a mix of private and federal) must be consolidated to refinance with a lender. private But student loan consolidation is not the right choice for everyone, even if you have several federal loans.
My student loan interest rate is too high. My variable interest rate makes it difficult for me to budget. At this rate, it will take forever
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