How to Lower Your Student Loan Payments in 5 Simple Steps

Guides2 years ago
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In today's turbulent economic times, reducing expenditure and working out how to lower your monthly expenses are becoming ever more important. If you are a student, working out how to lower your student loan payments can be an effective way to make your monthly budget a little more manageable.

If you don't contact your loan company to adjust your plan, you will be automatically set up for a standard repayment plan which has set payments for approximately a decade. But if you are currently struggling, there are steps you can take to lighten the financial load a little.

Whether you're struggling to find employment, battling against rising living costs, or trying to save money while setting up your own business - working out how to get lower student payments can be incredibly helpful.

Below we will answer the question "Can you Lower Student Loan Payments?" and give you five simple steps you can take to start easing your financial burden and make sure that you don't default on your student loan.

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Can You Lower Student Loan Payments?

If you are struggling to keep up with your student loan repayments, the situation is far from hopeless. In fact, there are several repayment plans you may be able to switch to. These will allow you to make your repayments at a lower rate.

You may find that arranging lower repayment amounts is a little easier if you have a Federal Student Loan. It may be a little more difficult to arrange lower repayments on your private loans, but it's not impossible.

There are five main options that you can look at when considering how to get lower student payments. These are:

  • Apply for an Extended Repayment Plan
  • Switch to an Income Based Repayment Plan
  • Move to a PAYE (Pay As You Earn) Loan Repayment Plan
  • Try the Graduated Repayment Plan
  • Consider Refinancing your Private Loan

Which repayment option is best for you will depend upon your current financial services and your monthly income. Scroll down to learn which option might be most suitable for your financial situation and help to alleviate the pressure on your budget moving forward.


How to get Lower Student Loan Payments with an Extended Repayment Plan

An extended repayment plan will stretch out the period of your monthly student loan payments from 10 years to 25 years. This means you will be able to pay less each month but will remain in debt for a longer period. So, you should weigh up the short-term benefits against the prospect of being in debt for fifteen years longer.

This type of plan is open to students with a Federal Student Loan and has no income limits to affect your eligibility.

To apply for an extended repayment plan, contact your loan servicer and ask them about switching your loan plan.


How to get Lower Student Payments with an Income Based Repayment Plan

An income-based repayment plan will recalculate your monthly payments for your student loan debt based on your income. You may be able to access lower student loan payments based on the scheme's calculation of your income and the poverty line which is set for your state.

If accepted your payment will be set at 15% of your income which may be lower than what you are currently paying. Once your loan has been adjusted, you will need to recertify your level of income annually. If your income increases, you should expect your repayment plan to increase to reflect this.

If you still have any debt left on your student loan repayment plan after 20-25 years you may qualify for debt forgiveness. This will depend on the origin of your student loans.


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Can You Lower Student Loan Payments with PAYE?

PAYE (Pay as You Earn) and RePAYE (Revised Pay as You Earn) are two newer student loan repayment schemes that will be counted on 10% of your discretionary income. If you are married the RePAYE scheme will take both spouses' income into account for the repayment amount. PAYE will be calculated solely on your income.

This is an income driven repayment plan and you will need to recertify your annual income. Your repayment amount can change based on this.

To apply for this, you should contact your loan servicer or head to StudentAid.Gov for more information.


How to Lower Student Loan Payments with the Graduated Repayment Plan

The graduated repayment plan will begin with lower repayment amounts which increase over time. This student loan repayment plan is based on the idea that you should be earning more in the future once you have established yourself in your career. You can choose between a ten-year and a twenty-five-year repayment plan.

Call your lender to discuss making the switch from your current plan to the Graduated Repayment Plan.


Can You Lower Student Loan Payments by Refinancing Your Loan?

If you have exhausted all other options, you can consider student loan refinancing.

You need to do your research and make sure that this option actually will lower your repayments each month. An online tool such as Credible or SoFi.

These tools will help you to make sure that you'll be able to organize a lower payment plan and check which student refinancing loans you may be eligible for.


Make Sure to Arrange a Lower Repayment Plan if You are Struggling

if you are struggling to keep on top of your monthly budget, it can be tempting to opt for a student loan deferment or forbearance. You may find yourself procrastinating on taking action due to the stress and anxiety you feel whenever you think about your finances.

However, the best option will always be to see if you can work out how to lower student loan payments. You'll lighten your financial burden, lower your stress levels, and regain control of your monthly budget. So read back through our guide to how to lower student payments and contact your loan provider or StudentLoans.gov

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