7 Ways To Get A Lower Student Loan Payment - Forbes

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Here are 7 ways to get a lower student loan payment.

Here’s what you need to know.

Student Loans

Student loans may be paused temporarily, but many student loan borrowers are focused on restarting student loan payments on May 1, 2022. Today, the average student loan payment is approximately $300. President Joe Biden and Congress have been focused on providing temporary student loan relief such as student loan forbearance as well as student loan cancellation. After nearly two years of no federal student loan payments, some student loan borrowers may be wondering if it’s possible to get a lower monthly student loan payment. (Here’s how your student loans can qualify for $1.7 billion in Navient student loan forgiveness). The answer is yes, and here are 7 ways to get a lower student loan payment:

1. Enroll in the extended student loan repayment plan

If you have federal student loans, one option to consider is the Extended Student Loan Repayment Plan. You’ll need at least $30,000 of Direct or FFELP Loans to qualify. Under this plan, you could extend your student loan repayment from the 10-year standard student loan repayment period to 25 years. By extending your student loan repayment period, your monthly student loan payments will be lower. That said, extending your student loan period also results in higher total interest payments over the life of your student loan. (How federal student loans will change this year).

2. Consider an income-driven repayment plan

Consider an income-driven repayment plan for your federal student loans. An income-driven repayment plan sets your monthly federal student loan payment based on your discretionary income, family size and state of residence. There are four types of income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR). With income-driven repayment plans, you pay a portion of your income, such as 10-20%, each month. After 20 or 25 years, it’s possible to get student loan forgiveness on your remaining federal student loan balance. (Student loan borrowers will get $15 billion of student loan cancellation).

3. Get a graduated student loan repayment plan

If you’re struggling to pay student loans, an income-driven repayment plan should be a priority. A graduated student loan repayment plan is an alternative option. Under this plan, your federal student loan payments have a relatively low monthly student loan payment. Every two years, your payment increases. After 10 years, your student loans are repaid. (Student loan forgiveness could be the reason that Democrats lose the midterm elections).

4. Enroll in autopay

Contact your student loan servicer to enroll in autopay. Autopay means that your monthly student loan payments are automatically deducted from your bank account. With autopay, you could get a 0.25% interest rate deduction, which can save you money on your student loan payments. (What higher interest rates mean for your student loans).

5. Get student loan payment help from your employer

Ask your employer if they offer any student loan repayment assistance. Some employers will help you pay off your student loans.

6. Consolidate your federal student loans

Direct Loan Consolidation combines your current federal student loans into a single federal student loan. The advantage is that you will have one student loan, one monthly payment and one interest rate. With a Direct Consolidation Loan, you can extend the repayment period to get a lower monthly payment, but you won’t get any student loan forgiveness. (Here’s who won’t get student loan forgiveness). Remember, when you extend your repayment period, you may save money each month, but you will pay more interest the longer it takes to pay off your student loans. The disadvantage of Direct Loan Consolidation is that you won’t get a lower interest rate. You will get a weighted average of your current interest rates rounded up to the nearest 1/8%.

7. Refinance your student loans

You can get a lower payment and lower interest rate when you refinance your student loans.

This student loan refinancing calculator shows you how much money you can save.

Student loan refinancing combines your current federal and private student loans into a new private loan. A lower interest rate will save you money each month. You can also choose a repayment period between 5 and 20 years. If you choose a longer repayment period like 20 years, you can get a lower monthly payment. That said, you may pay higher total interest if you choose a longer repayment horizon.

There are many ways to lower your monthly student loan payment. As temporary student loan relief ends, make sure you know all your options. Here are some smart ways to pay off student loans faster: