Here are 7 ways to get a lower student loan repayment.
Here’s what you need to know.
Student loans may be temporarily suspended, but many student borrowers are focused on restarting student loan payments on May 1, 2022. Today, the average student loan payment is around $300. President Joe Biden and Congress have focused on providing temporary student loan relief, such as student loan forbearance as well as student loan forgiveness. After nearly two years without a federal student loan repayment, some student borrowers may be wondering if it’s possible to get a lower monthly repayment. (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 repayment:
1. Enroll in the Student Loan Extended Repayment Plan
If you have federal student loans, one option to consider is the Student Loan Extended Repayment Plan. You will need at least $30,000 in direct loans or FFELP to qualify. Under this plan, you can extend your student loan repayment from the standard 10-year repayment period to 25 years. By extending your student loan repayment period, your monthly student loan payments will be lower. That said, extending the term of your student loan also results in higher total interest payments over the term of your student loan. (How Federal Student Loans Will Change This Year).
2. Consider an income-driven repayment plan
Consider an income-based repayment plan for your federal student loans. An income-based 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-based reimbursement plans: Income-Based Reimbursement (IBR), Pay-As-You-Earn (PAYE), Revised Pay-As-You-Earn (REPAYE), and Reimbursement-Based. income (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 is possible to get student loan forgiveness on the remaining balance of your federal student loan. (Student borrowers will get $15 billion in student loan forgiveness).
3. Get a phased student loan repayment plan
If you’re struggling to repay your student loans, an income-oriented 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 paid off. (The student loan forgiveness could be the reason the Democrats lose the midterm elections).
4. Sign up for automatic payment
Contact your student loan officer to sign up for autopay. Automatic payment 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 help with your student loan payment from your employer
Ask your employer if they offer student loan repayment assistance. Some employers will help you repay your student loans.
6. Consolidate your federal student loans
Direct loan consolidation combines your current federal student loans into one federal student loan. The advantage is that you will only 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 that when you extend your repayment period, you may save money each month, but you’ll pay more interest the longer it takes to pay off your student loans. The downside 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 to the nearest 1/8%.
7. Refinance your student loans
You can get a lower payment and a lower interest rate when you refinance your student loans.
This student loan refinance 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 term 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 could pay higher total interest if you choose a longer repayment horizon.
There are many ways to lower your monthly student loan payment. When temporary student loan relief ends, make sure you know all of your options. Here are some smart ways to pay off student loans faster: