5 Ways to Lower Student Loan Payments
Student Loan Help
Many recent college graduates are inundated by the pressures placed upon them to repay their student loans. The fees and charges of these loans can be incredibly high and many students accrue several separate loans throughout the course of their collegiate careers. When faced with these multiple loans and the task of repaying them, many individuals find themselves looking for ways to lower their student loan payments. Herein, there are 5 ways to lower student loan payments.
5 Ways to Lower Student Loan Payments
- Many individuals with low income find it helpful to convert to an income-based repayment (IBR) plan. In cases where an individual has either a lower income or multiple dependents, an IBR plan generally reduces monthly student loan payments. IBR plans calculate the monthly amount to be paid as a percentage of the individual’s income, so these types of plans are not recommended for those who have a high income. IBR plans are obtainable for most federally controlled loans. Stafford loans, Federal Direct loans, and Federal Family Education Loan Program loans are all loans which can be switched to an IBR payment plan. To inquire about your eligibility for the IBR plan, contact your loan provider.
- For those who have loans under the Federal Family Education Loan Program or Federal Direct loan program that total $30,000 or more, it may be possible to switch to an extended or graduated repayment play. The extended repayment plan prolongs the duration of the loan to between 12 and 30 years and generally reduces the amount paid each month, but increases the total sum paid overall for the loan. A graduated repayment plan diminishes the sum repaid every month to begin with, but increases the monthly installments at regularly scheduled interims. If an individual is in a difficult financial state but anticipates that his or her monetary situation will improve in the future, then a graduated repayment plan is the better of these two options. For an individual with a less certain financial outlook, the extended plan is recommended.
- If an individual meets and sustains particular eligibility prerequisites, loan deferment may be a valid option. The U.S. federal government permits individuals to defer repayment on federal loans if certain eligibility requirements are met. Persons who are pregnant, serve in the armed forces, earn minimum wage or less, or who are unemployed may be eligible for a deferment. Depending upon whether an individual’s loans are subsidized or unsubsidized, the government may pay any interest that accumulates during the deferment interval.
- Many loan providers offer discount options that can help lower monthly student loan payments. For instance, some financial institutions offer discounts if payments are debited automatically from an individual’s bank account rather than paid via traditional paper methods. Some institutions offer a discounted rate for individuals who have multiple accounts and loans with their establishments. To research existing discount options, call a loan provider or check out the loan provider’s website.
- The final method of the 5 ways to lower student loan payments is to consolidate the loans. Consolidating student loans pools all of the monthly payments for individual loans into a solitary monthly installment that covers all of the existing loans. Once loans are consolidated, the payment period is generally extended and monthly payments lowered. One note on this is that federal and private loans cannot be combined under the same consolidation loan. Federal loans can be consolidated with other federal loans, but not with private loans; the same goes for private loans. Like must be consolidated with like. To consolidate federal loans, apply online or via phone. To consolidate private loans, research consolidators and choose the one that suits your needs best.