How To Lower Student Loan Payments

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Whether you have just entered the workforce after finishing school or are between jobs, staying current on student loan payments can be tough. You might be juggling living expenses along with your student loan payments. Thankfully, you can find ways to cut down on what you must pay monthly. This article discusses how to lower student loan payments with a few effective strategies. 

How to reduce student loan payments

Most borrowers are placed on a standard repayment plan (SRP) to repay their loan. Borrowers usually have 10 years to repay their loans with an SRP.

But if your income isn’t high enough, you may find it challenging to meet your monthly obligations under an SRP. Below are some ways you can lower student loan payments.

Income-driven repayment plans

With an income-driven repayment plan (IDR), monthly payments are based on a percentage of your discretionary income. Payments under an IDR usually range from 10% to 20% of discretionary income. The lender may extend your repayment schedule to 20 to 25 years to accommodate the lower monthly payments.

Keep in mind that your monthly payment increases as your income rises. And because the term under an IDR has been extended, you pay more interest. The good news is that if you make consistent payments under an income-driven repayment plan, you could have the balance forgiven once the term ends. 

Graduated repayment plans

Under a graduated repayment plan (GRP), your payments start low. But your monthly payments gradually increase every two years. If you are starting out, GRP payments may be more manageable.

The downside of GRP is that payments increase automatically, no matter how much money you make. If your income falls, your monthly payment will stay the same

Extended repayment plans

Extended payment plans often lengthen your repayment period to up to 25 years. Because you have more time to pay off your loan, your monthly payments are lower than what you would pay under a standard or graduated repayment plan. Remember that the longer it takes to pay off your loan, the more interest you will pay. 

Loan consolidation

You may get a lower interest rate if you can consolidate multiple student loans into one loan. And if you can extend the length of your repayment when you consolidate your loans, you can reduce your student loan payment. Keep in mind that when you extend your loan repayment period, you will pay more interest over time. 

Deferment or forbearance 

A student loan deferment or forbearance lets you pause your payments until your financial situation improves. Monthly payments are typically postponed for three, six, or 12 months. If you lose your job or hit tough times, a student loan deferment or forbearance helps keep you out of default.

Deferment may be a good choice for short-term repayment issues. To defer payments on a federal student loan, you must meet specific criteria and eligibility requirements. Subsidized student loans in deferment do not accrue interest while your payments are postponed. But interest continues to accrue when you defer unsubsidized student loans.

If your financial struggles are longer term or permanent, you may need to consider forbearance for your federal student loan. Unlike student loan deferment, there are no specific eligibility requirements you need to meet. Instead, forbearance decisions are left up to the lender.

Private lenders may not offer student loan deferment or forbearance options. If you took out private student loans, contact the lender to find out the payment relief options. 


If you have a good credit score and a decent income, you may be able to refinance your student loan debt to get a lower interest rate. A lower rate doesn’t just reduce your monthly payment. You also can save money by paying less interest over the life of your loan. When you refinance for a longer term, you can reduce further your monthly student loan payment

Sign up for automatic payments

Some lenders discount your interest rate by up to 0.25% when you enroll in autopay. While the slight drop in your interest rate may not seem like a lot, it can help lower your student loan payment. And with a lower interest rate, you will save money in the long run

Check whether you qualify for student loan forgiveness

You may qualify for student loan forgiveness if you work in the public sector. If you make 120 qualifying payments when working for a government agency, public school, or eligible nonprofit, you may be eligible for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program.

If you have been making payments tied to your income under an IDR program, you may be eligible for student loan forgiveness. Most IDR loans have repayment terms ranging from 20 to 25 years. Once you have made the maximum payments under your IDR agreement, any remaining principal and interest will be forgiven. 

Make Your Student Loan Payments Fit Your Budget

Paying back your student loan can take a bigger bite out of your budget than you might expect. When you struggle to stay on top of what you owe, it might be time to explore opportunities to lower your student loans and monthly payments. Following the tips above could make your student loan payments more manageable.


Is there a way to lower student loan payments?

There are many ways to lower your student loan payments. You may be able to lower your monthly payments if you are eligible for income-driven or graduated repayment plans. You can also reduce your monthly student loan payment when you extend the length of your repayment or refinance your loan.

How to negotiate a student loan payment?

You can talk with your lender about available options for reducing your student loan payment.

How do you qualify for student loan forgiveness?

Under the Public Service Loan Forgiveness (PSLF) program, you may qualify for loan forgiveness. To be eligible for forgiveness, you must have made 120 qualifying payments while employed by a public school, government agency, or an eligible nonprofit. Or, if you have an IDR loan, you may qualify for forgiveness when you make the maximum number of payments required under your agreement.

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