Are your student loan payments more than you can handle each month? Do you find yourself struggling to make ends meet and really start focusing on destroying your debt? If your answer is “yes” then you would probably be excited to hear that there are ways to lower your student loan payments.
Like any debt in life, it’s best to understand all your repayment options before making decisions. With every alternative debt repayment, there are risks and rewards. Understanding these risks are crucial in helping make the best financial decision.
Here are the two most popular ways you can quickly lower your student loan payments:
When lowering your student loan payments is a good idea
It’s weird to think about, but there are times when lowering your student loan payments is a good idea. Most often or not it comes down to simply not being able to afford your monthly payments. If your expenses are outweighing your income and you have a negative cash flow you might be just digging yourself further into debt.
This does not mean the student loan payments are just inconvenient for you. It literally means after your necessary living expenses you do not have enough money. It’s very important to understand the macro view of your finances. The first thing you should do before making any decisions about lowering your student loan payment is organizing your finances.
At the end of the day if you truly cannot afford your student loans, lowering your payments is a good option to look into. The last thing you want to do is start missing payments, paying late fees, and having it affect your credit score.
Lowering Your Student Loan Payments with an Income-Driven Repayment Plan
Income-driven repayment (IDR) plans make it easier for federal student loan borrowers to pay back loans when your debt is high compared to your income. They’re based on your income, family size, the state you live in, and federal student loan type. These programs are designed to make your student loan payments much more affordable based on your individual situation.
Many college graduates commit to this repayment plan when their student loans kick in. It’s an attractive plan since it is based on your current financial situation. Unless you have very low-interest rates you are much better off paying off your student loans as quickly as possible. Doing this will save you money on interest and also allow you to get your life financially free as quickly as possible.
How to Reduce Student Loans Payments with Consolidation and Refinancing
If income-driven student loan repayment does not seem like a good fit you have other great options. Consider consolidating or refinancing your student loans to make repayment more manageable.
If you have federal student loans you can look into a federal student loan consolidation. This type of loan allows you to combine all of your federal student loans into one and make single monthly payments. This option will not help much with saving money on interest. The federal consolidation will take your current average interest on all your loans and apply it to the new consolidated loan. Although you might not be saving money on interest this is a great way to organize and manage your student loans better.
Unlike a federal student loan consolidation refinancing with a private lender has a great possibility to save you money by lowering your interest rates. In general refinancing through private lenders will allow for much more flexibility as far as lowering your interest.
Although these are only two of the many options to lowering your student loan payments they are the most popular and quickest to get started. Some other options include graduated repayment, extended repayment, student loan help through an employer, moving to a different state with student loan forgiveness, and signing up for auto repayment.
As you can tell you have a plethora of options and it’s absolutely possible to lower your student loan payments. Remember your goal is to get your student loans paid off as financially savvy as possible. Since you put yourself into debt it’s now time to start making the steps to get your out. You can do it!
Always make sure that whatever option you choose to lower your monthly payments it’s going to be an amount you can pay every month. When you start missing payments your credit score will plummet quickly making it extremely difficult to make financial moves in the future.
What is your current student loan debt?
What is your plan for paying them off?