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How To Decrease Student Loan Payments

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Student Loan Forgiveness: Which Loans Are Eligible

How to lower monthly student loan payments

Only direct loans made by the federal government are eligible for forgiveness. Stafford loans, which were replaced by direct loans in 2010, are also eligible. If you have other federal loans, you may be able to consolidate them into one direct consolidation loan that would make you eligible. Non-federal loans do not qualify for forgiveness.

In 2020, borrowers with federal student loans who attended for-profit colleges and seek loan forgiveness because their school defrauded them or broke specific laws were dealt a setback when former President Trump vetoed a bipartisan resolution that overturned new regulations that make it much more difficult to access loan forgiveness. The new, more onerous regulations went into effect on July 1, 2020.

In 2021, under the Biden Administration, the Department of Education canceled a total of $1.5 billion in student loan debt for nearly 92,000 students, who were victims of for-profit college fraud.

What To Do If Youre Having Trouble Making Your Student Loan Payments

If lowering your monthly student loan payment isnt enough, and youre still struggling to make your payments, either deferment or forbearance could provide temporary relief. Youll apply for these with your loan servicer, and you may need to prove financial hardship to be eligible.

As part of a COVID-19 emergency relief measure, federal student loan payments are currently paused and no interest is accruing until Jan. 31, 2022. If you still need help with your payments after Jan. 31, heres some additional information on deferment and forbearance.

Make Payments While You’re In School

Another way to hold down your costs is to make student loan payments while you’re still in school. If you can afford it, making payments can reduce what you owe in the long run. It not only reduces your principal, but it also reduces the amount of interest that accrues on your unsubsidized loans and eventually capitalizes. How your payments are applied depends on a number of factors, but in most cases, payments are applied first to any accrued interest and fees, then to your principal balance. Learn how your payments are applied to your loans while you’re still in school.

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How Much You Need To Repay

Verify your loan or line of credit contract to figure out the following:

  • the total amount you owe
  • the interest rate that will be applied to your debt
  • how youll repay your debt
  • how much youll pay
  • how long it will take to pay back your debt

Contact the organization that provided your student loan or line of credit if you dont have the information listed above.

Make The Most Of The Student Loan Payment Pause: 5 Ways To Take Control

7 Ways You Can Lower Your Student Loan Payment

From debt forgiveness options to refinancing, here’s how to be smart about student loan payments in 2022.

Associate Editor

If you’re one of the 43 million people in the US with federal student debt, your required payments are on hold until Aug. 31. The US Secretary of Education has also suggested the pause could be extended again, the fifth time since March 2020. And President Joe Biden also pledged to cancel some student loan debt, though his administration has yet to release any details.

If you want to make payments during the freeze and take advantage of the 0% interest rate, you can, but you’ll need to set up repayment online or by contacting your loan provider. If you have private loans, you may have been offered extended forbearance by your loan provider, but if not, you’ve likely already resumed making payments.

Whatever category you fall into, once you begin making student loan payments again, there are many ways to simplify the process and even save yourself time and money along the way. Here are five ways you can make your student loan repayment easier and, if you can, pay down your balance faster, to get out of debt sooner without breaking your monthly budget.

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Different Federal Student Loans Available To You

A total of four federal student loans are offered to those who qualify.

Direct Consolidated Loans. As a result of this federal loan, you can consolidate all of your federal student loans into a single loan server.

Direct Subsidized Loans. To cover college education costs, you may be eligible for direct subsidized loans, which are exclusively available to undergraduate students.

Direct Unsubsidized Loans. Undergraduates, graduates, professionals, etc., are eligible for Direct Unsubsidized Loans. This loan isnt based on a borrowers ability to repay and can be used for any purpose.

Direct PLUS Loans. For students who have not previously taken out a financial aid loan, Direct Plus Loans are available if you meet the eligibility requirements.

Reduce Your Living Expenses

Along with increasing your income, consider ways to decrease your expenses. Freeing up more room in your budget will help you afford extra payments on your student loans.

Consider downsizing to a cheaper apartment or moving in with a roommate or two. If you often eat out at restaurants, try meal planning and cooking at home. And if your car payment is a stretch, consider trading in your car for a less expensive vehicle.

Take a look at your monthly expenses to identify areas where you can cut back. Even an extra $50 or $100 per month could help you pay off your student loans faster.

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Lower Student Loan Payments And Start Saving For Your Financial Future

Now that you know how to get a lower student loan payment, its important to evaluate where you are financially and choose the best option for managing private or federal student loans. Start by using a loan calculator and note how much money youre planning to bring in each month compared to how much debt you have left to pay off.

Although student loans are overwhelming, the monthly payments are actually helping you build up credit. Yes, paying off your monthly student loans helps increase your credit score. This should give you even more incentive to pay them off quickly and become debt-free.

If youre looking for easier ways to save and become more financially secure consider a personal finance app that can help you set aside funds for both your student loans and your savings account.

Also, consider opening a credit card to help you build credit . Check out Credit.coms recommended credit cards for building credit from our trusted partners* which will help you rebuild your credit and move closer to your financial goals.

Put A Cash Windfall Toward Your Loans

Panel Discussion: Startup Claims To Lower Student Loan Payments

If you receive an unexpected windfall of cash, such as a bonus at work or inheritance, it might be tempting to spend it on something fun. But if youre committed to getting rid of your student debt as fast as possible, consider putting that windfall toward your student loans.

If you need a boost of motivation, use a student loan calculator to see how much an extra payment would save you. By seeing how much you could save in interest, along with the time you could shave off your debt, you might feel inspired to stick to your debt repayment goals.

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Pay More Than The Minimum Payment

When you borrow a student loan, you usually agree to pay it back with fixed monthly payments over a certain number of years. But if you pay more than the minimum amount due each month, you can shave months or even years off your repayment term.

For example, lets say you took a $35,000 loan at a 10.00% rate. If you pay $463 per month, youll get rid of that debt in 10 years. But if you can bump your monthly payment up to $513 , youll get out of debt a year and a half faster and save nearly $3,500 in interest. If you can pay $563 per month, youll get rid of your debt two years and eight months faster and save nearly $6,000 in interest charges.

Before setting up your increased payments, it could be worth reaching out to your loan servicer to make sure its applying the payments correctly. You want to make sure your payments are going toward your principal balance rather than being saved for future bills.

The Graduated Repayment Plan

The graduated repayment plan starts off your repayment at a low amount, and it rises over time. There are two versions – the 10 year graduated plan, and the 25 year extended graduated plan. The idea with this plan is that you’ll earn more in the future, so you start low and your payment grows.

Both of them start with a low payment amount.

On the 10-year graduated plan, you would lower your student loan payment to $213 per month in year 1, but remember it will rise to as high as $638 per month in year 9.

On the 25-year graduated plan, you would lower your student loan payment to $120 per month in year 1, but remember it will rise to as high as $359 per month in year 24.

You can switch to the graduated repayment plan simply by calling your lender.

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Teacher Loan Forgiveness Program

Student loan forgiveness for teachers is neither generous nor easy to qualify for. Teachers can have up to $17,500 of their federal direct and Stafford student loans forgiven by teaching for five complete and consecutive academic years at a qualifying low-income school or educational service agency. Loans that were issued before Oct. 1, 1998, are not eligible.

You must be classified as a highly qualified teacher, which means having at least a bachelor’s degree and having full state certification. Only science and math teachers at the secondary level, and special education teachers at the elementary or secondary level, are eligible for $17,500 in forgiveness. Forgiveness is capped at $5,000 for other teachers.

You can qualify for both teacher and public service loan forgiveness , but you can’t use the same years of service to be eligible for both programs. So you’d need 15 years of teaching service to qualify for both programs, along with meeting all the specific requirements to earn each type of forgiveness.

Benefits Of A Lump Sum Settlement

How to Lower Your Student Loan Payment Due to Coronavirus Income Loss ...

Many positive possibilities can come with a lump sum settlement, both financially and for your mental health.

The benefits of a lump sum settlement can:

  • Reduce the lifetime amount you have to pay
  • Reduce the loan term to zero
  • Cost less than your current loan balance
  • Eliminate future interest from accruing
  • Free up your monthly budget
  • Improve your credit score in the long term by getting rid of missed monthly payments
  • Remove an incredible burden from your shoulders

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Options For When You Cant Pay

Under certain circumstances, and depending on what type of federal student loan you have, you may be eligible for a deferment or forbearance. This will allow you to temporarily postpone or reduce your monthly payments, and in some cases, help you avoid going into default.

Private student loan borrowers should contact their lender to learn about repayment possibilities, such as forbearance or deferment or alternatives like rate reductions, extended loan terms, or other loan modifications.


Deferment is a temporary postponement of payment on a loan that is allowed under certain conditions. Depending on the type of federal student loan you have, the government may pay the interest that accrues during deferment. Most deferments are not automaticyou will need to submit a request to your student loan servicer, often on a form. Also, for most deferments, you must provide your student loan servicer with documentation to show that you meet the eligibility requirements for the deferment.

If youre having a hard time making your federal student loan payments, you may be able to qualify for an Economic Hardship Deferment or Unemployment Deferment depending on your individual circumstances.


If you do not qualify for deferment, forbearance may be an option to help you temporarily suspend or reduce your monthly federal student loan payments.

Switching to a New Repayment Plan

Why Might A Borrower Want To Cut Student Loan Payments

Cutting monthly student loan payments generally increases the total interest paid over the life of a student loan, except if the borrower will qualify for student loan forgiveness.

Nevertheless, there are several reasons why a borrower might choose to reduce their student loan payments.

  • More money in monthly budget. Cutting the monthly loan payment reduces the impact of the loan payments on the borrowers cash flow. This may be especially important for retired borrowers who are living on fixed income.
  • Borrower is struggling financially. Sometimes, borrowers who are experiencing financial difficulty are unable or unwilling to suspend the loan payments entirely using a deferment or forbearance. The borrower might have used up their eligibility for deferments and forbearances, or they may want a more permanent solution than a deferment or forbearance.
  • Maximize loan forgiveness. If a borrower will qualify for student loan forgiveness, reducing the monthly loan payment increases the amount of forgiveness. So, even though the total cost of the loan would normally increase as the loan payments decrease, the loan forgiveness cuts that short.

Considering a deferment? Use our Cost of Deferment Calculator to evaluates the impact of interest capitalization at the end of a deferment or forbearance on the monthly loan payment and the cost of the loan, assuming that the loan payments are re-amortized after the deferment or forbearance.

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Refinance Several Loans Into One Loan

Many borrowers have a mix of both federal and private loans that they’d love to consolidate. While you can’t consolidate private loans with the federal government option we outlined above, there is another way to combine multiple loans into one. If you want to simplify your loan payments for federal and private loans and get a lower monthly payment while you’re at it consider refinancing through a private lender.

Remember, if you refinance your federal loans along with your private loans, youll lose access to those specific benefits we mentioned earlier that are available only for federal student loans. Depending on your particular situation, the lower interest rate may be a worthwhile trade.

If you do refinance your federal and private loans together, you’ll follow the steps we’d laid out above under How to refinance your private student loan.

See: Should You Refinance Your Federal Loans Through a Private Lender?

How Did We Develop Our School List

Student loan debt could affect when you retire

We continually evaluate all accredited colleges and universities in the U.S. and Canada to determine which schools offer the best outcomes for global citizens.

We believe that the following schools offer the best career prospects for students studying in North America based on a proprietary scoring algorithm that considers a variety of data points such as graduation rates, post-graduation employment rates and alumni earnings.

If you dont see your school and/or have a U.S.-based cosigner, visit our partner Sallie Mae to determine your eligibility for their student loans.

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Ways To Reduce Your Student Loan Interest Rate

Editorial Note: This content is based solely on the author’s opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.

What is the best way to reduce your student loan interest rate? Its an important question that student loan borrowers ask so they can save money. If youre like many student loan borrowers, your student loan payment costs you a lot of money each month. If you want to know how to reduce your student loan interest rate, the good news is that you have options.

Here are 7 ways to reduce your student loan interest rate:

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Student Loan Planner® is a financial coaching company and does not claim to provide financial advice on investment products. Refinancing federal loans causes the borrower to lose access to income-based repayment plans as well as the PSLF program. We may earn compensation from advertising partners when you click on links on this site. Student Loan Planner® is not a debt settlement or debt relief company. We do not provide tax or legal advice.

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Pay Off High Interest Debt First

Many borrowers are paying off multiple student loans with different interest rates. Which student loans should you pay off first? Heres what you should do. List your existing student loans, remaining balances, interest rates and monthly payments. First, every month, pay the minimum payment for each student loan. Second, apply any extra money toward the student loan with the highest interest rate. Repeat this process each month until you pay off the student loan with the highest interest rate. Third, focus on the student loan with the next highest interest rate, and repeat this process until all your student loans are paid off. This strategy will help you save more money on your student loans.

Stuck With Student Loans 5 Ways To Lower Your Payments

How to Reduce Student Loan Payments

Americans owe $1.2 trillion in student loan debt at interest rates, typically, of 3.4 percent to 6.8 percent on federal loans, and up to 14 percent on private loans. According to Sofi, a leader in the business of student loan refinancing, customers save an average $14,000 by refinancing their loans.

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Cares Act Automatic Federal Student Loan Forbearance

If you have a student loan owned by the U.S. Department of Education, the government has granted you automatic forbearance on this loan under the Coronavirus Aid, Relief, and Economic Security Act. The forbearance was set to expire on Jan. 31, 2021, under the previous administration, then it was extended under the Biden administration until Sept. 30, 2021.

The administration extended the forbearance period again on Aug. 6, 2021, allowing loans to stay in forbearance until Jan. 31, 2022.

Between March 13, 2020, and January 31, 2022, no interest will accrue, and you don’t need to make any payments. No late fees will apply if you stop paying during this period. You’ll know you have this benefit if you see a 0% interest rate when you log in to your student loan account. On March 30, 2021, the Department of Education extended this benefit to defaulted privately held loans under the Federal Family Education Loan Program.

Under normal circumstances, you can’t make progress toward loan forgiveness during forbearance. But under the CARES Act, you can. You’ll receive credit toward income-driven repayment forgiveness or public service loan forgiveness for the payments you normally would have made during this period.

There may be tax obligations tied to any loan forgiveness.

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