After your rent and car payments, your student loans may be your biggest recurring expense. Depending on your income and debt, you may not have enough cash to cover your bills. According to the Federal Reserve, 12% of borrowers were behind on their payments. 

If you’re researching how to lower student loan payments, there are ways to reduce your payments and make your debt more manageable. 

1. Refinance Your Student Loans

Student loan refinancing is one of the most effective ways to lower your payments and save money. Refinancing is a process where you take out a loan to pay off your existing accounts. With good credit and a reliable source of income, you could qualify for a new loan with better terms than you have now, including a lower interest rate or longer repayment term, and reduce your payments. 

However, refinancing federal student loans will convert them to private loans, and you’ll no longer qualify for benefits like loan forgiveness or income-driven repayment. 

2. Enroll in Automatic Payments

Many loan servicers will give you an interest rate discount if you sign up for automatic payments. The discount is modest — typically 0.25% — but it can help you save money over time and even cause your payment amount to decrease. 

3. Employer Match Programs

More employers than ever offer student loan repayment programs for their employees. In fact, the Employee Benefit Research Institute reported that 25% of employers offer student loan repayment assistance, and an additional 24% of employers are planning to offer this perk in the near future. 

Through these programs, your employer will match your student loan payments up to a monthly or annual maximum. By taking advantage of employer student loan contribution programs, you can save a significant amount of money. 

4. Consolidate Your Student Loans

Federal loan borrowers have the option of consolidating their loans into a Direct Consolidation Loan. Your debt will remain federal, so you’ll still be eligible for federal loan benefits. But once you consolidate, you can choose a loan term as long as 30 years and get access to alternative payment plans that could reduce your monthly payments. 

5. Apply For An Income-Driven Repayment Plan

Federal loan borrowers struggling to afford their payments can apply for an income-driven repayment (IDR) plan. These plans base your payments on a percentage of your discretionary income, and you will have a new term of 20 or 25 years. If you haven’t paid off the loan in full by the end of the new repayment term, the government will discharge the remainder. 

Learn about refinancing vs income-driven repayment plans. 

6. Use Forbearance or Deferment

Whether you plan on returning to school to earn a master’s degree or were laid off from your job, you may be eligible for a forbearance or deferment from your loan servicer. If you qualify, you can postpone your payments for several months without entering default. Contact your loan servicer to find out what forbearance or deferment options are available. 

7. Get Help From Your State

Many states operate programs for student loan borrowers to encourage them to live and work in the state. Usually, these programs are tied to your employment; you commit to working in a high-need area for a period and receive money to repay your loans when you complete your service obligation. 

For example, New Jersey operates the New Jersey STEM Loan Redemption Program. Professionals that work in science, engineering, math, or technology can qualify for up to $8,000 in loan repayment assistance. 

Contact your state education department to find out if similar programs are available in your state.

How To Lower Private Student Loan Payments

Private loans work quite differently from federal loans. While federal loan borrowers have access to perks like loan forgiveness and IDR plans, private student loan borrowers do not. However, there may be ways you can reduce your payments:

Option 1: Restructure Your Private Student Loan

If you’re struggling to afford your payments, contact your lender right away. Some private lenders offer forbearance programs, allowing you to pause your payments for a few months. Or you may be eligible for a loan modification that lengthens your loan term so your payments are more affordable. 

Option 2: Refinance Your Private Student Loan

Some private student loans can have very high-interest rates, especially if you took them out without a co-signer or with poor credit. If your credit has improved since then — or if you have a creditworthy co-signer — you could refinance your loans and qualify for a better rate than you have on your existing loans. With a lower rate or a different loan term, you could significantly reduce your payments. 

Lower Your Student Loan Repayments With ELFI

The benefits of student loan refinancing are numerous. If you decide to refinance your private or federal student loans, be sure to check available rates through ELFI.* 

ELFI refinances undergraduate, graduate, and parent student loans, and it offers loan terms as long as 20 years. You can choose between fixed and variable interest rates, and ELFI’s loan minimum is just $10,000. 

You can use ELFI’s Find My Rate tool to find out if you meet the requirements for student loan refinancing and view potential loan options. 

The post How To Lower Your Student Loan Payments appeared first on Education Loan Finance.