Typically, for most students and most federal student loan options, your obligation to repay your loan does not begin until you graduate. Until that time, your loan is in deferment. Once you graduate, you will be contacted by your loan servicer to set up payment arrangements. You will be provided an opportunity to set up payments over a specific length of time or you may be eligible to set your payment amounts off of your monthly income, so it is more affordable.

If you do not take action with setting up your student loan repayments, your loan provider, or loan servicer, will sign you up for a generic repayment plan which usually has even payments over ten years. The amount this comes out to may be difficult to keep up with, particularly right after graduation when you are searching for a job with your new degree or later in the repayment process if you happen to move or lose your current position.

Whether you are having a hard time with your payments or anxious about how you are planning to pay them off, we have solutions for you. Some of these methods are complex and have long-term impacts. But you can rest assured that you’ll be presented with valuable information to help you make a wise decision.

What are you waiting on? Let’s dive in!

Method 1. Refinance your student loans at a reduced rate or longer term

If you have one or many student loans, you can consolidate and refinance it into a new, single loan through a private lender. Doing this will enable you to streamline both your private and federal loans into one loan, along with providing you with a single (and most likely reduced) monthly payment. That’s an excellent method for people who have a good credit and steady income. It works through one of these mechanisms:

  • Extending the term of the loan
  • Reducing the interest rate

Do you wish to refinance or consolidate your student loans? Your lender will start by considering these criteria:

  1. Credit score of more than 660
  2. A debt-to-income ratio under 40% to 45%
  3. A stable source of income

If doing this, you will find downsides to bear in mind.

  • When you extend your term, you might pay more in complete interest over your new term of the loan. That’s true even if you now have a lower rate.
  • If you plan to refinance a federal loan to a private loan, you’ll lose access to those income-based repayment programs.

TIPS: You will find particular cases where refinancing and consolidation might not be the perfect option for you. You might also run the risk of losing some benefits as a borrower. Some of this include interest rate discounts, principal rebates and more if you shit from your standard loans to a consolidated one. For such reasons, it is very crucial to check at the existing status of the loans before you start this student loan refinancing process.

Method 2. Try debt settlement if you have any private loans

Borrowers who have private student loans have fewer options when we talk about forgiveness compared to those with federal loans. You see, there are no forgiveness options accessible for borrowers of private student loans. Nevertheless, there are ways to at least reduce your required monthly student loan payments if you are having trouble making your student loan repayments. One method, which can be very efficient, is trying to manage your debt for less than the overall principal amount by requesting a settlement or compromise.

Private lenders are often eager to work along with borrowers when they’re influenced that you can’t pay off the loan in full, but could pay a significant portion of it, and a compromise can be made.

Debt settlement is composed of working with the lender to discuss either lowered principal balance or some reduced payments on your private student loans. This process can often accomplish excellent outcomes; however, it can be a very cumbersome and lengthy process.

If you are in need of reduced payments – if it is becoming more difficult to make their required monthly payment or something has occurred financially, and you know that shortly, you will need to lower your monthly student loan debt payments – then contact the Student Loan Advisory Group to review possible options, like debt settlement of your private student loans.

Also, take note that we do not suggest or support that any debtor stop making payments for their lenders.

Method 3. Negotiate deferment and forbearance options with your lender

One option that could provide temporary relief for people with student loans is negotiating a deferment or forbearance with the student loan servicer. Either option is accessible for private loans and federal loans in limited situations.

Forbearance denotes you are enabled to stop making any payments temporarily on loan for up to twelve months. Forbearance is typically utilized by people suffering from sudden income or employment concerns which impact their capacity to make the student loan payments. Nonetheless, interest will continue to increase on loan throughout the forbearance period.

Meanwhile, deferment happens when both your interest and principal payments on your student loans are postponed temporarily. Often, depending on the individual loan, the government may make the interest payments for you within the period of deferment.

Forbearance is the more typical alternative and often utilized by those who are not qualified for determent. That’s because the requirements for eligibility are much stricter.

If you wish to try a deferment or forbearance, you should get in touch with one of our financial advisors to review your student loan circumstances and the best options for you.

Method 4. To reduce your payment, enroll in an Income Based Repayment (IBR) Plan or Program

Did you know that an IBR program has both long-term and short-term benefits when we talk about student loans? Income Based Repayment Programs are an excellent technique for people who have low income, no income, or have doubts about their future income to still manage their student loan repayment obligations.

Income Based Repayment Programs:

  • Are a benefit of federal student loans only. Non-eligible student loan debts can be consolidated into a loan that is IBR eligible.
  • Monthly payments are estimated based on the level of your income and not on how much you be indebted.
  • Repayment terms range between 20 to 25 years. If a balance still remains, then the outstanding debt will be forgiven.
  • Qualifying individuals can have payments as low as $0 per month.

Income Based Repayment plans are one of our most popular options for out clients with significant student loan debt. IBR plans provide instant relief while still enabling those with student loan debt to manage their finances and keep up with their loans without defaulting.

Income Based Repayment programs for student loan debt relief may require you to reverify your income to ensure you still qualify for your current monthly payment and the benefit of lower payments through an IBR program can have tax implementations.

Which Is The Best Option To Manage My Student Loan Debt?

To conclude, if you are having a hard with making either your private or federal student loan payments, you will find long-term and short-term options that are available for you. Contact the Student Loan Advisory Group for more information and to get started to a lower monthly payment on your student loan debts.