Strategies for Dealing with Student Loan Debt
Debt pain is real
Hundred thousands of people struggle every month to make their student loan payments. If your student loans are weighing you down, check out these ways you can lighten the load.
Lower your interest rate
Most student loan servicers will automatically lower your rate by 0.25% if you sign up for automatic payments.
Ask about deferment and forbearance
Put your payments, but not interest, on pause. If your lender allows it, you can choose between making monthly interest payments and stopping all payments and having the interest that builds during that period added to your total loan balance.
Change your repayment plan
You can go and visit www.studentaid.gov for information about eligibility and more details. But here are some short explanations to catch up with you.
- Graduated: Payments are lower in the beginning, and then increase every two years for up to ten years.
- Extended: Offers a longer loan term — up to twenty-five years — and lower monthly payments, which can be fixed or graduated.
- Pay as you earn (PAYE): Maximum monthly payment is 10% of discretionary income, and the loan term is extended to twenty years.
- Revised pay as you earn (REPAYE): Monthly payment equals 10% of discretionary income, and the loan term is extended to twenty years.
- Income-Based repayment (IBR): Monthly payment equals 10% or 15% of discretionary income, depending on when your loan originated. The loan term is extended for up to twenty-five years.
- Income-Contigent Repayment (ICR): Monthly payment equals the lesser of 20% of discretionary income or what fixed payment would be on a twelve-year loan. The loan term is extended for up to twenty-five years.
Remember, Payment for income-driven repayment plans are recalculated every year based on updated income and current family size, along with other factors.
Consolidate and refinance.
Roll all of your loans into one with a lower interest rate; this means more of your payment goes toward the principal every month. However, you lose some of the protections built into your federal student loans, including access to repayment plans.
