When you’re struggling to pay bills, your student loan payments might feel like the greatest weight on your shoulders.
There are several possibilities for reducing or deferring payments on federal student loans. A deferral or forbearance are all options.
Consider your alternatives and which tactics work best if you want to discover how to minimize private student loan payments.
- 6 Ways to Lower Private Student Loan Payments on Your Own
- 6. Consider Bankruptcy as Your Last Option
- Contact Your Lender If you Can’t Afford the Monthly Payments
- Lower Private Student Loan Payments Through Forbearance or Deferment
- Start Making Plans With Your Lender to Pay off your Student Loans
- Frequently Asked Questions
6 Ways to Lower Private Student Loan Payments on Your Own
There are 6 options for lowering your private student loan payments:
1. Enroll In Autopay
Autopay is an automated payment agreement in which a creditor agrees to remove funds from a credit card, checking or savings account on a regular basis to pay a bill.
This is an effective strategy to reduce your student loan debt.
With most private student loan providers, this can cut your interest rate by %0.25.
Keep in mind: You should only do this if you are confident that you can afford your student loan installments.
Instead, you can be charged an overdraft or inadequate fee.
2. Make Increasing Your Income a Priority
Every borrower, regardless of their student debt circumstances, should concentrate on increasing their income.
This is particularly true if you are unable to repay your private student debts.
The reality is that each week has 168 hours. Your day job may need you to labor 40-50 hours each week.
Too many borrowers waste money.
They are squandering money whether they are at home watching Netflix or out to dinner with friends or family.
The majority of debtors I encounter who are having trouble paying their student loans are only behind by $200 each month.
The annual cost of $200 each month is $2,400. Anyone who works hard enough might earn that extra cash.
3. Refinance Private Student Loans
Refinancing your private student loans is another option for lowering your payments and making them more reasonable.
You may lower your monthly payments and free up time in your schedule by refinancing your student loans for a longer period.
Furthermore, if you obtain a cheaper interest rate, refinancing might save you money in some situations.
To refinance your student loans, however, you must fulfill the lender’s credit and income standards.
Another sort of private student loan, this one replaces your existing loans with new loan conditions that may be more reasonable in your position.
4. Choose a Shoestring Budget
A bare-bones budget is one that primarily considers your immediate necessities, such as food.
It’s not always enjoyable to make sacrifices in order to repay your student debts.
However, if you want to prevent default, the first place to go is your budget.
5. Look For Assistance With Loan Repayment Options
Create a comprehensive repayment plan for all of your student loan debt. This isn’t always easy, as everyone’s tastes are different, but here’s how to go about it.
First, manage your Federal loans. These loans often offer additional repayment alternatives, and you may benefit from establishing an income-based repayment plan.
Your monthly payment will be reduced to 10% or 15% of your discretionary income under these programs.
This might significantly assist you in repaying your student loans.
There are various state and employer-based initiatives that help private loan debtors repay their debt.
Remember that these programs are mainly intended for borrowers in specific job sectors or places who are willing to work.
6. Consider Bankruptcy as Your Last Option
Bankruptcy is a legal procedure in which a person or business fails to pay its obligations.The bankruptcy procedure begins with a petition submitted by the debtor or on behalf of creditors, depending on the situation.
If you are unable to reduce your private student loan payments, you could consider declaring bankruptcy to help you start over.
While getting your private student loans dismissed in bankruptcy court is not impossible, it is extremely uncommon.
Getting student loans canceled in bankruptcy entails establishing in an adversarial hearing that the student loans cause undue hardship to the borrower and the borrower’s dependents.
Keep in mind: Only a small fraction of debtors succeed in having their student debts canceled in bankruptcy
Contact Your Lender If you Can’t Afford the Monthly Payments
Borrowers who are having financial difficulties should call their lender and inquire about their alternatives for financial assistance,
Consider contacting your lender if you’re attempting to figure out how to decrease your private student loan payments.
If you’ve defaulted on your private student loans or are going to default, you should inquire about any alternative payment options available from your lender.
Consider strategies to maintain your debts in great condition by making the payments you can after more important problems are taken care of to avoid student loan default and other complications down the line.
Private student loans, unlike federal loans, normally do not include income-based repayment or forgiveness alternatives.
Private lenders are under no duty to provide these alternatives on private student loans, but they do so because it is more profitable to have a current borrower than a defaulting borrower
If you can’t make payments on your private student loans, contact your lender right away to explore your alternatives.
Rather than risking default, which might harm your credit score, it’s best to communicate and be proactive.
Lower Private Student Loan Payments Through Forbearance or Deferment
Consider delay or forbearance if you want to minimize your private student loan payments.
For various reasons, both of these options allow you to defer your student loan payments temporarily.
CommonBond*, a well-known private student loan lender, for example, provides forbearance for up to three 3 months in the event of financial difficulty. Many private lenders may give you a break if you are in school or serving in the military.
Private lenders often give deferments and forbearance in certain instances.
Keep in mind: Interest continues to collect on your private student loans while they are in deferment or forbearance.
Start Making Plans With Your Lender to Pay off your Student Loans
The first step in lowering private student loan payments is to contact your lender and explore your possibilities.
If you absolutely cannot afford your loan payments, check your income and spending to determine if any modifications may be made.
Furthermore, it’s critical that you maintain in touch with your lender and pay what you can to prevent default at all costs.
Consider engaging a free or low-cost student loan counselor or lawyer if your lender is unhelpful or if you need more direct assistance.
Frequently Asked Questions
Marie got her journalism degree from the University of California and is an award-winning financial journalist, who’s responsible for collecting and analyzing information concerning students and young adults within the world of finance.
Marie has spent her career with more than 5 years writing for unique media outlets like Yahoo finance, GoBankingRates, and CNBC. She also teaches them how to plan strategically to get out of loan debts easily.
Her goal is to educate students about the different stages in life that involve finances so they can get their money’s worth.