5 Ways to Lower Student Loan Payments

Credit Signs Team

Credit Signs Team

July 30, 2020  •  4 min read

If you have student loan debt, you know the monthly payments can sometimes be hard to manage. Whether you’re fresh out of college, or just aren’t making enough in your current job, your monthly payment can eat up much of your paycheck, leaving little left for essentials. 

If you feel your student loan repayments are too much to handle, the good news is there are ways you may be able to lower your monthly payment. 

1. Change Your Repayment Plan

Most student loan servicers offer multiple repayment plans, allowing borrowers to pay back their debts in ways that match their financial situation. When you first begin repaying your loans, you’re either assigned or can choose a repayment plan. As time goes on, you may be able to adjust this plan to account for changes in your financial situation. 

Your repayment options will vary depending on the type of loans you have (public or private) and who is servicing your debt. If you have federal student loans, here are some of the most popular repayment options available: 

  • Standard repayment: With this plan, you’ll have a fixed monthly payment that ensures you pay off your loan in 10 years. All borrowers are eligible for this plan.
  • Graduated repayment: With this plan, your payments are smaller in the beginning and grow over time. Payment amounts are increased every two years, and payments are calculated to ensure your debt is paid off in 10 years. All borrowers are eligible for this plan, and this option could be good for someone who believes their income will increase over time.
  • Extended repayment: If you’re looking for a lower monthly payment, an extended plan will spread your repayment over 25 years instead of the standard 10. Your payments can be fixed or graduated in this plan, but you must have over a certain amount of student debt to be eligible for this option.
  • Income-based repayment: With this option, how much you pay is based on how much you earn. Your monthly payment will be either 10 or 15 percent of your after-tax income, but will never be more than what you would have paid under a standard 10-year repayment plan. This option could be good for borrowers who have a low income.

2. Refinance Your Loans

One of the biggest costs associated with taking out student loans is the interest you pay over the life of the loan. Interest is essentially the fee you pay to be able to borrow the money, and over time 5% or more of your loan goes toward interest. 

Refinancing is the process of lowering your interest rate. When your rate decreases, you pay less over the life of your loan, which could account for thousands of dollars in savings. 


Easily refinance your student loans

3. Try to Extend Your Repayment

By extending your repayment period, you’re agreeing to pay a lower monthly payment for a longer period of time. For example: If you’re currently paying $500 per month and have 10 years left on your loan, by extending your repayment for five years, you may be able to lower your monthly payment by roughly $100. 

With this option, you’ll be repaying your loan for another five years, though the extra $100 in your pocket could make a big difference in your monthly budget. Additionally, when you get a new job or increase your income, you may be able to update your repayment plan to contribute more or decrease the length of your loan term.. 

If you have federal student loans, extending your repayment period should be relatively easy. However, if you have private loans, check to see if this option is available. 

4. Consolidate Your Federal Loans

If you have multiple student loans, it can be tricky to keep track of all the different payments. Each loan may have a different interest rate, and they could all be serviced by different student loan companies. By consolidating your federal student loans, you can wrap all your existing debt into one new loan, giving you one monthly payment with one interest rate. While this process might not lower your student loan payments, it makes the process of managing multiple loans much easier.

You can consolidate federal student loans easily and for free through the U.S. Department of Education

5. Get a Side Hustle

Interest on a student loan can be expensive, and the longer it takes to repay your loan, the more interest you’ll have to pay. Getting a side hustle enables you to pay more toward your loan now, ultimately lessening the time it takes to repay the full balance. And while this may seem like it will not save you money, in the long run, shortening your repayment period could represent a major savings in interest. 

If you get a side job earning an extra $100 a week and put that money toward your student loans (depending on your total balance) you could see significant savings in interest by paying down your debt faster. 

Our Two Cents

While student loan expenses can take a chunk out of your monthly income, there are ways to reduce these costs if you need to. Just remember that reducing costs now often means paying more over time, so only pursue this option if you really need to free up money today.