How To Lower Your Student Loan Payments

Your student loan payments aren’t fixed.

You can lower them and even erase some debt in certain cases.

Learn how to lower your student loan payments with six effective strategies.

Gain more financial flexibility and control over your finances.

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How To Lower Your Student Loan Payments. Photo Source (Freepik)

6 Ways To Lower Your Student Loan Payments

If you’re a student, past or present, and want to lower your monthly loan payment, think about your options carefully.

1. Consolidate Federal Student Loans

If you qualify, you can merge your federal student loans into one monthly payment with a direct consolidation loan.

This makes it easier to manage your debt and offers fixed interest rates.

You also get access to repayment plans that reduce your monthly payments.

To qualify, you must not be a full-time student and your loans must be in repayment or grace period.

Apply online and wait for a loan servicer to help you with the process.

2. Change Your Repayment Plan

You can choose between income-driven repayment (IDR) plans and non-IDR plans for your student loans.

IDR plans offer loan forgiveness after 20 or 25 years of payments.

Your monthly payments are based on a percentage of your income that’s left over after covering basic living expenses.

There are four main IDR plans:

  1. Revised Pay As You Earn (REPAYE): Payments are capped at 10% of your discretionary income.
  2. Pay As You Earn (PAYE): Payments are capped at 10% of your discretionary income.
  3. Income-based repayment (IBR): Payments are either 10% or 15% of your discretionary income.
  4. Income-contingent repayment (ICR): Payments are either 20% of your discretionary income or what you would pay under a 12-year fixed term.

Use the official loan simulator to see which repayment plan suits you best.

Non-IDR plans include:

  1. Extended repayment plan: Maximum 25-year term with fixed monthly payments.
  2. Graduated payment plan: Starts with low payments that increase over time. Most loans have a 10-year repayment term, while direct consolidation loans can extend up to 30 years.

3. Lengthen Your Loan Term

Private student loan borrowers can lower their monthly payments by refinancing to a longer repayment term.

For instance, if you owe $50,000 with an 8% interest rate over 10 years, refinancing to a 6% interest rate over 20 years can reduce your monthly payment by $256.

However, longer terms mean you’ll pay more interest overall.

In this example, refinancing to a 20-year term would cost you an extra $13,175 in total interest.

To manage the increased interest, you can refinance and make extra payments when your income goes up.

Student loans don’t have penalties for paying off the balance early.

4. Refinance Your Loans

You can refinance your student loans to combine them into one and pay less interest each month.

For example, if you owe $50,000 at 11% interest for 10 years, refinancing to a 5% interest rate and a 10-year term can reduce your monthly payment by $158.

You’ll also save $19,010 in total interest.

You can refinance your loans as many times as you want.

If you qualify for a lower interest rate, you’ll save money.

However, if you refinance a federal loan, you’ll lose federal benefits like loan forgiveness programs, longer forbearance options, and IDR plans.

Think carefully before making a decision.

5. Employer Assistance

Your employer can assist with student loan repayment outside of federal programs.

Until 2025, they can make tax-free contributions to your loans.

Ask your HR representative about this option.

Healthcare or legal workers may qualify for specialized Loan Repayment Programs (LRPs).

These require working in underserved areas for a few years before you’re eligible for loan forgiveness.

LRPs usually forgive both federal and private loan balances.

6. Deferment or Forbearance

If you can’t afford your payments, deferment or forbearance are options.

Direct subsidized loans don’t accrue interest during deferment.

Federal deferment is available for:

  1. Economic hardship: If you earn below 100% of the poverty line and receive welfare or other government assistance.
  2. Cancer treatment: During and six months after treatment.
  3. Military service: For active duty service members during war or national emergency, ending upon return to school.
  4. Unemployment: If you’re jobless or seeking work, lasting up to three years.
  5. Rehabilitation training: For drug abuse, mental health, or alcohol abuse rehabilitation.

If you don’t qualify for deferment, you can apply for forbearance.

Interest accrues on both direct subsidized and unsubsidized loans during forbearance.

Private student loan forbearance is limited, with interest always accruing and possibly being capitalized.


In summary, you have choices to reduce your student loan payments and even eliminate some debt.

By consolidating your federal student loans, changing your repayment plan, extending your loan term, refinancing, seeking employer help, or using deferment or forbearance, you can have more control over your finances.

Carefully consider these options to find what works best for you and make your student loan payments more manageable.

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