Naira Citlali
Written by Naira Citlali
Last updated: Feb.23,2022

According to Nerd Wallet, 43 million Americans currently have student debt that they are repaying each month. With the costs of education getting higher and higher, it has become nearly impossible for a family with an average income to finance a child’s college journey, especially if the student qualifies for one of the more prestigious schools in the country. That’s where student loans come in handy. 

If you’re reading this article, you probably have a student loan you’re trying to repay. You options when it comes to paying off your debt will differ on the type of loan you took out and your current financial situation. With that said, here’s what you can do to repay your student loans faster, with less interest, or with lower monthly payments.

How to Pay Off Your Loans with Less Interests

We’ll start off with lowering the interest on your loan as that’s what makes most loan repayments extremely difficult. The way to lower the interest on a student loan is by enrolling in the standard student repayment plan. This plan requires you to make equal monthly payments for a period of 10 years. You’re only eligible to enter this plan if you have a federal student loan. 

Although this will allow you to pay less in interest, you have to be able to afford those monthly payments for the upcoming decade (a total of 120 payments). If your financial situation allows you to enroll in the standard repayment plan, you’ll be good to go. However, if you can’t afford to follow this rate of monthly payments, you’ll have to look for an alternative solution, which makes reducing interest impossible.

What to Do If You Need Lower Student Loan Payments

Now, let’s say you can’t afford your current student loan payments and you need to find a way to lower them. In this case, your best repayment option is income-driven repayment. If you’re on a federal loan, you have an option to choose between four income driven repayment plans offered by the government. These include the income-based repayment, the income-contingent repayment, Pay As You Earn plan (PYE), and Revised Pay as You Earn plan (RPYE). 

These plans allow you to have income-driven payments, meaning the amount of money you have to repay each month depends on how much money you’re making. These monthly payments usually range between 10% and 20% of your income, while they can equal to $0 if you’re unemployed. However, you need to keep in mind the downside of this plan, which is the fact that it extends your loan term to 20 or even 25 years. If your current income is not sufficient to cover the standard repayment plan, then this is the way to go, although it will take much longer for you to get rid of the student debt altogether.

How to Qualify for Student Loan Forgiveness

The government offers a Public Service Loan Forgiveness program, which is available to government and nonprofit employees (in some cases). If you are eligible to apply for the student loan forgiveness plan, you will get to enjoy great benefits of this program. That means your remaining loan balance could be forgiven (tax-free( after you make 120 loan payments. 

Keep in mind that in order to qualify for student loan forgiveness (on top of being a government or nonprofit employee), you need to make repayments under an income-driven repayment plan. If you make a certain number of payments under an income-driven repayment plan, your remaining loan balance can be forgiven. Check here to see if you qualify for student loan forgiveness.

How to Pay Off Your Student Loans Faster

If you want to get rid of your student loans faster and your financial situation allows you to put more money toward that goal, you can easily add extra payments on your current loan. Another option is to refinance to a new loan with a shorter repayment term, or combine both of these solutions to get the best of both worlds.

Simply consult with your loan provider on making larger payments per month in order to cut years off your debt. On the other hand, if you choose to refinance to a shorter loan term, you might be able to land a lower interest rate. Look into both options before making your choice.

What to Do If You Have Private Student Loans

Last but not least, let’s look into private student loans. If you have a private student loan that you want to repay faster or at a lower rate, your options will be more limited. None of the private student loans can qualify for income-driven repayment or other government plans. That means you solely depend on your private loan provider.

Your best bet at lowering private student loans is to contact your lender and ask about your options, especially if you’re struggling to make monthly payments. In most cases, you will be given an opportunity to refinance your private student loan at a lower interest rate. For this to be possible, you need to have a credit score of at least 650. If you don’t have a credit score high enough to qualify, your co-signer might be eligible to get your loan refinanced. Make sure to call your private loan provider and ask for more information.

Educate Yourself on Student Loan Repayments

Whether you have a federal or private student loan, it is in your best interests to repay it as fast as possible. By repaying the loan faster, you will be saving a ton of money on interest rates. Unfortunately, many people are struggling to make even the low-end monthly payments, which makes faster refinancing seem impossible.

Regardless of your current situation, we recommend you to further educate yourself on student loan repayments and your options regarding cutting down your debt in the upcoming years. There are plenty of resources available online but make sure you’re getting information from reputable sources (and government sites if you’re on a federal loan).

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