Best 10 Ways to Lower Your Student Loan Payments

If you're paying back student loans and need a lower rate, this article will break down ten things you can do to get a lower payment.

Many people are interested in lowering student loan payment obligations. Student loans can be a substantial financial burden, especially for those who borrowed a lot to fund their education. The good news is, there are techniques that work for reducing student loan payment requirements. 

Here are 10 of the best ways to reduce the amount you have to pay on your educational loans. 

1. Change to an Extended Repayment Plan

If you have federal student loans, the standard repayment plan requires you to pay off your debt over ten years. But, if you qualify, you can choose to switch to the Extended Repayment Plan. 

The Extended Repayment Plan gives you up to 25 years to pay your loans off in full. Making your repayment timeline longer reduces each monthly payment, although you will pay more interest over time and make payments for longer. 

You'll need at least $30,000 in federal direct or FFEL loans to qualify for this option. 

2. Choose an Income-Driven Repayment Plan

Borrowers with federal Direct Loans can explore this approach to lowering student loan payment obligations. There are four different income-driven plans, each of which cap monthly payments at a specific percentage of income. 

Depending on the plan you choose, your loans will be repaid over 20 to 25 years, and any remaining loan balance will be forgiven at the end of your payoff term. You will make payments for longer with this payoff plan, and you will end up paying more interest over time. But your monthly payments may be much lower than under the standard repayment plan and, in some cases, could be as low as $0. 

3. Choose an Income-Sensitive Repayment Plan

Income-Sensitive Repayment Plans are available to borrowers with FFEL Loans. If you choose this repayment plan, you'll make monthly payments based on your income. Depending on your earnings, this could result in lower monthly payments. 

With an Income-Sensitive Repayment Plan, loans are fully repaid within 15 years. Although your repayment timeline is longer, and you will likely pay more interest over time, you'll still make your monthly payments lower. 

4. Change to a Graduated Repayment Plan

Borrowers with federal student loans can also choose a Graduated Repayment Plan. This reduces monthly payments, at least temporarily, compared with the Standard Repayment Plan. 

A Graduated Repayment Plan sets initial payments low, regardless of what your current income is. The amount you'll have to pay each month then increases every two years. You still have the same 10-year payoff time as you would under the Standard Repayment Plan, though, so your payments, later on, will end up higher in order to ensure you repay your debt on schedule. 

5. Consider a Direct Consolidation Loan

Consolidating your loans is another option for those interested in figuring out how to lower student loan payments. 

A Direct Consolidation Loan is available from the Department of Education for federal student loans. If you have multiple federal loans, you can combine them all into one, which could result in one lower monthly payment. Consolidation also allows you to extend your repayment time for up to 30 years, which can further reduce monthly payments. 

6. Look for a job offering repayment assistance

Some employers offer student loan repayment assistance as an employee benefit. Finding a job that offers this perk could allow you to make smaller monthly payments since your employer is picking up some of the tab. It could also lower total payoff costs thanks to your employer's contribution. 

7. Explore student loan forgiveness or repayment options 

Loan forgiveness is a different approach to reducing student loan payment obligations. 

There are forgiveness programs available for specific jobs, such as the National Health Services Corp Loan Repayment Program. There are also state-specific forgiveness or repayment programs. And anyone with eligible federal student loans could also become eligible for Public Service Loan Forgiveness through the Department of Education if you work for a qualifying non-profit or government organization.

If you qualify for forgiveness, you won't pay your loans for as long or spend as much to pay them back. 

8. Set up automatic repayment

If you have federal student loans, you can qualify for a 0.25% autopay discount. Many private student loan lenders offer an autopay discount as well. 

These savings can reduce the interest you pay, making the total costs of paying off student loan debt more affordable. Although a 0.25% interest rate reduction isn't huge, it can make a difference over time. 

9. Pay off your loans strategically 

If you have multiple student loans, it could be smart to focus on paying off higher interest rate debt first. You'll want to make the minimum payment on all your loans, of course, but if you have extra payments to make, devote them to retiring your higher-interest debt ASAP. 

By being strategic about the order in which your loans get repaid, you can reduce the interest costs you pay over time. 

10. Refinance your student loans 

Finally, if you're considering how to lower student loan payments on private student loans, refinancing could be a great solution. Refinancing means getting a new student loan and using the proceeds to repay existing debt. 

While you can refinance both federal and private loans, refinancing federal loans would involve giving up borrower benefits. When you refinance private loans, you're just switching from one private lender to another, so you aren't forfeiting any benefits.

If you can reduce the interest rate on your new student loans compared with your existing debt, you can save money over time on loan repayment. And depending on the repayment timeline you choose, you likely can also reduce monthly loan payments as well. 

Juno can help you qualify for a refinance loan at the best possible rate for your situation. When you join Juno, we use the power of collective bargaining to help you save money on debt payoff. We get groups of borrowers together and make lenders compete for their business, which enables each borrower to qualify at a competitive rate. Learn more about Juno today

Christy Rakoczy Bieber
Written By
Christy Rakoczy Bieber

Christy Rakoczy Bieber is a full-time personal finance and legal writer. She is a graduate of UCLA School of Law and the University of Rochester. Christy was previously a college teacher with experience writing textbooks and serving as a subject matter expert.

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