How can I lower my private student loan payments? This is possible, but it is a very complicated and hectic process. These processes are never easy, just so you know.
How Can I Lower My Private Student Loan Payments
There are various ways to lower your private student loan payments. And which of the options that will be best for you depends on your financial situation and whether it is that you have private or federal loans and in this case private student loans.
If it is that you have stable finances or not but however want a smaller student loan payment in order to free up extra cash every month, these very strategies could just be it for you.
Refinance Some or All of Your Loan Debts
If you already have a solid income as well as a strong credit score, then you may just qualify for a lower interest rate and a lower monthly payment via s student loan refinance.
Refinancing as you should know also gives you the opportunity to change your term. A longer loan term with a lower interest rate will effectively cut down your monthly payment the most. But you will however also get to pay more overall in interest rather than in the case of going with a shorter loan term.
And just as you can refinance federal loans, you also can do the same with private student loans, but the thing is that you can only refinance with a private lender as you cannot transfer private loans to the federal government.
Select an Income-Driven Repayment Plan
This very option is only available for federal student loans as only a handful of private lenders offer an income-driven repayment option.
And depending on the size of your income, your monthly loan payment could be very lower and even as low as zero dollars for every month. You should ask your servicer of which income-driven plan will result in the lowest monthly payment if that’s your main goal.
You however have to recertify your income every single year to stay on an income-driven repayment plan; otherwise, you will ultimately end up back on a standard plan, and then your monthly payment will likely increase.
One major drawback of income-driven repayment however is that it will take longer than a standard repayment plan in paying off your loan. This however results in you paying more in interest over the life span of the loan. You also could end up with a higher monthly payment as your income increases.
Ask For a Temporary Decrease in Payment
If it is that you are struggling to make your monthly student loan payment, you can easily ask your private lender about reducing your payments temporarily in a bid to avoid default.
Your private lender could easily and effectively modify your loan simply by reducing your monthly payment or interest rate for a short period of time. You should make contact with your loan servicer in order to find out what short-term payment modification options they offer, what is needed to apply as well as on how to get started.
Federal loan servicers on the other hand will not lower your payment temporarily. The only offer they have for you is longer-term options such as what is available through income-driven repayment.
Forbearance or Deferment
Forbearance and deferment as you know will stop your payments temporarily. That being said, it works differently for both federal and private student loans. If you have private student loans, your options for forbearance and deferment can be different. You should do well to connect with your lender to see what options are available to you and the type of information that is also needed to apply
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