How to Reduce Your Loan Payments

By Victoria Robertson on November 18, 2017

Paying for college is not easy. In fact, most students leave college with debt because the initial cost of going to school is far too high. For that reason, college students must take out loans to help cover the cost of tuition, especially if their parents are unable to assist.

Student loans can be scary, but it’s not until you graduate that you realize just how scary. Your monthly loan payments typically don’t start for a few months (due to the grace period upon graduation), but when they do, it’s overwhelming, especially if you haven’t yet been able to start a full-time position.

In my own experience, I was able to obtain a job immediately following graduation. However, that being said, it was a part-time opportunity that would, down the road, transition into a full-time position. I was fortunate enough to be taken full-time prior to my loan repayment due date. Others are not this lucky.

So what do you do if you’re not ready to begin paying back your loan? Or at the very least, how do you lower your monthly payments to make them more manageable?

The unfortunate truth is that there is no right answer. In fact, more often than not, you’re going to find yourself in a position in which you’re stuck paying what you’re told, which is stressful.

That being said, there are a few options that you will want to look into, as they may just help to keep you afloat in a time period where money might be scarce, especially in the beginning of your career.

The first thing you will need to consider is the type of loan you have. With federal loans, you have a bit more flexibility in terms of changing your payments. When considering private student loans, your options are much more limited and dependent on the loan provider you have chosen. Sallie Mae, for instance, no longer assists in refinancing loans, which means you will have higher monthly payments.

If you do have a federal loan, there is the option to consolidate your loans, which essentially means you are combining all federal loans you have into one, so there is one, fixed monthly payment for you. Typically, this will lower your monthly payment, but that is not always the case. If you’re concerned about how much you will need to pay back and whether or not consolidation is the smart choice for you, I would speak with a financial adviser and share your situation.

In addition, just like there’s an option for homeowners, it is possible to refinance your student loans. That being said, this is again dependent on the type of loan you have and the repayment plan you chose upon taking the loans out. However, for many, this is another cost saving option that you’ll want to take advantage of if you’re able to.

However, one of the best options, in my opinion, is the income-driven repayment plan. This plan is great for those with low-paying, entry-level positions, as you will only need to pay back what’s financially feasible for you within a month.

So let’s say you have a $30K starting salary; the income-driven plan will say that you only need to pay a fixed portion of that salary towards your loan every month. This makes sure that you are spending the same percentage every month, meaning you’re not spending large sums of money (more than financially feasible) towards your loan every month. If this option is available to you (because again, it’s not available to everyone), definitely take advantage of it!

These are just a couple of ways to save a little bit of money, but there are other options out there as well. What it’s going to come down to is research. Start digging. Ask questions of your student loan provider, run searches on the best ways to save money on your loans, ask friends and family for advice, etc.

I promise that if you begin looking into this seriously, you’re going to find an option that not only works for you, but that saves you enough money that your student loan debt isn’t going to be a large concern in the future.

So know the details of your loan, know what’s available to you and get out there and start working. Also keep in mind that many of these options are only available if your payments are made on time every month, so don’t fall behind on those payments! Make sure you’re taking care of what you can control and don’t let you loans fall through the cracks.

Don’t allow your loans to become a large stress looming over your life – manage what you’re able to and find help for the rest. There are plenty of resources out there available to you, you just need to get out there and find them!

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