Student loans can be difficult to manage. If you need student loan debt help, you’re not alone. According to Bloomberg News , more than $166.4 billion worth of student loans are delinquent.
With the average total student loan debt hovering right around $35,000 per person , it is no wonder that borrowers are looking for free help with student loan debt.
The good news is there is help with student loan debt available. If your student loans are stressing you out, and you’re worried about how you’ll make your monthly payments, don’t despair!
You may have options when it comes to managing your student debt, including options for choosing repayment plans and refinancing your student loans.
Considering a Federal Loan Repayment Plan
If you’re struggling to make your monthly federal student loan payments, it may be worth taking a look at your loan repayment plan. Federal student loans have several different loan repayment plans available, which may offer different monthly payment amounts based on your discretionary income and other factors.
Choosing a federal loan repayment plan that could give you a lower monthly payment, if available, could help you more easily make your monthly student loan payments.
You may have been placed on the Standard Repayment Plan when you graduated, which is the default for students repaying federal loans.
Under this plan, you have 10 years to pay off your student loans, and you make a fixed payment amount each month in order to ensure that your full loan is paid by the end of the 10 years. This plan may have higher monthly payments than other federal repayment plans.
In addition to the Standard Repayment plan, one option is the Graduated Repayment Plan. Under this plan, loan payments are made over a 10 year period. But unlike the Standard Repayment plan, loan payments start at a lower amount and are gradually increased every two years.
Another option when it comes to federal repayment plans is the Extended Repayment Plan. The Extended Repayment Plan has a longer repayment term option—up to 25 years. Monthly payments under this plan can be either fixed or graduated amounts. The extended repayment term means that you may have lower monthly payments.
Don’t forget, however, that choosing a longer repayment period could cost you more over the life of the loan due to interest that accrues every month that the loan is still outstanding.
There are also four income-driven plans that calculate monthly payments based on a percentage of the borrower’s discretionary income. The percentage will vary based on the specific income-driven repayment plan you are enrolled in, but can be either 10%, 15%, or 20%. Depending on the plan, repayment is extended over 20 or 25 years .
With federal loans, you can change your repayment plan at any time. If you are interested in switching the plan you are enrolled in, the Federal Student Aid website offers a repayment calculator that could help give you an idea of what your monthly payments may be like under each of the different payment plans.
This could help you make an informed decision about which plan may work best for your personal situation, based on what you qualify for. You could also use our Student Loan Payoff Calculator to get an idea of when your loan payoff date may be based on your interest rate and monthly payments.
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Learning About Deferment and Forbearance
If you’re really in dire straits and can’t afford to make your normal monthly payments on your student loans at all, you may be able to put your federal student loans into deferment or forbearance.
These programs offer options to temporarily reduce your monthly payment amount or pause your monthly payments entirely for a limited period of time. Not all borrowers are eligible deferment or forbearance—in order to qualify you need to meet certain eligibility requirements.
If you’re interested in deferring your federal student loans to help with student loan debt, you’ll want to contact your student loan servicer. Your student loan servicer may require you to fill out paperwork or talk to an advisor before approving a deferral or forbearance of your student loans.
Student loan servicers may offer assistance with student loan debt management at no cost, and may be able to explain how student loan deferral or forbearance will work in your specific circumstances.
It is also important to know that during deferment, depending on the type of loan borrowed, the borrower may still be responsible for paying interest that accrues. If a loan is in forbearance, the borrower will be responsible for paying accrued interest.
While deferring your student loans can be helpful when you’re undergoing a brief period of economic hardship, it may not be as helpful when it comes to managing loans long-term, since interest may continue to accrue and neither option changes your loan repayment terms.
Understanding Student Loan Forgiveness
One source of federal student loan debt help are loan forgiveness programs. These programs essentially forgive a remaining portion of federal student loan debt after you meet certain requirements.
One of the most well-known loan forgiveness programs is the Public Service Loan Forgiveness program. This program offers federal student loan forgiveness for some people working full-time in qualifying public interest fields for 10 or more years.
Public Service Loan Forgiveness, which is sometimes known as “PSLF”, offers federal student loan forgiveness for certain public servants and non-profit employees who qualify after 120 on-time qualifying payments .
Unfortunately, PSLF isn’t available to everyone. To qualify for Public Service Loan Forgiveness, you must work for a qualifying employer.
Generally, government organizations and certain non-profits will be considered qualifying employers for the purpose of PSLF, but to be sure that your job counts for the PSLF program, you can submit a PSLF employment certification form to verify your employer’s eligibility for the program.
In addition to verifying that your job qualifies for PSLF, you’ll need to meet other eligibility requirements like working full time and making your 120 qualifying monthly payments on-time. If your payments are missing or late during a certain month, those payments won’t count towards the required 120 payments.
Considering Refinancing Your Student Loans
Another option for help with student loan debt may be refinancing your student loans. For some borrowers, refinancing student loans could help lower monthly payments or potentially reduce the money spent on interest over the life of the loan.
When you refinance your loans, a new private lender pays off your current federal and private student loans and offers you a new loan—one with hopefully a better interest rate or better repayment terms. Note: not all private lenders will refinance both private and federal student loans, but SoFi does.
Loan refinancing isn’t right for everyone, however, and if you refinance your federal loans they will no longer be eligible for any federal repayment assistance programs.
If refinancing is right for you, however, it could help provide a long-term solution to managing student loan debt. Exploring your refinancing options with a private lender can be a quick, mostly painless process. With SoFi, it only takes a few minutes to get a quote.
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If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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