In the last few years, there has been a growing need to reduce student loan payments. Many students are struggling to make ends meet during college and struggle to pay for their education. As a result, many students are turning to debt consolidation for help with reducing student loan payments. It is very important that borrowers consider the various options available to them in order to reduce student loan payments. Find out how you can lower your student loan payments through one or more of the following options.
Income-driven repayment plans are among the most popular ways to reduce student loan payments. With an income-driven repayment plan, borrowers have the option of reducing their student loan payments based on their income. There are many benefits to this type of repayment plan including the ability to avoid late fees and penalties if you don’t repay your loan on time.
There are several disadvantages to income-based repayment plans. First, this repayment plan is only good for students who are currently enrolled at an accredited school. If you are considering an income-based repayment plan, make sure your school is approved for one. Second, income-based repayment plans usually only offer a fixed interest rate. You will not be able to change your repayment period in an income-based repayment plan. This means that you will have to deal with your current lender.
Loan forgiveness programs are another way to reduce student loan payments. Loan forgiveness programs are designed for people who have exhausted all federal or private loans but are unable to repay their loans because of a financial hardship. Loan forgiveness will give eligible borrowers a second chance to repay their loans and save themselves from bankruptcy. Eligible borrowers can apply for a loan forgiveness plan even if they have already entered into bankruptcy.
Debt consolidation is another option to lower student loan payments. This is a great choice for borrowers who are struggling to manage multiple loans and interest rates. Under this program, borrowers can consolidate both federal and private debt into one loan. In some cases, the interest rates of the merged debts may be lower than the rates of the separate debts.
Some lenders provide students with grace periods, after which they are required to begin paying their monthly bills. If a borrower qualifies for this grace period, he does not have to start paying his debt until his grace period ends. However, borrowers must still pay their bills on time to keep their eligibility. Eligibility requirements vary by lender. For more information on qualifying for different grace periods, borrowers should check with their lender’s online website.
Another option to lower student loan payments is to get a lower interest rate. Federal government loans offer some of the lowest interest rates available to income-based repayment borrowers. Students can also avail of fixed-rate interest rates for the life of their loans. Lenders may also reduce the interest rate on federal subsidized and unsubsidized student loans if the borrowers are enrolled in a federal service that is qualified. Eligibility requirements vary by type of service.
Private lenders may not offer as many options as the federal government. However, they too offer lower interest rates to income-based repayment borrowers. Students who wish to lower their student loan payments can contact private lenders directly to negotiate payment plans and interest rates. Some private lenders may also reduce payment options or eliminate them altogether for a lower payment. Private lenders often require borrowers to have good credit and cosigner status.
If these options do not work, some borrowers can contact their federal service to negotiate payment plans. Most students must maintain good academic standing to stay eligible for federal student aid. Income-based repayment programs benefit these students because they pay more per month towards the principle of the loan while also receiving more money each month in the form of a loan discount. Students who do not qualify for income-based repayment programs can still lower their student loan payments by paying extra towards the interest on the principal. This does not mean the students will pay more in total; however, they will receive a smaller lump sum payment each month.
Students with poor payment history can use forbearance options to reduce student loan payments. A forbearance is when the lender allows the borrower to miss payments for a set period of time. The period could be three months to two years. Before the start of the forbearance, the borrower must still meet all payment requirements.
There are a number of financial resources on the web to help student loan borrowers who need help. There are also many resources on college financial aid websites and at the federal student aid office. These sources can provide information on which programs, grants and loans are available to help pay for school. Some websites provide applications for federal student aid loans. Others provide resources to find scholarships, grants, work study, and even work-study programs that are funded through the government.