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Updated on Wednesday, April 24, 2019
If you’re struggling to keep up with payments on your federal student loans, options like income-driven repayment can help. But if you can’t pay your private student loans, you might not know where to turn.
Unlike the federal government, private lenders usually aren’t so flexible when it comes to adjusting monthly payments. But that doesn’t mean all hope is lost if you need a break from your bills.
If you’re wondering how to lower private student loan payments, here are six strategies that could help.
1. Can’t pay private student loans? Ask about forbearance
While federal student loans come with a variety of repayment plans, private student loan options are up to the discretion of each lender. Whether you borrowed from a bank, credit union or online lender, you’ll have to check with your lender to see if it offers options for lowering your payments.
Some private lenders, like CommonBond and Sallie Mae, let you temporarily postpone payments through deferment or forbearance. Interest may continue to accrue during this period, but you won’t have to make payments. This break could give you the breathing room you need until you can get your finances in better shape.
Again, not every lender offers forbearance, but it’s worth checking with yours to see if it provides this borrower protection. It could also help to track down your student loan promissory note or contract for more details on your repayment agreement and options.
2. Speak with your lender about adjusting payments
Even if your lender won’t let you pause payments outright, it might be open to lowering your monthly bill — after all, it doesn’t want you to walk away from your debt completely and default.
So prepare your case, and call your lender with detailed reasons for your request. While your bank or credit union is under no obligation to help you, it might be willing to lower payments.
At the same time, make sure you’re truly speaking with your lender and not some third-party service making overblown promises. Unfortunately, there are student loan scammers out there trying to prey on borrowers in difficult situations. If someone is promising to wipe away your debt overnight or charging you a hefty fee for consolidation, beware.
3. Learn how to lower private student loan payments through refinancing
A private lender may or may not be open to adjusting your payments upon request, but you can always restructure your debt through student loan refinancing, so long as you qualify. When you refinance, you swap one or more of your old student loans for a new one with a new lender.
At this point, you can choose new repayment terms, often between five and 20 years. A longer repayment term could lower your student loan payments, making them less burdensome on your bank account from month to month.
You might also snag a lower interest rate, which could save you money over the life of your debt. That said, only creditworthy borrowers (or those with a creditworthy cosigner) can qualify for refinancing.
Refinancing is a surefire way to adjust your monthly payments, but it’s not accessible for everyone.
4. Explore student loan repayment assistance programs
Forgiveness programs such as Public Service Loan Forgiveness will wipe away federal student debt, but they typically don’t help with private student loans. Luckily, there are some student loan repayment assistance programs (LRAPs) that will help with private student loan debt.
Most states and even some universities offer LRAPs to student loan borrowers who live in certain areas or work in specific occupations. Some common jobs that often qualify include doctors and nurses, dentists, pharmacists, veterinarians and teachers.
If you’re eligible, an LRAP could pay off thousands of dollars of your student loans for you. You might also explore companies that offer a student loan matching benefit, especially if you’re open to changing your job.
This outside assistance could go a long way toward paying off your private student loan debt.
5. Find ways to increase your income and decrease your spending
Outside of help from your lender or loan assistance programs, you can use strategies to conquer your private student loan debt on your own.
A great first step is to sit down and come up with a budget. Write down your monthly income and expenses, and root out areas where you could spend less. If you can cut down on spending, you might have more room in your budget for extra student loan payments to speed you way out of debt.
Of course, creating a savings habit will only take you so far, especially if you’re working with a limited income — so you should also focus your efforts on increasing your income.
Maybe you could further your education and gain the skills you need for a higher-paying job. Or perhaps you could find ways to get a promotion and pay raise at your current workplace.
And beyond boosting your main salary, consider side hustles for extra cash. From driving for Lyft to doing jobs for TaskRabbit to freelancing on Upwork, there are lots of possibilities for making extra money.
All this hustling might require sacrifice in other areas of your life; still, it could be worth the extra effort to get out from under the shadow of student debt.
6. Consider bankruptcy as a last resort
Discharging student loans in bankruptcy is rare, but not impossible. If you can prove your student loans present severe financial hardship, you might be able to get them wiped away in Chapter 7 or Chapter 13 bankruptcy.
Of course, declaring bankruptcy can take a long time, destroy your credit and cost you thousands in legal fees— it’s a route that’s really only for those in serious financial straits.
If you are considering bankruptcy, try to speak with a student loan lawyer first so you understand exactly how it could affect your student debt. In some cases you may be able to find low-cost or even free legal aid.
Learn how to lower private student loan payments and avoid default
When if comes to federal loans, you can almost always trim your monthly payments with an income-driven plan or similar strategy. But if you’re trying to figure out how to lower private student loan payments, you could be stuck with the repayment plan you agreed to in the beginning.
Sill, it’s worth checking your contract for additional options, as well as asking your lender about forbearance or adjusted payments. And if you can qualify for refinancing, it could be a savvy way to restructure your debt.
Whatever you do, don’t wait to deal with your student loan situation, especially if you’re struggling to pay your bills. Ignoring the problem could just cause your loans to fall into delinquency or even default, which could make a bad situation worse.
So if you feel like you can’t pay your private student loans, be proactive about finding a solution that works for you.