Note that the government has paused all repayment on federally held student loans through the end of 2022, with no interest to be charged during that period and no loans to be held delinquent or in default.
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When you’re struggling to make ends meet, your student loan payments can feel like the heaviest ball and chain weighing down your finances.
If you have federal student loans, there are many options for lowering or pausing your payments. You can opt for an income-driven repayment plan, deferment or forbearance.
But what if you have private student loans?
If you’re interested in learning how to lower private student loan payments, have a look at your options and which strategies work best. Specifically, let’s review these topics:
- Comparing federal vs. private student loan payments
- Lowering payments with forbearance or deferment
- Contacting your lender to afford loan payments
- Ways to lower private loan payments on your own
- Creating a strategy with your lender moving forward
Remember, not all student loan lenders are created equal. Especially if you compare private and federal student loan lenders.
Federal student loans are originated by the Department of Education and come with standard benefits and protections.
Usually banks and other private financial institutions provide private student loans. And since private student loans are offered by various lenders, there is no standardized protocol for dealing with payments. In other words, each lender might do things a little bit differently.
No matter where you stand on debt, though, it’s important to come up with a good debt repayment plan to help you reduce what you pay and get your bills under control.
If you’re wondering how to lower private student loan payments, consider deferment or forbearance.
Both of these measures allow you to temporarily postpone your student loan payments for different reasons.
For instance, Sallie Mae, a popular private student loan lender, offers a deferment for borrowers going back to school or pursuing an internship or residency. There’s also a forbearance option if you run into financial difficulties.
CommonBond, another private student loan lender, also offers forbearance for economic hardship for up to three months at a time. And many private lenders are willing to offer a pause if you are in school or on active military duty.
Both deferments and forbearance are usually offered by private lenders under specific circumstances.
|For more, check out: Private Student Loan Options That Let You Pause Payments|
It’s important to note that interest usually continues to accrue on your private student loans while they’re in deferment or forbearance.
If you are trying to come up with a strategy for how to lower private student loan payments, consider contacting your lender.
“Borrowers who are struggling financially should contact the lender to ask about their options for financial relief,” Mark Kantrowitz, a leading student loan expert, told Student Loan Hero.
And if you’ve defaulted on your private student loans or are at risk of defaulting, you should ask your lender about any alternative payment plans they offer.
These plans may be considered on a case-by-case basis. To avoid student loan default and any other issues down the road, consider ways you can keep your loans in good standing by making the payments you can after more pressing matters are taken care of.
Unfortunately, private student loans don’t usually come with income-based repayment options or forgiveness options like federal loans. Additionally, private lenders don’t offer as many flexible repayment options as federal student loans.
“Private lenders have no obligation to offer these options on private student loans, but do so because it is more profitable to have a borrower who is current than a borrower in default,” Kantrowitz said.
If you can’t afford private student loan payments, get in touch with your lender as soon as possible, and discuss your options. It’s better to communicate and be proactive, instead of risking default, which could affect your credit score.
Aside from what your lender can offer you, there are other things you can do to improve your situation:
- Opt for a bare-bones budget
- Prioritize earning more income
- Apply for autopay or auto-debit
- Seek out loan repayment assistance programs
- Refinance your private student loans
A bare-bones budget is a budget that focuses only on your needs, such as food and shelter.
It’s not necessarily fun to cut back on certain things just to pay back your student loans. But if you want to avoid default, your budget is the first place to look.
Yes, it’s easier said than done, but investigate side hustles and entrepreneurial pursuits that could increase your earnings. You might also consider asking for a raise, seeking a promotion, working overtime or adding a second job.
This is an additional way to save some money on your student loans. This can lower your interest rate by 0.25 percent points with the majority of private student loan lenders.
Of course, you only want to do this once you can truly afford your student loan payments. Otherwise, you could be hit with an overdraft fee or insufficient fee instead.
Loan forgiveness isn’t exclusive to federal loans, as there are many state- and employer-based programs that help private loan borrowers repay their debt. Just keep in mind that these programs are typically meant for borrowers in certain career fields or locations who may be willing to work.
Another way you can lower your private student loan payments and make them more manageable is to refinance. By refinancing student loans to a longer term, you can reduce your monthly payments, creating breathing room in your schedule.
Additionally, in some cases refinancing — even to a longer term — can save you money, if you get a lower interest rate.
However, in order to refinance your student loans, you need to meet the credit and income requirements set by the lenders. This is another type of private student loan that replaces your current debts with new loan terms that might be more manageable in your situation.
If you are unable to lower private student loan payments, you may wonder if you can opt for bankruptcy to help you start fresh.
While getting your private student loans discharged in bankruptcy court isn’t totally impossible, it’s pretty rare.
“It is almost impossible to get student loans discharged in bankruptcy,” Kantrowitz said. “Doing so requires demonstrating that the student loans represent an undue hardship on the borrower and the borrower’s dependents in an adversarial proceeding.”
“A very small percentage of borrowers are successful in getting their student loans discharged in bankruptcy,” Kantrowitz added.
If you want to learn how to lower private student loan payments, the first thing you need to do is contact your lender and discuss what options are available for you.
And if you truly can’t afford your loan payments, look at your income and expenses to see if there are changes that can be made.
Ultimately, it’s important for you to stay in touch with your lender and pay what you can to avoid default at all costs.
If your lender is unhelpful or if you’d like more direct help, considering hiring a no- or low-cost student loan counselor or lawyer.
Andrew Pentis contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|2.49% – 11.72%1||Undergrad & Graduate|
|2.50% – 6.30%2||Undergrad & Graduate|
|4.13% – 7.39%3||Undergrad & Graduate|
|2.49% – 7.99%4||Undergrad & Graduate|
|2.49% – 7.99%5||Undergrad & Graduate|
|3.24% – 8.24%6||Undergrad & Graduate|
|2.48% – 7.98%||Undergrad |
|1.74% – 7.99%7||Undergrad & Graduate|
|3.69% – 9.92%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 6, 2022.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $9 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
3 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 09/09/2022 student loan refinancing rates range from 4.13% APR – 7.39% Variable APR with AutoPay and 2.99% APR – 9.93% Fixed APR with AutoPay.
4 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
You can choose between fixed and variable rates. Fixed interest rates are 3.99% – 8.74% APR (3.74% – 8.49% APR with Auto Pay discount). Starting variable interest rates are 2.74% APR to 8.24% APR (2.49% – 7.99% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.
5 Important Disclosures for Navient.
6 Important Disclosures for SoFi.
Fixed rates range from 3.99% APR to 8.24% APR with a 0.25% autopay discount. Variable rates from 3.24% APR to 8.24% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
7 Important Disclosures for Purefy.
Purefy Student Loan Refinancing Rate and Terms Disclosure: Annual Percentage Rates (APR) ranges and examples are based on information provided to Purefy by lenders participating in Purefy’s rate comparison platform. For student loan refinancing, the participating lenders offer fixed rates ranging from 2.73% – 7.99% APR, and variable rates ranging from 1.74% – 7.99% APR. The maximum variable rate is 25.00%. Your interest rate will be based on the lender’s requirements. In most cases, lenders determine the interest rates based on your credit score, degree type and other credit and financial criteria. Only borrowers with excellent credit and meeting other lender criteria will qualify for the lowest rate available. Rates and terms are subject to change at any time without notice. Terms and conditions apply.
8 Important Disclosures for Citizens.
Education Refinance Loan Rate Disclosure: Variable interest rates range from 3.69%-9.92% (3.69%-9.92% APR). Fixed interest rates range from 4.49%-10.11% (4.49%-10.11% APR).
Undergraduate Rate Disclosure: Variable interest rates range from 6.39%- 9.60% (6.39% – 9.60% APR). Fixed interest rates range from 6.58% – 9.79% (6.58% – 9.79% APR).
Graduate Rate Disclosure: Variable interest rates range from 3.69% – 9.16% (3.69% – 9.16% APR). Fixed interest rates range from 4.49% – 9.35% (4.49% – 9.35% APR).
Education Refinance Loan for Parents Rate Disclosure: Variable interest rates range from 3.69%- 9.09% (3.69%- 9.09% APR). Fixed interest rates range from 4.49% – 9.28% (4.49% – 9.28% APR).
Medical Residency Refinance Loan Rate Disclosure: Variable interest rates range from 3.69% – 9.16% (3.69% – 9.16% APR). Fixed interest rates range from 4.49% – 9.35% (4.49% – 9.35% APR).