Is your monthly payment too high? Different student loan repayment plans may reduce your monthly payments.
- Standard Repayment Plan
If you have a fixed rate student loan you will pay a fixed amount each month for the life of the loan. If your student loan has a variable rate your monthly payment may change, higher or lower, depending on interest rate changes.
The following plans are available only with federally guaranteed student loans.
- Graduated Repayment Plan
Monthly payments start out low in the early years of repayment and increase in later years. The student loan is still paid in full over the same amount of time as the standard repayment plan, but you will pay more in interest.
- Extended Repayment Plan
Lowers your monthly payment by lengthening the time to repay your student loan, usually between 12 to 30 years, depending on the loan amount. You will pay more for your loan because interest will accrue over a longer period of time.
- Income Based Repayment Plan
Designed to keep your monthly payments manageable, the monthly student loan payment is based on your annual income and can fluctuate as your income changes.
Ask for Help if You're in Trouble
If you are temporarily unable to make your monthly payment, contact your lender or servicer immediately. You may be able to temporarily postpone or reduce your monthly payments with a deferment or forbearance while you are enrolled in school at least half-time, are unemployed or are experiencing financial hardship. You may be asked to provide supporting documentation.
The first option you should explore is deferment. Deferments are federal entitlements and have interest benefits for any subsidized portion of your student loans. There are a number of different deferments available for different situations, including unemployment, economic hardship, active duty military service and more. Private student loans do not qualify for deferments, but if you're experiencing difficulties making your payments be sure to contact your lender as it may have other options available to help you.
If you don't qualify for a deferment, your lender may offer you a forbearance. Forbearances carry no interest benefits and will increase the total amount you repay on your student loans, as well as increasing the monthly payment amounts once the forbearance ends. Postponing your payments with a forbearance should be the last option you consider. Most private student loan providers offer similar relief in cases of hardship.
A student loan is the responsibility of the borrower. If student loans are not repaid by the borrower, the loan will be in default.
The government tracks defaulted student loans. Nonpayment has a serious and lasting impact on your future.
There are serious consequences if you default.
- Damage to your credit rating
- Loss of eligibility for additional student loans
- Inability to secure a mortgage
- Assessment of collection fees which you are responsible for paying
- Loss of your professional license
- Garnishment of your wages
- Your cosigner, if applicable, is responsible for your student loan
- Your interest rates will soar
- In the case of federally guaranteed student loans, seizure of your tax refund / State and Federal tax lien
Avoid a loan default at all costs. Pay your student loans off and on time!