How to Pay Low Student Loan Payments

When you have a low student loan payment each month, you maximize the amount of money in your bank account. Via options such as income-contingent payment, extended repayment and graduated repayment, borrowers can hold onto more of their hard-earned cash while paying a small percentage toward their outstanding student loans. Yet, the longer you pay for your loan, the more interest the loan accrues. Even if your financial situation doesn't allow you to commit to a higher student loan payment in writing, you have the option of paying more toward your loan when you can.

Instructions

1

Speak to a loan counselor and ask about your options for loan repayment. Income-contingent payments are based on 15 percent of your current income--as low as $5--and last up to 25 years for Direct Loan borrowers only, borrowers who obtain loans directly from the federal government. As your income increases, payments increase. Income-sensitive repayment, for FFELP borrowers, works the same as income-contingent but only lasts up to 10 years. Federal Family Education Loan Program loans are funded by private lenders, such as banks and credit unions. Income-based payments for Direct Loan or FFELP borrowers function similarly to income-sensitive and income-contingent plans and last up to 25 years. A graduated repayment plan allows you to pay only interest on your student loan for up to four years. Once payments begin, they gradually increase so that you pay off your loan within 10 years. Extended repayment plans extend payments for your loan from a period of 12 to 30 years, making the payments lower than with a standard repayment plan of 10 years.

2

Write down the pros and cons of each type of repayment plan. Think about your income and other expenses once you enter the loan-repayment phase. Make a decision based on the information the counselor has provided and your list of pros and cons. Tell the loan counselor which payment plan you want to implement to begin paying off your loans.

3

Create a budget. Write all your monthly expenses on paper and add them together to figure the total, including your current student loan payment. Don't forget to include expenses for entertainment, gasoline, groceries and clothing.

4

Subtract the the sum of your expenses from your monthly net income to find out how much money you have left over after paying all of your expenses.

5

Put aside a certain amount of extra money each month to pay toward your student loans, as little or as much as you can afford. If your finances allow, make an extra payment every few months to reduce the balance of your loan.