How to Lower Your Federal Student Loan Payment

Students who graduate with $40,000 of federal student loans at 6.8 percent interest that need to be repaid over 10 years are faced with monthly payments of $460.32. On an entry-level salary, this can be a huge financial burden. If your student loan payments are putting a strain on your budget, look into other repayment plans to lower your payments. Extended repayment plans lower payments by stretching them out over 25 years instead of 10, graduated repayment plans start with low monthly payments that increase every two years, and income-based and income-contingent repayment plans calculate payment amounts as a percentage of your available income each year.

Instructions

1

Determine your annual salary by looking at your tax return from last year. This amount factors into your monthly payments under some of the repayment plans.

2

Look up the amounts and interest rates of all your federal student loans. If you do not know where to find this information, look up your loans in the National Student Loan Data System.

3

Visit the federal student loan repayment calculators listed in Resources. Input your student loan information and other information as requested to calculate your estimated monthly payment amounts under each type of repayment plan. Plans include the standard 10-year repayment, extended 25-year repayment, graduated 10- or 25-year repayment, income-contingent repayment and income-based repayment.

4

Compare the monthly payment amounts under the repayment plans and choose the one that best fits your needs.

5

Call the company that services your student loan. The company name and phone number is located on your student loan statements or you can look it up in the National Student Loan Data System.

6

Tell the customer service representative that you would like to lower your monthly payments by changing your repayment plan. Tell the lender which plan you think would work best for you or get assistance choosing a plan if you have not already made the decision.

7

Submit required documentation and forms as instructed by the customer service representative to complete your enrollment in the new repayment plan.