In pursuit of higher education, millions of Americans have racked up student loan debt. This debt hangs over many students like a cloud for years after graduation, making it difficult to pay the bills and to save for the future.
Fortunately, there are ways to reduce your payments — or even to wipe out your debt. Here are a few options:
Government options for reducing student loan debt
Let’s start with the official debt relief options offered by the government.
The government offers ways to defer, consolidate or even forgive certain student loans. The catch is you must have loans through the government — private loans aren’t eligible — and you may have to commit yourself to a career in public service.
Here’s some of what you can get :
Deferment or forbearance: If you’re having trouble making payments, your loan servicer to ask for a . While the details differ somewhat, both work by suspending or reducing your payments for a period.
Deferments can last longer, and the government may even pay your interest during that time. You typically need to meet requirements to get a deferment, such as being unemployed, in the military or in school. Forbearances can be general or mandatory or discretionary. Again, you need to meet requirements to be eligible.
Loan consolidation: Another option to reduce payments may be to . If you have multiple government loans, you can apply — at no cost — for a consolidation loan. This turns your multiple loans and monthly payments into one loan and one (hopefully lower) payment amount.
However, be aware that while selecting a longer repayment term may lower your monthly payments, it could also increase the overall amount you’re paying in interest over the life of your student loans.
Income-based repayment plans: The standard government repayment plan is 10 years, but that certainly isn’t your only option. Other repayment plans go as long as 20 years or longer. Check out the federal government’s Federal Student Aid webpage .
There are also several income-based repayment options:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Income-Based Repayment Plan
- Pay as You Earn Repayment Plan
- Income-Contingent Repayment Plan
These plans all have monthly payments tied to your income and can be ideal if you find yourself stuck in a low-wage job.
People employed by a government or not-for-profit organization might be eligible for loan forgiveness under this program.
If you are a teacher, you might be eligible for loan forgiveness under this program.
State-run programs: States might offer their own loan forgiveness programs to teachers, doctors and other professionals. You can learn more about federal forgiveness programs and government options on the .
Using a third-party company
You can apply for all of the above programs yourself. It costs nothing and may be as simple as making a call, sending an email or completing a form.
Still, some people find the process overwhelming and need a helping hand. While there are many for-profit companies willing to provide assistance, they sometimes do so for an exorbitant price. These companies may charge hundreds of dollars to fill out the same simple forms you could complete and submit for free. And you have to be careful: Some companies have been accused of fraud related to student loan consolidation.
So, before you choose a company, check with the Better Business Bureau and search for online reviews. Above all, be wary of any company insisting you should stop paying your loans while it negotiates your debt. That is a surefire way to default on your loans.
Third-party companies may also claim to help with private lenders. Again, there is really nothing they can do that you can’t do yourself — namely, refinance or try to negotiate a forbearance. Private loans offer little flexibility.
You can be matched with reputable third-party companies we recommend by visiting the MTN Student Loans Solution Center.
Have you tried to reduce your student loan payments? What did you try and how did it work? Share your experience in the comments below or on our .
Ari Cetron contributed to this post.