Many people struggle to repay their student debt, and with good reason. More than half of bachelor’s degree recipients in 2021-22 graduated with student debt, and the average debt among those borrowers was $29,400, according to recent data from College Board.
Current student loan refinance rates
The good news is student loan repayment help is out there. This guide will help you understand your options if you need some extra assistance repaying the debt you took on to earn your degree.
Federal student loan repayment help
If you're struggling to pay off student loans issued by the Department of Education, there are many options to help make this debt more affordable.
Income-driven repayment plans
Income-driven repayment plans cap the amount you're required to pay each month at a percentage of your income. This can help make your monthly payments more affordable. In fact, they can be as low as $0, depending on your earnings.
There are four income-driven payment plans:
- Saving on a Valuable Education (SAVE) plan: Payments are generally set at 10% of your discretionary income under the SAVE plan. After 20 years (or 25 if you took out loans for graduate or professional study), any remaining loan balance is forgiven.
- Pay As You Earn (PAYE) plan: Payments are typically set at 10% of your discretionary income but can't exceed what you'd pay on the Standard Repayment plan. After 20 years, any outstanding loan balance is forgiven.
- Income-Based Repayment (IBR) plan: If you're a new borrower on or after July 1, 2014, payments are generally 10% of your discretionary income but can't exceed what you'd pay on the Standard Repayment plan. If you aren't a new borrower before then, you must pay 15% of discretionary income. New borrowers will have their remaining debt forgiven after 20 years, while those who aren't new borrowers will need to make payments for 25 years before receiving forgiveness.
- Income-Contingent Repayment (ICR) plan: This plan involves paying either 20% of your discretionary income or the amount you'd pay if you had a fixed repayment plan with a 12-year term, adjusted based on income. After 25 years, any remaining balance is forgiven.
You can apply online for an income-driven plan to help bring your monthly payment down if you need help with student loan repayment.
Loan forgiveness programs
There are also some student loan forgiveness programs that can help wipe away some of what you owe. These include:
- Public Service Loan Forgiveness: If you work full-time for an eligible not-for-profit organization or government entity, you can become eligible for PSLF after making 120 qualifying on-time payments on an income-driven plan. This would allow you to eliminate any remaining debt balance.
- Teacher Loan Forgiveness: This program provides forgiveness of up to $17,500 if you have a qualifying Direct Loan or FFEL Loan and you teach full-time for 5 complete academic years in a low-income school or educational service agency. However, you can't double-dip and use this 5-year period to work toward PSLF.
- Income-driven repayment forgiveness: If you complete your income-driven repayment program and still have a remaining balance on your debt after making payments for the required length of time, any remaining loan balance will be forgiven.
Be sure to explore all of these options to eliminate your student loan debt without having to pay back every dollar you borrowed.
Loan discharge programs
Loan discharge programs can also offer debt relief in certain cases. A few ways you may become eligible for discharge include:
- Your school closed: If you have an eligible federal loan and your school closed either while you were attending or shortly after your withdrawal, you may be able to get loans discharged.
- Your school misled you: This is a borrower defense discharge, and you must prove that your school deceived you or engaged in other illegal misconduct.
- You become totally and permanently disabled: If you have eligible loans and documentation of a total and permanent disability, you could have your loan balance erased.
More student loan repayment options
Beyond the repayment help mentioned above, there are other options that could apply to both federal and private student loans.
Contact your lender for your options
Your lender may offer repayment assistance programs. Since these can vary by lender, if you have private student loans, reach out to your loan servicer to let them know you are struggling and see what they can do to assist you. Lenders may temporarily pause your payments or reduce your interest rate — especially if you're proactive and reach out early.
Check out your state’s repayment assistance programs
States may offer repayment assistance programs separate from those on the federal level, especially for those who work in certain industries such as health care or teaching. Check with your state's Department of Education to find out what type of help is available.
See if your employer offers repayment assistance
Some private employers provide student loan repayment help as a workplace benefit, including companies like Ally and Aetna. These programs don't result in loan forgiveness, but you get help paying down your debt either because your employer matches your own payments or because you become entitled to payment help with a service commitment.
There are also loan repayment programs available to those who work in certain professions, such as the National Health Service Corps Loan Repayment Program.
Explore refinancing options
By refinancing student loans, you may be able to reduce interest rates and total borrowing costs, making repayment easier. This process involves getting a new loan at better terms than your existing debt and using the proceeds from it to pay off your previous lender(s).
Refinancing is typically best if you have private student loans because refinancing your federal ones results in losing access to federal protections and repayment programs that might be useful to you.
What if I can’t make my monthly payment?
If you can’t make your monthly payments, there are some options to consider. Here's what you can do:
- Communicate with your lender: Talking with your lender could open the door to assistance programs that help you avoid damaged credit and increased costs.
- Student loan forbearance: Both federal and private loans can be put into forbearance, although the rules differ among private lenders. Forbearance is a pause to your payments for a period of time. Interest keeps accruing during this time and you'll eventually need to resume payments, so this generally works best as a temporary solution.
- Student loan deferment: Deferment is another way to pause payments. While most loans will continue to accrue interest while payments are paused, Direct Subsidized Loans do not accrue interest during the deferment period. Without added interest costs, it can be easier to begin paying off debt again when you get back on your feet, since your balance won't grow while payments are paused.
- Enroll in an income-based repayment plan: Income-based repayment plans for federal loans give you the option to set payments at an affordable percentage of your income, with payments sometimes coming in at $0 a month.
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