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11 Ways to Reduce Student Loan Payments

11 Ways to Reduce Student Loan Payments
Rebecca Safier
Rebecca SafierUpdated August 10, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
March 2025: The Saving on a Valuable Education (SAVE) Plan for federal student loan repayment is on hold due to a court injunction. As of late March, these loan repayment plans are available: Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment. Federal student loan consolidation applications are also live. To monitor the latest decisions on federal student loan plans, check the Federal Student Aid site.
The national student loan debt is about $1.77 trillion, with the average federal student loan debt balance totaling close to $38,000. If you’re one of the nearly 43 million borrowers with student debt, you may be looking for a way to lower your student loan payments. Fortunately, there are strategies for reducing your monthly student loan bills, so you can keep more of your hard-earned cash for yourself.Using one or more of these strategies could lower your monthly bills without causing your loans to go into delinquency or default. Here’s how to lower student loan payments so your education debt is no longer breaking the bank.

1. Signing Up for Graduated Repayment Plan

If you have federal student loans, you’re eligible for a variety of repayment plans that could lower your payments. One such plan is the graduated repayment plan. Like the standard repayment plan, the graduated plan has you pay off student loans over 10 years. However, instead of fixed monthly payments, you’ll start by paying a smaller amount, which then increases every two years. Your payment increase won’t be astronomical, though. In fact, your final payments will never be more than three times your initial payments. If you start by paying $100 per month, for instance, your final payments won’t be more than $300. The graduated repayment plan could be a good choice for borrowers who want to pay off their debt in 10 years and expect their income to increase in the future. 

2. Getting an Income-Driven Repayment (IDR) Plan

Another option for lowering payments on your federal student loan debt is applying for an income-driven repayment plan. There are four income-driven plans: Private student loans are not eligible for any federal repayment options, including IDR plans. Depending on your income and family size, all four IDR plans may offer a lower monthly payment compared with the Standard Repayment Plan.IDR plans adjust your monthly payments to a percentage of your discretionary income, either 5%, 10%, 15%, or 20%. You recertify your information every year and could see your payment change based on your income and family size. Some borrowers may qualify for $0 monthly payments depending on their income, family size, and specific IDR plan.All IDR plans can end with a borrower’s outstanding balance being forgiven at the end of the repayment period. Forgiveness may come after 20 or 25 years under any of the IDR plans, but forgiveness may come earlier for eligible SAVE Plan enrollees who had original principal balances of $12,000 or less.

3. Looking Into Extended Repayment Plans

If you owe $30,000 or more in federal student loans, you could be eligible for the extended repayment plan. The extended plan gives you 25 years to pay back your loans. Because it adds time to your repayment plan, you’ll see your monthly payments go down. It’s worth noting, though, that a longer repayment term means you’ll pay more interest over time. You can use the loan simulator tool on the Federal Student Aid website to compare your monthly payments and long-term interest costs on the various repayment plans. If you opt for the extended repayment plan, you can choose between fixed payments that stay the same every month or graduated payments that start out lower and increase over time. 

4. Consolidating Your Student Loans

Federal student loans are also eligible for loan consolidation via a Direct Consolidation loan. Through Direct loan consolidation, you can combine multiple loans into one for a single monthly payment. Your new interest rate will be the weighted average of your previous rates rounded up to the nearest one-eighth of one percent. After you consolidate, you can choose a new repayment term, such as income-driven or extended repayment. Depending on your loan amount, you have options of terms that range from 10 up to 30 years. Consolidating loans might also be a necessary step to make some loans eligible for certain repayment plans. If you owe Parent PLUS loans, for example, you have to consolidate them before you can put them on an income-driven repayment plan.Parent PLUS loans do not qualify for all of the IDR plans and loan forgiveness programs, so consolidating parent PLUS loans with other federal student loans may not be right for you.

5. Enrolling in Automatic Payments

Putting your loans on autopay is a great way to stay up to date on your payments without much legwork. Plus, most lenders offer a 0.25% reduction on your interest rate when you opt for autopay.Although this rate cut might not sound like much, it can slightly lower your monthly payments and lead to interest savings over time.

6. Moving 

If you’re open to changing locations, moving could also help you lower your student loan payments. Some cities and states offer student loan assistance for new residents. The Kansas Rural Opportunity Zones program, for instance, offers student loan reimbursement and tax incentives to new residents of certain counties in Kansas.Plus, some states have a lower cost of living than others or don’t charge state income taxes. With the savings you get by moving, you might be able to afford your student loan payments more easily or even pay your loans back faster.

7. Searching for an Employer Who Can Help

Not only do certain cities and states offer student loan incentive programs, but more employers are providing student loan benefits to employees. Companies like Google and SoFi will pay back a certain amount of student loans each year to their employees. If you’re open to job hunting, consider looking for an employer that offers a student loan matching benefit. 

8. Searching for Repayment Assistance Programs

You might have heard of federal student loan forgiveness programs such as Public Service Loan Forgiveness and Teacher Loan Forgiveness. But what you might not know is that many states, colleges, and private organizations offer student loan repayment assistance programs that can help you pay back federal and/or private student loans. Most of these programs require that you work in a certain profession in a high-needs or low-income setting. Some occupations that commonly qualify for student loan assistance include doctor, lawyer, pharmacist, dentist, nurse, and teacher. Check with your state, school, and any other affiliated organizations to see if you could qualify for student loan help. 

9. Asking for Temporary Payment Decrease

If you need to lower your student loan payments immediately, contact your loan servicer to see if it could temporarily reduce your bills. Since federal student loans are eligible for a variety of repayment plans, your servicer might direct you to one of those. But you could have luck with your private student loan servicer, which may offer a temporary decrease so you don’t miss a payment. Although there’s no guarantee of success, it’s worth communicating with your loan servicer to see if it’s willing to help. 

10. Using Forbearance or Deferment

If you need to pause payments completely, look into your options for forbearance or deferment. Federal student loans are eligible for both these programs if you’ve lost your job, gone back to school, or have another qualifying reason. Some private lenders offer temporary forbearance or deferment, as well. These options could be a lifesaver if you’ve run into financial hardship. But keep in mind that interest continues to accrue on most loan types even when payments are paused, so you could be facing an even larger debt balance when the forbearance or deferment comes to an end. 

11. Refinancing Your Student Loans

Refinancing your student loans is another strategy for lowering your student loan payments. When you refinance student loans, you trade them in for a new loan with different rates and terms. Depending on your credit, you could lower your rates by refinancing. Plus, you can select new repayment terms with an adjusted monthly payment. Most lenders let you choose a term as short as five years or as long as 20 years. Be cautious about refinancing federal student loans, though, because doing so means losing access to federal benefits, such as income-driven repayment plans and federal loan forgiveness programs. 

Refinance Student Loans With Lantern

Refinancing your student debt has the potential to lower your interest rate and monthly payments. Many refinancing lenders let you check your rates online with no impact on your credit score. By prequalifying online, you can compare multiple offers and see if one is the right fit for you. See how Lantern can help you refinance student loans by connecting you with competitive offers from leading lenders.Take control of your student loan debt today with Lantern.

Frequently Asked Questions

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About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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