Like millions of other Americans, financial journalist Janet Alvarez was laid off from her job in 2009. She decided to ride out the recession by pursuing her MBA, racking up six figures in student loan debt along the way.

But when she graduated, the economy was still sputtering, and there were few jobs available for her, despite her advanced degree. Her credit score was in the gutter, and to top it off, she had tens of thousands of dollars in medical debt.

“I was really at a rock bottom,” said Alvarez.

But thanks to her professional background, she had the skills to dig up solutions to her massive debt problem. Through a combination of income-driven repayment and refinancing, she was able to lower her payments until she was in a position to aggressively tackle her lower student loan payments. Today she is nearly debt-free, and as the executive editor of personal finance site Wise Bread, she helps others navigate similar difficulties.

Whether you’re barely scraping by or simply want to pay less per month on your lower student loan payments there’s hope for getting those payments lowered.

1. Extend your repayment plan.

When you graduated from college, you were automatically enrolled in the standard repayment plan, the default plan for federal borrowers, which requires you to pay off your loan over 10 years. What you might not realize is that this plan is not your only option ― far from it, in fact.

One way to lower your monthly payments is to enroll in an extended payment plan. Adam Minsky, a lawyer whose practice is dedicated entirely to helping people with student loans, said this allows you to stretch out payments over up to 25 years. With more time to pay, the amount you have to hand over each month decreases.

The extended repayment option is available only to federal lower student loan payments borrowers (as are most repayment benefits). Additionally, you cannot have had an outstanding balance on any Direct Loans or Federal Family Education Loan (FFEL) Program loans before Oct. 7, 1998, and you must have at least $30,000 in Director FFEL loans.

The drawback? The longer you take to pay off your loan, the more you’ll pay in total interest. It’s important to ask yourself whether lower payments now are worth spending more on your loans over time.

2. Opt for a graduated payment plan.

If your income is lower student loan payments now but you expect it to increase over the next few years, a graduated repayment plan might give you the breathing room you need.

Rather than fixed payments over 25 years, this variation of the extended repayment plan starts off with monthly payments that gradually increase. Most federal loans require a payment period of just 10 years. However, if you consolidated any loans through the Department of Education, you may have 10 to 30 years to pay off the consolidated loan, depending on how much you owe.

Leave a comment

Your email address will not be published. Required fields are marked *