How to Change My Student Loan Repayment Plan
Easily adjust your student loan payments. Discover how to change your federal or private repayment plan to fit your financial situation.
Changing a student loan repayment plan can significantly impact a borrower’s financial stability and the overall cost of their debt. Understanding the available options and the process for making such changes is a practical step to manage student loan obligations. This adjustment can lead to more manageable monthly payments or a faster path to debt freedom, depending on individual financial circumstances and goals.
Understanding Your Current Loan Details
Before changing a student loan repayment plan, gather information about existing loans. Identify whether loans are federal or private, as this distinction determines available repayment options. Federal loans are typically issued by the U.S. Department of Education; private loans come from banks, credit unions, or other financial institutions.
Borrowers can determine their federal loan servicer by logging into StudentAid.gov, where a “My Loan Servicers” section provides details on assigned servicers, loan status, and balances. For private loans, the servicer can usually be found by checking recent monthly statements, loan origination documents, or personal credit reports. Knowing the loan servicer is important for accessing account information and discussing changes.
Understanding the current repayment plan, outstanding loan balances, and interest rates for each loan is also necessary. This overview allows borrowers to assess their situation and evaluate suitable alternative repayment strategies.
Exploring Federal Student Loan Repayment Options
Federal student loans offer several standardized repayment plans. The Standard Repayment Plan is the default, featuring fixed monthly payments over a 10-year term. While this plan typically results in the lowest total interest paid, its fixed payments might be higher than other options.
The Graduated Repayment Plan begins with lower monthly payments that gradually increase, typically every two years, over a 10-year period. This structure benefits borrowers expecting income to rise, though it may lead to paying more interest than the Standard Plan.
For those with higher loan balances, the Extended Repayment Plan allows payments to be stretched for up to 25 years, offering either fixed or graduated payments. To qualify, borrowers must generally have over $30,000 in outstanding Direct Loans or Federal Family Education Loan (FFEL) Program loans.
Income-Driven Repayment (IDR) plans are another federal option, setting monthly payments based on income and family size. There are four primary IDR plans:
Income-Based Repayment (IBR)
Income-Contingent Repayment (ICR)
Pay As You Earn (PAYE)
Saving on a Valuable Education (SAVE)
Payments under IDR plans can be as low as $0, and any remaining loan balance may be forgiven after 20 or 25 years of qualifying payments, depending on the plan. However, lower monthly payments and extended repayment periods typically result in paying more interest over the loan’s life.
Steps to Change Federal Repayment Plans
Changing a federal student loan repayment plan involves a direct application process, typically managed through StudentAid.gov or by contacting the loan servicer directly. First, use the Loan Simulator tool on StudentAid.gov, which helps borrowers compare plans and estimate potential monthly payments. This tool also identifies qualifying plans based on loan types and financial information.
Once a desired plan is identified, borrowers can apply online via StudentAid.gov by logging in with their FSA ID. The application requires personal and financial information, including family size and income. For income-driven repayment plans, borrowers typically consent for the Department of Education to access federal tax information directly from the IRS, streamlining income verification. If tax information does not accurately reflect current income, or if a borrower did not file taxes, alternative documentation like recent pay stubs or an employer letter may be required.
After submitting the application, expect a processing period, usually a few weeks. The loan servicer will confirm receipt and notify the borrower of any changes. Continue making current payments until the new plan is officially confirmed to avoid delinquency. Borrowers on IDR plans must recertify income and family size annually to maintain eligibility and adjust monthly payments.
Addressing Private Student Loans
Unlike federal student loans, private loans do not have standardized repayment plans established by the government. Terms and conditions are determined by individual lenders. Therefore, changing private loan repayment terms often involves direct negotiation with the loan servicer or lender.
Borrowers struggling with private loan payments should contact their servicer to discuss options. Some private lenders may offer temporary payment adjustments, such as deferment or forbearance, allowing a temporary pause or reduction in payments. These options are typically offered case-by-case and may have specific eligibility requirements and duration limitations. Interest may continue to accrue during these periods, potentially increasing the total loan cost.
Another option for private loans is refinancing, which involves taking out a new loan from a private lender to pay off existing private loans. Refinancing can result in a lower interest rate or a different repayment term, potentially reducing monthly payments or the total amount paid. Eligibility for refinancing typically depends on factors like credit score, income, and debt-to-income ratio. While refinancing can simplify repayment by consolidating multiple loans, compare offers from various lenders to secure favorable terms.