Student LoansStudent Loan Refinance

Student Loan Relief: 5 Options to Keep in Mind

At least 1.3 million students graduate with student loan debt in America. The Wall Street Journal states that 2015 college graduates have reached new heights when it comes to debt by averaging more than $30,000 in student loans, which is up from the previous year’s average of $29,400.

When you graduate, it’s crucial that you understand what your options are in terms of paying off your loans so you can assess your situation and commit to a repayment plan or similar solutions. Here are five student loan debt relief options to take into account.

1. Standard Repayment Option

Your lender will offer a standard repayment option as one of the first repayment plans for your loans. The standard repayment plan offers a fixed rate, term and monthly payment that will allow you to pay the least amount of interest over the life of your term.

For Federal loans, the minimum standard payment amount is $50 per month and your term can last up to 10 years.

2. Income-Based Payments

If you can’t afford the minimum payment for the standard repayment option, or if you’d just like to start out paying less on your student loans each month, you can look into seeing if your lender offers income-based payments. Income-based payments will be calculated based on how much you earn and may increase as you earn more.

3. Graduated Payments

Another similar type of repayment or student loan relief option is the Federal graduated plan. This plan is eligible for students who have Direct and Stafford subsidized and unsubsidized loans and PLUS loans. With this plan, your minimum payment will start out low and increase every two years. You may pay more interest with this type of plan compared to with the standard plan, but it’s a great option for graduates who may not have a lot of money to put toward student loans at the beginning of their term while they’re still searching for a new job.

There is also a Pay As You Earn plan (PAYE) that was passed by President Obama in December of 2012. If you have Federal student loans that were disbursed after 2007 and are undergoing a financial hardship, you may qualify for this option. Payments are determined by your adjusted gross income. Applicants who utilize this program will have an extended term to pay back their loans and they will also be eligible for student loan forgiveness.

4. Loan Consolidation

If you feel like your interest rate is too high and it’s making it difficult for you to meet the monthly payment requirements, you can try consolidating your student loans. Consolidating is similar to refinancing your student loans and involves combining all your loans into one balance with one single payment and one low interest rate.

By locking in a lower interest rate to help more of your payment go toward the principle balance, consolidation helps simplify your debt and makes it more manageable to pay off.

However, you should assess your situation to determine if student loan consolidation is best for you. Once you consolidate your Federal loans, you will not be eligible for other student loan relief options like loan forgiveness.

5. Loan Forgiveness

If you choose not to consolidate your loans, you may be able to qualify for student loan forgiveness. Student loan forgiveness is a long-term debt relief solution, seeing as it can take up to 10 years to have your loans completely forgiven. In order to qualify, you must work for any government-funded employer or community service organization and meet the requirement of making at least 120 qualifying payments on your student loans in most cases.

Explore Student Loan Relief Options and Pay as Much as You Can

There is a wide variety of student loan relief options to help remove the burden of your student loan debt. Explore some of these options and talk to your lender or a debt professional who can help you find a solution to meet your specific needs.

Also remember, the minimum payment on you student loans is just that; a minimum payment. You can always pay more each month if you have the means to in order to reduce the amount of interest you will pay overtime and get rid of your loans much quicker.


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