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5 Ways To Lower Your Student Loan Payments Due To Coronavirus

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If the Coronavirus has seriously impacted your wallet, this is how to get lower payments for your student loans.

Here’s what you need to know.

1. Enroll in an income-driven repayment plan

Income-driven repayment plans are available to federal student loan borrowers and base your student loan payments on your discretionary income, family size and state of residence. There are four main income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR). Even if your monthly payment is lower, interest still accrues on your student loan balance. After 20-25 years, you can receive student loan forgiveness on the amount forgiven. However, you will owe income taxes on the amount of student loan forgiveness you receive.

2. Choose the Graduated Repayment Plan

While a Standard Repayment Plan is 10 years, you can choose a Graduated Repayment Plan for your federal student loans. Under a Graduated Repayment Plan, your monthly student loan payment increase over-time. Rather than make a large, monthly student loan payment upfront, this plan increases your payment every two years and you’ll pay off your federal student loans in 10 years.

3. Choose an Extended Repayment Plan

An Extended Repayment Plan allow you to extend student loan repayment of your federal student loans from 10 years up to to 25 years. To qualify, you must have Direct or FFEL federal student loans with a balance of at least $30,000. As with income-driven repayment plans, the longer you extend student loan repayment, the more student loan interest you may owe.

4. Pause your student loan payments

The CARES Act, which is the new $2 trillion Coronavirus stimulus legislation, allows you to pause your federal student loan payments for six months until September 30, 2020. Previously, President Donald Trump also announced that you have an option to stop paying your federal student loans for 60 days. You don’t have to stop paying your federal student loans, however, but you have the option. Also, interest on your federal student loans will be waived during the same period.

5. Refinance your student loans

Student loan refinancing is the only strategy to lower your interest rate and monthly payment permanently. You can refinance federal student loans, private student loans or both. Even if you already refinanced before, there are no fees and no limit to the number of times you can refinance. Student loan refinancing rates have dropped due to the Federal Reserve cutting interest rates.

This student loan refinancing calculator shows you how much you can save when you refinance student loans.