Besides deferment, and forbearance, there are still other options you have available to you when you cannot, or are having trouble making your current student loan payment. These payment adjustment options can alter your payment amount, typically by a reduction, for a certain amount of time with regard to an appropriate reason, or methodology.
Some of the common payment adjustment options that may be available with your particular student loan include the following:
- income contingent payments
- graduated payments
- extended payments
- interest-only payments
Income Contingent Repayment: Income contingent repayment plans will be based on your level of income, and people normally utilize this option when their current student loan payment is more than they can afford while making their current level of income. The amount you will be able to reduce your payment by will depend on your own situation and loan term—contact your lender to see what income-based repayment options may be available to you.
Graduated Repayment Plan: Graduated repayment plans are great when you want to postpone when you must begin making “full” payments on your loan. They work simply by altering your repayment schedule so that you will have to make a smaller payment relatively speaking at the beginning of your loan term. As the years progress your monthly loan payment will increase, and you will therefore have to pay more later on if you do decide to utilize this option.
Extended Repayment Plan: This plan will allow you to lengthen the term of your loan so that your monthly payment amount will be reduced. The main downside to this option is that you will be paying off your loan for a longer amount of time, and this can sometimes increase the cost of your loan by a significant margin.
Interest-only Payments: Interest-only payments are a great way to reduce your monthly payment amount for a short period of time, and work exactly how their title suggests, and therefore can allow you to only make payments toward the interest of your loan for a given amount of time. This means that you won’t be paying any principal during this time, and you will therefore be delaying when you are able to payback your loan in full.
Utilizing Payment Adjustment Options
Federal student loans will typically come with all of the above payment adjustment options, while private student loans may come with the above payment adjustment options depending on the specific type of private student loan, and the actual lender’s policies.
You should not hesitate to utilize any of the above options regardless of whether you have a federal student loan, or private student loan, especially when you graduate, as each of these can lessen the burden of having to make a substantial student loan payment when you are first getting on your feet.
You can utilize these payment adjustment options much in the same way as you would request a forbearance, or get a deferment, and you simply need to contact your lender, or loan servicer to figure out what you need to do to utilize one of these. Once you have successfully utilized a payment adjustment option it is critical that you make a mental note of when your payments will change. You don’t want an unexpected surprise later on down the road, and by taking note of when your payments will return to normal you will hopefully have enough money saved away to resume making your full payment amount.
