The 3 Best Ways to Lower Your Monthly Student Loan Payments


 Carol Katarsky Updated: January 25, 2022


We all want lower student loan payments but figuring out exactly how to make that happen can be frustratingly confusing. Should you consolidate or refinance? Get a shorter term or a longer-term loan? And what about just taking a break from payments altogether?

Understanding the best ways to lower your monthly student loan payment is incredibly important for college students and graduates. Learn about the best ways you can lower your monthly payments and save money on your private and federal student loans.

3 ways you can lower your monthly student loan payments

Many student loan borrowers struggle to pay their monthly payment, especially right after graduation. All in all, there are three main ways you can reduce your monthly payment to make it more manageable. These include:

  1. Reduce your interest rate 
  2. Extend your payment term 
  3. Apply for an income-based repayment plan

1. Reduce your interest rate

The top way you can reduce your monthly student loan payments overall is to reduce your interest rate through refinancing. When you refinance your student loan debt through a private lender, you may be able to lower your overall monthly payment.

Additionally, you can choose to refinance your loans as many times as you want. To get a lower interest rate on your loan, your credit score will most likely have to be average or higher. Additionally, you'll have to consolidate your federal loans before refinancing them with a private lender. 

2. Extend your payment term

If you want a lower monthly payment but still want to keep the benefits of having a federal loan, you can opt to extend your repayment term. After graduation, your repayment term is automatically set to 10 years. However, you can sign up for an extended repayment plan for up to 25 years and lower your monthly payment overall. 

You'll need to contact your loan servicer to ask about extending your term. Additionally, you should remember that extending your repayment term may lower your payments now, but it'll ultimately result in you paying more over the life of your loan. 

3. Apply for an income-based repayment plan

One of the most straightforward ways to reduce your monthly payment is by signing up for an income-driven repayment (IDR) plan.

There are four income-driven repayment plans, but they all have the same purpose: to allow you to continue paying back your student loans without inhibiting your ability to afford essentials like food and rent. The four IDR plans available include:

  • Pay As You Earn Repayment (PAYE) plan
  • Income-Based Repayment (IBR) plan
  • Revised Pay As You Earn (REPAYE) plan
  • Income-Contingent Repayment (ICR) plan

Of course, everyone on an income-driven repayment plan isn't submitting their monthly budget to the U.S. Department of Education. The income-based repayment plans are made for recent graduates facing economic hardship. To qualify for these programs, you'll need to provide documentation of your current annual income. The government calculates your discretionary income using federal poverty guidelines for families of your size and in your geographic location. 

Once they've calculated your discretionary income, they'll set your monthly payment amount at 10-20% of that number, depending on the specific plan you've chosen.

Other student loan repayment options

If income-based repayment, extending your repayment term, and/or refinancing for a lower interest rate don't lower your monthly payments enough, there are other options you can explore. While these aren't guaranteed, depending on the type of loan you have they're worth exploring. The alternative student loan repayment options for you include:

  • Deferment
  • Forbearance
  • ​Forgiveness
  • Auto-pay Discounts

Student loan deferment

If you're struggling to make payments on your student loans, you can contact your student loan servicer and ask about student loan deferment.

Deferment traditionally lasts between six months to three years. All federal student loan servicers allow borrowers to apply for deferment. Some private lenders do as well. 

During the deferment period, you won't be required to make monthly payments on your student loans. Additionally, your federally subsidized student loans won't accrue interest throughout the deferment period. However, both private loans and unsubsidized loans will still accrue interest. 

Student loan forbearance

Student loan forbearance is also offered by both federal and private student loan servicers. It is very similar to deferment in that it pauses your monthly payments for an extended period of time. However, your loans will accrue interest and you may be required to pay the interest on your loans throughout the forbearance period. 

You can also choose to make small payments towards your total loan balance to offset the cost of accrued interest. 

Student loan forgiveness

The best option for student loan repayment is to see if you're eligible for any federal student loan forgiveness programs. However, the federal government only makes these available if you have federal student loans.

There are a few federal student loan forgiveness programs available to you, like the Public Service Loan Forgiveness Program. Many of these programs have strict eligibility requirements for your income, job, length of loan repayment term and more. 

For more information on the federal student loan forgiveness programs available to you, you can visit studentaid.gov. 

Sign up for auto pay with your lender

Most loan servicers will knock a one-quarter percentage point off your interest rate just for enrolling in automatic payments.

That 0.25% discount may sound small, but it can yield significant savings over the life of your loan. The larger your balance and the longer your loan term, the more you'll save.

Frequently Asked Questions

Should I consolidate my federal student loans?

Student loan consolidation often will not lower your monthly payment rate, but it can help make your federal loans more manageable. For a federal direct consolidation loan, they take the weighted average interest rate of all of your federal loans and apply that to your consolidated loan. 

Oftentimes, this means that you won't save a lot in interest, but it you can make a single payment instead of several.

Should I consolidate my private student loans?

Ultimately, consolidating your private student loans can help save you money over time. Private student loans have interest rates set by lenders, not the federal government. That means you can potentially get a lower payment rate on your principal balance.

To consolidate your private loans, you'll need to refinance them with a new lender. Student loan refinancing can help give you one monthly payment on your private loans and help save you money in the long term. However, private lenders will need to do a hard credit check to decide if your credit report is reliable. 

Will an income-based repayment plan extend my repayment period?

Oftentimes, an income-based repayment plan will involve you extending your repayment term for your student loans. This can help keep your costs low but could wind up increasing your overall loan balance with accrued interest.

Learning more about student loan repayment plans with Nitro

Student loans are incredibly stressful, and it's important to have a solid repayment plan in place after you graduate. Nitro aims to educate college students and recent graduates on the best ways to repay their student loan debt. 

Our helpful calculators can help you decide what the best repayment plan for your financial situation is. Use one of these calculators to find out how much you could save by refinancing, consolidating, or choosing an income-based repayment program. 

Refinance & Save Today With These Leading Lenders

#1 - Nitro Recommended View More Details

Special offers for medical resident and fellow refinance products

  • Fixed rates: 1.99% - 7.84% APR
  • Variable rates: 1.74% - 7.49% APR
  • Minimum credit: 650
View More Details
Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with some of the lowest fixed in the industry which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

#2 View More Details

Ability to apply for cosigner release after 24 consecutive payments. 

View More Details
Visit NelNetBank View Loan Disclosure

Give Your Life’s Journey a Jump-Start.

If you’re ready to put student loans in your rearview mirror, Nelnet Bank student loan refinancing offers low rates and flexible terms to help you start getting ahead.

  • VARIABLE RATES: 2.69% - 9.20% APR See Disclaimer
  • FIXED RATES: 3.49% - 7.44% APR See Disclaimer
  • AUTO DEBIT SAVINGS: We’ll knock .25% off of your interest rate when you enroll in auto debit. See Disclaimer
  • NO ORIGINATION FEES: No application, origination, or prepayment fees on Nelnet Bank loans.
  • HARDSHIP PROTECTION: Hardship forbearance helps protect against unexpected loss of income. See Disclaimer

See How Much You Can Save: Estimate your savings with a student loan refinance from Nelnet Bank.

#3 View More Details

ElFi offers top-rated customer service, some of the lowest rates available, and flexible terms to fit your goals.

  • Fixed rates: 2.73% - 5.99% APR
  • Variable rates: 1.86% - 6.01% APR
  • Minimum credit: 680
View More Details
Visit ElFi View Loan Disclosure
Student Loan Refinancing Made Simple.
Discover our low rates and fast, no-fee application process for refinancing your student loans or financing your college education.
The ELFI Difference:
  • Some of the Lowest Rates Available – We believe in rewarding financially responsible borrowers by providing some of the lowest refinancing rates available.
  • Expertise That’s Second to None – Our ELFI management team has over 30 years of expertise in student loans and student loan refinancing.
  • Fast and Easy Process – Secure your personalized student loan or refinancing options in just a few short minutes.
  • Personal Loan Advisors – Our award-winning customer service team will guide you every step of the way.
  • Service Coast to Coast - ELFI private student loans and student loan refinancing are available across the entire U.S. and Puerto Rico.

Click here to refinance now with ELFI.

#4 View More Details

SoFi is the leading student loan refinancing provider. 

  • Fixed rates: 3.49% - 7.99% APR
  • Variable rates: 1.74% - 7.99% APR
  • Minimum credit: 650
View More Details
Visit SoFi View Loan Disclosure

$30 billion+ in refinanced student loans. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, there's no maximum on the amount you can finance. Some state restrictions may apply.

  • Serious savings: Save thousands of dollars thanks to flexible terms and low fixed or variable rates.
  • No hidden fees, no catch: No application or origination fees. No pre-payment penalties.
  • Fast, easy, and all online: Simple online application and access to live customer support 7 days a week.
  • Access to member benefits: SoFi members get career coaching, financial advice, and more—all at no cost.
  • 98% of surveyed members would recommend SoFi to a friend

Save thousands on your student loans and pay off your loans sooner. Find your rate.

#5 View More Details

Works with 300+ community lenders for higher approval chances

  • Fixed rates: 2.49% - 7.75% APR
  • Variable rates: 1.90% - 5.25% APR
  • Minimum credit: 660
View More Details
Visit LendKey View Loan Disclosure

Connecting student borrowers to a network of over 300 community lenders with low interest rates. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

LendKey Student Loan Refinance review

  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 300+ community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#6 View More Details

Best for borrowers who want to customize their repayment schedule to pay off debt fast.

View More Details
Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.
Ready to pay off your student loans? Get Started Now!

I reduced my student loan payment by $152 per month, by refinancing thru Nitro

Save Money Now