1. Money

Student Loan Payment Options

Consolidation, Deferment and Forbearance

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If you are having a difficult time repaying your student loans, you may have a few options available to you. Before you consider these you need to make sure that you are truly having a difficult time paying. If you have a cell phone, cable, eat out every week or every day, then you need to change your lifestyle until you pay off your loan. If you have lost your job, have a low paying job or are having a difficult time finding a job you may consider one of these options to manage your student loan payments.

1. Student Loan Consolidation

Young man fretting over student loan bills
Dougal Waters/Digital Vision/Getty Images

You may want to consider student loan consolidation, since this process can lower your monthly payments and lock in a low interest rate. However, it is important to realize that consolidation can extend the life of your loan and greatly increase the amount of interest you pay. If you do consolidate, you may consider paying the loans back at a quicker rate once you are in a better financial situation. You may need to consolidate to a Federal Direct Loan if you want to qualify for income based payment options or loan forgiveness in the future.

2. Unemployed Deferment

You are allowed to have three years of unemployed deferment on your student loans. You can take advantage of this deferment if you do not have a job. Since you are only allowed three years, you should carefully consider your options before claiming deferment. During deferment the federal government will pay the interest on the subsidized Stafford loans. You will be responsible for the interest payments on the unsubsidized Stafford loans.

3. Economic Hardship Deferment

If you have a low paying job you may qualify for economic hardship deferment. This is usually for a specified amount of time. Your lender will let you know how long you have. If you do qualify take the opportunity to really focus on changing your financial situation. You may take the money you were paying for your student loan and apply it to credit card debt. If things are really tight you may be barely scraping by. Be careful not to add more debt to the picture however.

4. Forbearance

Forbearance is your final option when it comes to paying back your student loans. If you are having difficulty making your payments, then you need to contact your lender. They are usually willing to allow you to pay a lower payment, rather than put the loan into default. This should be your last option. It is important to be open with your lender, because they do want you to repay the money. By communicating with them when you have a problem, you can generally avoid being put into default on the loan.

5. Income Based Payments

If you have a low income or a large family, you may qualify for income based payments. You will need to be signed up for a Federal Direct loan, in order to qualify. The student loan will be based on a percentage of your income. If you qualify for this for thirty years, and make payments on time for the entire time, you can have the balance of the loan forgiven after the thirty years. This is a good option to consider if you are struggling to make ends meet. You will need to submit proof of income each year to stay enrolled in the program.

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