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How to Reduce Federal Student Loans

The United States Department of Education administers the Federal Student Aid program to help students pay for their post-secondary educations. The department offers federal grants and loans for qualified students and their families. Students and families who have trouble repaying the loans can apply for loan consolidation, loan repayment modification, loan deferment or forgiveness. Loan deferment and postponement will not reduce a loan recipient's payments, but may defer his repayment for a limited time. Typically, programs are only available to loan recipients who have not defaulted on their loans and have made timely payments.

Instructions

    • 1

      Visit the U.S. Department of Education's website at "loanconsolidation.ed.gov" to apply for a consolidation. You can submit a consolidation application at no cost electronically, file an application by phone or apply by mailing a paper application.

    • 2

      Assess whether consolidation is a good option. Loan consolidation is a good option if the average interest rate after consolidation is less than the lowest interest rate of any of your loans. If the U.S. Department of Education approves your consolidation application, you will repay your student loans at an interest rate equal to the average interest rate of your loans, which is limited to 8.25 percent, as of 2011.

    • 3

      Complete your consolidation application and submit it directly to the U.S. Department of Education. Under the Direct Consolidation Loan program, you may have up to 30 years to repay your loans. According to the Department of Education, most students can consolidate their loans. Loan consolidation is available to students with Federal Family Education Stafford Loans, Supplemental Loans, Perkins Loans, Health Education Assistance Loans and FFEL PLUS Loans. If you have unsubsidized Stafford or Direct Loans you may be able to consolidate those too.

    Change Repayment Plans

    • 4

      Contact your loan servicer. There are different loan servicers for each federal student loan program. For instance, Sallie Mae is a loan servicer for the Direct Loan Program. You must apply for a different repayment plan by contacting your loan servicer directly.

    • 5

      Complete an application to change your repayment plan. The U.S. Department of Education offers standard and extended repayment plans. With an extended plan, you can have up to 25 years to repay your loans, instead of the 10 years offered under the standard repayment plan. You must obtain your application directly from your loan servicer.

    • 6

      Submit your application for a change in repayment directly to your loan servicer.

    Apply for Loan Forgiveness

    • 7

      Review the U.S. Department of Education's Fact Sheet on Loan Forgiveness for Public Service Employees. The Department of Education offers several types of loan forgiveness programs for public sector employees. Programs are designed for teachers, attorneys and other full-time public service professionals who meet the eligibility requirements for their occupational forgiveness programs. Only public sector employees qualify for loan forgiveness under federal law.

    • 8

      Apply for loan forgiveness through the loan servicing program you applied under.

Tips & Warnings

  • Under federal law, you cannot consolidate your student loans more than once.

  • Use the extended repayment plan calculator offered by the U.S. Department of Education to estimate your monthly loan payments under the extended plan.

  • Although consolidating your loans or changing repayment plans can lower your monthly payments, you may end up paying more over the course of your repayment plan because of the monthly interest that accrues.

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