How to Negotiate Federal Student Loan Debt

Negotiate your student loan debt.

Student loan debt can stay with you for years, which isn't too bad if you can afford the monthly payments. However, many graduates leave school and take jobs with modest starting salaries. Between home expenses and other monthly obligations, there are often little funds left over to make student loan payments. Fortunately, federal student loan lenders recognize the hardship, and they're willing to negotiate and offer flexible repayment plans.

Instructions

1. Extend your payment term. Repayment terms for student loans vary. Opting for a shorter term helps pay off the debt sooner, but this also increases monthly payments. Speak with your lender and ask for a longer repayment term to help reduce monthly debt payments.

2. Get a lower interest rate. Ease the financial burden by requesting an interest rate reduction. A good payment history and credit score helps you acquire a better rate, and some federal student loan lenders offer a 0.25 rate reduction when borrowers sign up for automated payments.

3. Inquire about forbearance. Student loan forbearance helps borrowers who undergo financial hardships and can't make their payments. Request a forbearance over the phone and provide your lender with a brief reason for the request. Forbearance lengths vary according to lender; however, it's possible to suspend payments up to one year. Once your forbearance period ends, you can contact your student loan lender and ask for an extension. Interest accrues on the loan throughout the forbearance period, which increases your balance.

4. Consolidate debt. If you have multiple federal loans with different interest rates and payments, apply for a federal student loan consolidation to combine your debts into one loan and simplify your finances.

References

• Loan: Reduce Student Loan Debt by Negotiating the Interest Rate
• Student Doc: Consolidate Student Loans
• Your Finish Rich Plan: How to Negotiate Student Loan Debt