Student Loan Repayment Plan: Is it Possible to Change Repayment Plan?
Student Loan Repayment Plan: Wondering if it’s ever possible to change your student loan repayment plans? Because of the challenges you face in payment of your student loan each month. The possibility of that is if you apply for a federal student loan.
Federal student loan enables you to lower the amount you pay each month. However, these lower repayment options may have a catch, as they may result in paying off a higher amount overall. As for the personal student loan the possibilities are quite slim. All that will be clearly highlighted below.
Changing repayment plans on federal student loans is relatively straightforward. Here are the easy steps;
Review Your Options
Take time and You have eight repayment plans to choose from when it comes to federal student loans. These include:
Standard Repayment Plan: Get out of debt faster by signing up for a 10-year loan term.
Graduated Repayment Plan: Repayments start low and increase over time — ideally with your salary.
Extended Repayment Plan: Lower your monthly repayments by lengthening your term to 25 years.
Revised Pay As You Earn (REPAYE) Plan: Repayments based on your income, best for borrowers paying off undergraduate debt.
Pay As You Earn (PAYE) Plan: Repayments based on income, best for single borrowers with a high DTI.
Income-Based Repayment (IBR) Plan: Repayments based on income, best for borrowers who took out loans after July 1, 2014.
Income-Contingent Repayment (ICR) Plan: Repayments based on income, best for consolidated Parent PLUS Loans.
Income-Sensitive Repayment Plan: Repayments based on income for FFEL borrowers.
The easiest way to compare plans is to use the repayment estimator tool available on the Federal Student Aid (FSA) website. Log in with your FSA ID to quickly weigh the benefits and drawbacks of signing up for different plans.
Reach Out to Your Servicer
Got a new repayment plan in mind? Contact your servicer to let it know you want to make a change. The fastest way to reach out is to call customer service. Otherwise, you can often send an email, letter or even fax in some cases. Your servicer should tell you what steps to take to change your repayment plan.
Fill Out the Application
You need to fill out a form to switch your federal student loan repayment plan. You can get the forms on StudentLoans.gov or directly through your servicer. If you’re applying for a repayment plan based on your income, you might need to submit supporting documents along with the forms.
Continue Repaying Your Loans
You’ll hear from your servicer when you’ve successfully made the switch to your new plan. Until then, continue making repayments according to your old plan. You can also check to see which repayment plan you’re currently on by logging in to your online account with your servicer.
Signed up for autopay? After you’ve switched plans, make sure you’re still enrolled. In some cases, you might have to sign up again after switching repayment plans.
Instances to Change Your Student Loan Repayment Plan
Most times you benefit from changing your repayment plan in the following situations:
You want to apply for federal forgiveness. You need to be on an income-driven repayment plan to qualify for most federal forgiveness programs, most notably PSLF.
When you’re struggling with repayments. Signing up for a longer term or getting repayments based on your income can provide a long-term solution that can prevent you from defaulting.
You want to get out of debt faster. Rather than making extra repayments, switching to a shorter term can hold you to higher monthly repayments and eliminate the work of making sure additional payments go toward your principal.
How to Change a Private Student Loan Repayment Plan
Changing repayment plans on your private student loans is a little trickier since they typically only come with one standard repayment option. You make the same fixed repayment every month until your loan is paid off — usually over five to 20 years.
If you’re having trouble making these standard repayments and want to request an alternative plan, get together documents that can support your argument — such as bank statements and pay stubs. Then reach out to your servicer to explain the situation.
If you’re in danger of becoming delinquent or defaulting, they’ll often work with you to extend your term or even offer income-driven repayments in some cases.
Other Options Available for You
Changing repayment plans isn’t the only solution to your student loan; sometimes it’s not even an option at all. In these cases, you might want to consider;
Deferment or forbearance. Put repayments on hold when you’re going back to school or have another temporary setback to your income.
Loan repayment assistance. Many private organizations offer partial forgiveness to members of certain professions, usually in exchange for a service commitment. And some employers offer student loan repayment benefits as well.
Federal loan consolidation. Consolidate your federal loans to move all your repayments into one place and have the option to switch your servicer.
Refinancing. Take out a new loan with a private lender to change up the rates and terms. This is also the only way to switch servicers for private student loans.
There is always a solution to any problem there is, you just have to go in search for it. Bearing in mind that there is always a way to change your student loan repayment plan. Just have to go in search for it.