Let’s say you started clearing your loan, but your chosen repayment plan no longer fits. What do you do? Stick to it or change the plan? Well, this post will enlighten you on how to handle that. It will teach you how to change your student loan repayment plan. Just in case you find yourself in that shoe.
As much as there may be many reasons you might want to change your student loan repayment plan, knowing how to change it is of the essence. This article seeks to educate you on that.
As you read, you will find the advantages and disadvantages of changing your student loan repayment plan, other options available to pay your loan, how to change your loan repayment plan, and the reasons you might want to consider that.
Read More: Student Loan Forgiveness – How to get your Loan Forgiven
Table of Contents
Can I change my Student Repayment Plan?
Yes!!! You can change your student loan repayment plan as often as needed. No rule says you stick to one payment plan for life. So once there is a shift in earnings or what so ever reason, you are free to change your student loan repayment plan.
The case might differ for a Private Student Loan. Some private student loans have alternate payment plans, so it’s best to contact your lender or check your loan paperwork to see your options for paying less.
Note: Changing your repayment plan is best when you change from a slow repayment plan to a fast one.
Read More: How to Secure Private Student Loans
Why should I change my Student Loan Repayment Plan?
Changing your student loan repayment plan depends on some reasons, such as
- Higher/Lower income than earlier estimated
- Family size
- Major life events like buying a house
- Going back to school for a higher degree
- Other financial debts, etc
These reasons might make you change your student loan repayment plan. The endpoint is that you can still pay your loan using a more comfortable repayment option.
How do I change my Student Loan Repayment Plan?
Following these steps helps you to achieve this faster. These strategic steps have proven to be effective. This is how to change student loan repayment plan options for Federal Student Loan borrowers;
Choose a New Repayment Option.
Plug your loan information into Federal Student Aid’s Loan Simulator to see how much you might save on different plans. The student loan repayment calculator can be useful at this point. Then choose a new repayment option better than the one you once had.
Contact your Servicer
Choosing a different student loan repayment plan is always free. You don’t have to pay a third-party debt relief company. Your loan servicer — the company that manages your federal loans on behalf of the government — can help you.
Read More: How to Secure a Federal Student Loan – All You Need to Know
Complete any Necessary Paperwork.
You must apply if you want to consolidate your student loans or select an income-driven repayment plan. Your servicer can provide paper copies of these forms and fill them out accurately.
Check Payment Due Dates.
Switching payment plans can take time. For example, the Consumer Financial Protection Bureau says income-driven repayment applications sometimes take months to process. Confirm your next payment deadline, so you don’t fall behind by accident.
Update Auto-pay if needed.
Sometimes, your new student loan repayment plan won’t come with a new servicer. But you can switch student loan servicers through consolidation. If you auto-pay your loans, give your new servicer your payment information.
For Private Student Loan borrowers;
Changing repayment plans on your private student loans is trickier since they typically only come with one standard repayment option. You make the same fixed monthly repayment 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, gather documents supporting 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 sometimes.
Is Changing My Student Loan Repayment Plan Free?
Yes, changing a student loan repayment plan is free. It requires no monetary exchange, just some paperwork and processing.
How often can I change my student loan repayment plan?
You can change federal student loan repayment plans as often as needed. But we cannot say the same about private student loans. The reason is simple; they need their money back else they will crash in business.
You must remember that any changes will probably affect the total amount they expect you to repay.
Read More: How to Change Student Loan Repayment Plan
What are the Advantages of Changing your Repayment Plan?
- One benefit of changing your student loan repayment plan is that you can pay your loan while maintaining a balance in your present life.
- In most cases, you get to pay off your debt faster. This is for people who started earning big.
- Changing your student loan repayment plan helps secure loan forgiveness for those whose payment plan supports that.
- Changing your student loan repayment plan to one that suits your life now will help you achieve other things besides being debt-free.
- It helps you avoid the consequences of student loan default, like ruined credit, garnished wages, and tax refund garnishment.
Are there Disadvantages to Changing my Repayment Plan?
- A lower monthly payment means a longer repayment term
- Increase in the amount of interest you’ll pay.
- Changing plans can also capitalize unpaid interest, increasing the amount you owe.
What are my other Options Aside from Changing my Plan?
Changing repayment plans isn’t the only solution to your student loan woes — sometimes, it’s not even an option. In these cases, you might want to consider the following:
Deferment or Forbearance
Put repayments on hold when you’re returning 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.
Read More: All you need to know About Student Loan Repayment Plan
Federal Loan Consolidation
Consolidate your federal loans to move all your repayments into one place and have the option to switch your servicer.
Take a new loan with a private lender to change the rates and terms. This is also the only way to switch servicers for private student loans.
Changing your student loan repayment plan is your choice. Weighing the advantages of the student loan repayment plan against its disadvantages is a significant step. The best thing is finding a balance that will improve your life.
Read More: Benefits of Student Loans – 10 things you need to know