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Looking to Lower Your Student Loan Payment? Here Are the Best Ways to Do It

Kat Tretina

If you have a high student loan payment, it can be difficult to make ends meet. That’s a reality for millions of people. According to the Federal Reserve, 20% of adults with outstanding student loans are behind on their payments. Becoming delinquent or entering student loan default has serious consequences, including collections, damaged credit, and even wage garnishment.

If you’re trying to figure out how to lower your student loan payment, here’s what you should know.

3 Ways to lower student loan payments

Whether you need more money for rent or you simply want more breathing room in your budget, there are three core ways to lower student loan payments.

1. Consolidate your debt

For federal loan borrowers, one way to lower your payments is to consolidate your debt with a Direct Consolidation Loan. Consolidating your debt can give you a lower payment by extending your repayment term, giving you up to 30 years to repay your loans instead of just 10. Direct Loan Consolidation won’t affect the interest rate you have — your new loan’s rate is based on the weighted average of your existing debt — but it can reduce your monthly loan obligation.

2. Enroll in an income-driven repayment plans

If you have federal Direct student loans, you may be eligible for an income-driven repayment (IDR) plan. In each of the four plans, the loan servicer extends your repayment term and determines your monthly payment based on your family size and discretionary income. Depending on your situation, you could get a much lower payment; some people even qualify for $0 monthly payments, so they don’t have to make payments but remain current on their loans.

3. Refinance your student loans

If you’re wondering how to lower student loan interest as well as your payments, student loan refinancing may be for you.

Unlike loan consolidation and IDR plans, student loan refinancing is for both federal and private loans.

To refinance your debt, you apply for a loan from a private lender for some or all of our existing debt. After you refinance your loans, you only have one loan and one monthly payment. Depending on your credit history, you may qualify for a lower interest rate, which can lower your monthly payment. And, you can decide to extend your repayment term — some refinancing lenders offer terms as long as 20 years — further reducing your payment.

For example, let’s say you had $40,000 in student loans with a 6% interest rate. With a 10-year repayment term, your minimum monthly payment would be $444.

If you refinanced and qualified for a 15-year loan at 5.5% interest, your monthly payment would drop to $327 — a savings of $117 per month.

  Original Loan Refinanced Loan
Loan Term 10 Years 15 Years
Interest Rate 6% 5.5%
Monthly Payment $444 $327
Total Interest Paid $13,290 $18,830

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Benefits of lowering your student loan payments


Figuring out how to lower student loan payments is obviously appealing, but there are three reasons why it’s especially beneficial:


1. You’ll have more money for other expenses


If you’re struggling to make ends meet or want to save money for other financial goals, like buying a new car or home, lowering your student loan payments helps free up more money for those expenses. With a lower monthly payment, you can increase your savings for your goals.


2. You’re less likely to enter default


When you lower your monthly payment, you’re more likely to be able to afford your bills. With more wiggle room in your budget, you’re less likely to fall behind on your payments or enter into student loan default.


3. You can reduce your debt-to-income ratio


When you apply for a mortgage or car loan, lenders look at your debt-to-income ratio (DTI) — the amount of debt you have relative to your monthly income. If you have a high student loan payment, your DTI may be higher than lenders require, making it difficult to qualify for a loan.


By reducing your monthly payment, you can lower your DTI and increase your odds of getting a loan. 

See How Much You Can Save

Student Loan Refinance Calculator

View Details


Student loan refinancing combines your current loans into a single loan with a new rate and term. See how much you can save by entering your loan information below, or by getting quotes from multiple lenders using Purefy’s rate comparison tool.

Step 1: Enter Current Loan Information

Loan Balance
Your remaining student loan debt to be repaid.
Interest Rate
The amount that the lender charges in interest, expressed as a percentage.
Current Monthly Payment
The total amount of your monthly student loan bill.
Add Multiple Loans to Calculate

Step 2: Enter New Loan Information

New Interest Rate
Your updated interest rate after refinancing student loans.
The length of time you have to repay your student loan debt in full.

Add Multiple Loans

Insert additional loan

Step 3: See How Much You Can Save


Lifetime Interest


New Monthly



Current Loan New Loan Savings
Rate 6.7% 4.2% 2.5%
Lifetime Interest $37,520 $22,210 $15,310
Monthly Payment $1,146 $1,018 $128

Like what you see? Check your actual prequalified rates from the industry’s top lenders in just 2 minutes or less.

Drawbacks to lowering student loan payments


While reducing your student loan payments can be an attractive idea, there are some downsides you should keep in mind:


1. You’ll pay more money in interest over time


If you consolidate your debt, enroll in an IDR plan, or refinance your loans and opt for a longer term, you’ll get a lower monthly payment thanks to an extended loan term. However, you’ll likely pay more in interest over time because your loans are in repayment longer. You could pay thousands more in interest charges than if you stayed on your current repayment plan.


2. It’ll take longer to pay off your debt


Obviously, extending your loan term means it will take longer to pay off your debt. But many people don’t think about the consequences of that decision. If you’re a recent graduate and extend your loan term to 20 or 30 years, you could be repaying your loans when you’re in your 40’s or 50’s. That drawback can place a major weight on your shoulders, especially if you want to start saving for your children’s education.


3. You could lose out on certain loan benefits


Depending on what strategy you use to lower your monthly loan payments, you could lose out on certain loan benefits. For example, when you consolidate with a Direct Consolidation Loan, you lose credit for payments made toward loan forgiveness and you may lose previous interest rate discounts.


When you refinance federal loans, you transfer your loans to private loans. You’ll no longer have access to benefits like income-driven repayment plans, loan forgiveness, or federal deferment or forbearance.


However, the downsides may be worth it to get more breathing room in your budget and to lower your financial stress.


Managing your student loans through refinancing


If you’re struggling with student loan payments, there are several ways you can lower your minimum payments. If you decide to refinance your education debt, make sure you compare rates from multiple lenders. With Purefy’s Compare Rates tool, you can get quotes from top lenders after filling out one simple form, and it doesn’t affect your credit score.

Interested in Student Loan Refinancing? Compare rates from top-rated lenders and see how much you could save.

Checking your rates takes 2 minutes and has no impact on credit. 

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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 11-21-2022. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 3.99% APR to 8.24% APR with a 0.25% autopay discount. Variable rates from 2.24% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.24% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 3.49% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 3.94% to 8.48% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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