If your federal student loan payments are becoming difficult to make, there are some payment plans and options you may want to consider. Comparing student loan options can reduce stress and lower your student loan payments.
For those those who have been laid off or have seen a huge decrease in their family income, here are some options to consider with your federal student loans:
- Choose another repayment plan. You can ask from a graduated payment plan where the initial 24 payments are lower and slowly increases. As mention above, an income based payment plan can also ease the burden while you get back on your feet.
- Apply for a deferment. This option allows you to temporarily stop making payments on your student loan(s). You have to speak with a customer service representative to see if you qualify.
- Apply for a forbearance. You can temporarily make smaller student loan payments.
You can change your payment plan online at contact Federal Direct Loans. With deferments and forbearances, please call Federal Direct Loans at (800) 848-0979.
Your Take
Have you already consolidated your loans? Have you received a deferment or forbearance?
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Just wondering, if you had $10,000 in student loans at 2.6%, but had $100,000 in the bank earning only 2%, would you pay off your student loan or just keep it since the rate is so cheap
If I had $100,000 in the bank, I think I would pay off the student loan. If I didn’t have a decent emergency fund, I’d hold off on paying the debt off. How about you?
It’s tough to say b/c at 2.6%, it’s free money. I ask this question b/c this is the type of dilemma I face, but with slightly different #’s.
I don’t see my loan amount, I just get debited automatically every month. Maybe I’ll accelerate the payment, but I just feel I’d rather have as much cash possible to do something with it than pay off a 2.6% loan.
I almost always recommend consolidating student loans. A forbearance can allow also allow you to temporarily stop making payments. The biggest difference between a deferment and forbearance is that with a deferment the government pays the interest on all subsidized loans.
@Financial Samurai I wouldn’t be in a hurry to pay off a tax-favorable loan either. My bigger concern for you is having that much money in a bank earning 2%. But I don’t pretend to know your financial situation and you seem like a pretty smart guy so I’m guessing you know what you’re doing.
Howdy EoW – My loans are consolidated and at 2.6%. I’ve actually got a much larger chunk of change sitting in muni’s, and 5-yr CD’s earning about 4.2%. You can check out my post on <a href="http://www.financialsamurai.com/2009/10/02/the-only-cd-strategy-to-employ-for-maximum-retur/""The DVD Method to CD Investing".
The thing is, I JUST got about $60,000 in company stock last week, and of course now rates are pitiful, even the 5-yr at 2.75%. I don’t know, I just love having as big a war chest as possible when something really enticing comes a long (private equity or whatever).
The student-loan is not tax-favorable at all, since the gov’t doesn’t allow people to write the interest off if you earn more than some ridiculously low amount.
Thnx for your thoughts!