Let’s say you started clearing your loan, but the repayment plan you chose no longer fits. What do you do? Stick to it or change the plan? Well, this post will enlighten you on how to take care of that. It will teach you how to change 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 on, 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 student loan repayment plan and the reasons you might want to consider that.
Can I change my Student Repayment Plan?
Yes!!! You can change your student loan repayment plan as often as needed. There is no rule that says you stick to one payment plan for life. So once there is a shift in earning 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’s paperwork to see what options you have for paying less.
Note: Changing your repayment plan is best when you change from a slow repayment plan to a fast repayment plan.
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 end point is that you still get to 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 option 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 chose 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.
Complete any necessary paperwork
You will need to submit an application if you want to consolidate your student loans or select an income-driven repayment plan. Your servicer can provide paper copies of these forms, fill 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
In most instances, 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, be sure to give your new servicer your payment information.
For Private Student Loan borrowers;
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 sometimes.
Is changing my student loan repayment plan free?
Yes, changing a student loan repayment plan is totally 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 you need to. But we cannot say the same of the private student loan. The reason is simple; they need their money back else they will crash in business.
It’s important you keep in mind that any changes will probably affect the total amount that they expect you to repay.
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What are the advantages of changing your repayment plan?
- One benefit in changing your student loan repayment plan is that you get to pay your loan while still maintaining 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 your 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 apart from 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 of 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 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.
Federal loan consolidation
Consolidate your federal loans to move all your repayments into one place and have the option to switch your servicer.
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.
Changing your student loan repayment plan is totally your choice. Weighing the advantages of student loan repayment plan against its disadvantages is a significant step to start. The best thing is that you find a balance that will improve your life.