When it comes to student loans, your monthly payment can eat up a significant portion of your paycheck. In fact, the average student loan payment for millennials is a whopping $351. With such a high payment due every month, it can be difficult to make ends meet or save for the future.

If you want to get more breathing room in your budget so you can pursue other goals, such as saving for retirement or to buy a home, it’s important to know that you’re not stuck with a high monthly bill. In fact, here are seven different ways to reduce your monthly payment and make it more manageable.

‍

1. Apply for an income-driven repayment plan

‍

Depending on your income, family size, and loan balance, you could qualify for a payment as low as $0 with an income-driven repayment (IDR) plan. With IDR plans, your loan servicer extends your repayment term—up to 25 years—and caps your monthly bill at a percentage of your discretionary income.

You’ll likely pay more in interest over the length of your loan than if you stuck to a shorter repayment term, but an IDR plan can give you much-needed relief when you’re on a tight budget.

There are four different IDR plans; most borrowers will qualify for at least one of these plans.

• Pay As You Earn: You have 20 years to repay your loans, and your payment is 10 percent of your discretionary income.
• Revised Pay As You Earn: Your payment is generally 10 percent of your discretionary income, and you have 20 years to repay undergraduate loans, and 25 years to repay graduate loans.
• Income-Based Repayment: For borrowers after July 1, 2014, you have 20 years to repay your loans and your payment is 10 percent of your discretionary income.
• Income-Contingent Repayment: Your payment is the lesser of 20 percent of your discretionary income or what you would pay with a fixed payment over the course of 12 years.

Only borrowers with federal student loans are eligible for IDR plans. Private lenders don’t offer IDR plans, but if you have no other recourse, it’s still worth asking them if you can make a change to your payment.

‍

2. Enroll in a Graduated Repayment Plan

‍

If you have federal student loans but don’t qualify for an IDR plan, you may be able to enroll in a Graduated Repayment Plan. Unlike IDR plans, which change depending on your income and family size, Graduated Repayment Plans start out low, but grow over time, regardless of your income.

Toward the end of the repayment term, your loan payments will be quite large. That’s because you’ll pay off your loans within just 10 years with a Graduated Repayment Plan.

‍

3. Sign up for an Extended Repayment Plan

‍

With an Extended Repayment Plan, you can extend your federal loan repayment term to 25 years. Opting for such a long term will dramatically reduce your monthly payments as compared to a 10-year plan, and you can choose between fixed payments or graduated payments, which grow over time.

However, you may end up paying much more in interest with this option than if you kept to a 10-year plan.

‍

4. Consolidate your loans

‍

If you have federal student loans, you can reduce your monthly payments by consolidating them with a Direct Consolidation Loan. With this approach, all of your federal loans are lumped together with one easy loan. When you take out a Direct Consolidation Loan, you can opt for a longer repayment term, decreasing how much you owe each month.

However, keep in mind that you won’t be lowering your overall principal, and that you’ll pay more in interest with this approach than if you stuck to a standard 10-year repayment plan.

‍

5. Pursue state repayment assistance

‍

If you’re a teacher, lawyer, or healthcare professional, your skills are desperately needed in select areas. That’s why many states offer student loan repayment assistance programs for select professions.

Under these programs, you typically agree to serve in a low-income or high-need area for a set number of years. In return, you get thousands of dollars to repay your loans.

If you’re not sure if your state offers a program like this, check with your state’s department of education.

‍

6. Ask your employer for help

‍

To recruit and retain top talent, more and more employers are offering student loan repayment assistance to their employees. Like a traditional retirement plan match, some employers will give you money to pay off a portion of your student loans.

Taking advantage of these programs can make paying off your loans much easier and help you become debt-free much sooner.

Talk to your human resources department to see if your employer offers this benefit; if not, suggest it as recruitment tool for the future.

‍

7. Refinance your student loans

‍

If you have private loans, or a mix of private and federal loans, another way to manage your loans and reduce your monthly payment is to refinance.

With this approach, you work with a private lender to take out a loan for the amount of your current education debt. Using the new loan, you’ll pay off the old ones. Going forward, you’ll have just one loan and one easy payment.

Unlike Direct Consolidation, you get completely different repayment terms when you refinance, including a new loan duration, minimum monthly payment, and interest rate. If you qualify for a lower rate or extend your repayment term, you could dramatically reduce how much you owe each month.

For example, say you had $50,000 in student loans at 7 percent interest and had 10 years left to repay them. Your monthly payments would be $581 a month. But, let’s say you refinanced your loans and qualified for a 15-year loan at 4 percent interest. Your monthly payments would drop to $370. By taking just a few minutes, you’d free up over $200 in your budget every month, and you’d still save money over the length of your loan.

‍

Check out our refinancing calculator to see how much you can save.

‍

Making your payments more manageable

‍

If you are looking for ways to reduce your monthly payment and give yourself more breathing room in your budget, there are many options available to you. By using these tips, you can find a way to reduce your payments so you can pursue your other goals.

If you decide that refinancing is right for you, you can get a quote and apply online in just a few minutes.