Request a longer repayment term. You may be eligible to spread out your payments over a longer term. If your loan term is 10 years, you may be able to spread it out to 20 years and decrease your payment. The problem with this is you will end up paying significantly more over the life of the loan due to interest. With high interest loans, it is better to pay the loan off as quickly as possible. However, if this is not an option, increasing your repayment term may make the loan more manageable.
Fill out the appropriate application to increase your loan term. This can be done from your lender's website, or by calling them. Call your lender's customer service line for specific instructions. You can also electronically submit, fax, mail or e-mail your application to them.
Negotiate a lower interest rate. Interest rates on private student loans are typically much higher than federal student loans, with some of them being as high as 15% or 20%. Lowering this rate may lower your payment significantly if your lender agrees to it.
Call your lender and simply ask them for a lower rate. Tell them that you are less likely to default on a loan if it is more affordable. If you have never missed a payment or have paid ahead, use this as a bargaining chip as well. If they refuse to reduce your rate permanently, they might reduce it for a short period of time to help you get back on track.
Apply for a deferment if you can. A deferment postpones loan payments, and may be available for certain situations, like returning to school, joining the military or the Peace Corp. Depending on your loan type and lender, interest may or may not accrue while the deferment is active.
Speak with your lender about the types of deferments you may be eligible to. Very often the eligibility requirements for deferment are listed on their website.
Apply for forbearance. Forbearance may be available to you if you do not meet the requirements for a deferment and you are experiencing economic hardship. Unlike a deferment, a loan in forbearance will accrue interest that will be added to the loan balance. In essence, this will increase the total amount of money you have to pay back, and may increase your monthly payment after the forbearance ends. You may also have to pay a fee to place your loans in forbearance.
Negotiate other options with your lender. Tell them you simply cannot make the payment. They have no legal obligation to help you, but there may be other options to decrease your loan payment, temporarily or permanently.
For instance, a lender may decrease your payment for a few years. Be aware that this might balloon your payment in the future. But, this may be a good option if your circumstances are likely to improve down the road.
Another option that might give you some relief is provision for interest-only payments for a short period, such as two or four years. This might decrease your payment significantly or not at all, depending on how long you have been paying on the loan. Payments for the first few years of the loan may be almost all interest, so this option may not do you much good. Check with your lender to determine how much of your payment is interest, and how much is the principal. However, the principal portion of your loan will not decrease at all during this time, if you decide to pay only the interest.
File for bankruptcy if you can. Under the current law, student loans in general cannot be discharged in bankruptcy. But if your circumstances are extreme and are not likely to change, you may qualify for bankruptcy, provided you meet the strict guidelines and income requirements. Speak with a bankruptcy attorney to determine your eligibility.
New legislation is being considered to allow student loans to be discharged in bankruptcy.