This is a sinking boat I think a lot of us have been in. It’s a scary and frustrating thing. We go to school, work and study hard, graduate, and then we are handed a lovely GIGANTIC bill in the mail to congratulate us. I will not lie, I still struggle with this. Every single second, student loan debt in America grows by $2,726. Every second people! I don’t know about you, but this blew my socks off. Guess what, I have contributed to this “Student Loan Debt Epidemic.” When I graduated college, I was not able to afford my student loan bills. In fact, I was completely clueless on how to even keep up. That’s when I discovered the Income Repayment Plan. This saved me from missing payments, lowered my monthly bill to an amount that was realistic to my current circumstance, and allowed me to keep my head above water until I could actually afford my regular bill. There are options out there that can not only lower your monthly payment, but can actually give you peace of mind.

Watch the seconds tick away as the student loan debt grows!

That bill you got in the mail might not be set in stone. It says you have to pay a certain amount every month, but there are ways to alter this lovely monthly payment. As I have posted about before (The Day My Son Leaves Home), if you have federal student loans, there might be a way for you to get back on track!

There are currently 8 different repayment options for your federal student loans. That’s 8 ways to make a huge difference in your budget. Each one is unique, and it is up to you for you to determine which one is the best solution for your circumstances. I will not go into all 8 options, but I will list the ones I think might help you if you are failing to make your payments.

• The Standard Plan – This plan is meant to save you money over time. Why do you ask? Your payments will be a bit higher than other options, but you will pay off your loans the fastest with this option. Since you pay it off sooner, this means less interest you have to pay. This is the plan that is the “default” option. This means that if you don’t choose  a prepayment plan option, you automatically get slapped with this bill in the mail. So do you see why it might be scary to see your first student loan bill? You might be in the default plan because you didn’t say otherwise. This plan is not a great solution if you are saying to yourself “Help, I can’t pay my student loans.”

• The Graduated Repayment Plan – If you just graduated and are in a low paying position to start off, this might be a great option. Under this option your payments will be low in the beginning, but over time they will increase. The increase in payment will happen every two years and will never be less than the amount of interest that accrues between your payments. This payment option will never be more than 3 times greater than any other payment.

• The Extended Repayment Plan – If you are truly stuck in a low paying job for a long period of time. You hit the jackpot with this option. You will make lower monthly payments over a longer period of time. There are eligibility requirements for this option. I will not list all the requirements, but here are a few. You can’t have an outstanding loan balance on a Direct Loan as of 10/7/1998, or on the date you obtained the Direct loan after 10/7/1998, and you have to have more than $30,000 in outstanding Direct Loans. If you are interested in this option please see the link at the bottom of this post for a more detailed explanation.

• Read: Should You Consolidate Your Student Loans?

This is the Important Section!

Detailed below are the repayment options I am suggesting all people who are struggling to make student loan payments look at. These plans are designed to make your student loan payments more manageable and are called income driven repayment plans. If you want to possibly start any of these plans, heads up, you will have to apply.

• Revised Pay As You Earn Repayment Plan– Under this plan your payments will be based on about 10% of your discretionary income. What is discretionary income? This is your income that is left over for you to spend, invest or save after taxes, and personal expenses (the 3 basis – food, shelter, and clothing) have been paid.

• Pay As You Earn Repayment Plan – Your payments are generally 10% of your discretionary income, but it will never be more than the 10 year Standard Repayment monthly plan amount.

• Income-Based Repayment Plan – This is also generally 10% of your discretionary income. However, people who they consider new borrowers who borrowed money on or after 6/1/2014 will get the 10% figure. This will also never be more than the 10 year Standard Repayment monthly plan amount. If you are an old borrower, who borrowed money on or after 7/1/2014, then it is generally 15% of your discretionary income.

• Income-Contingent Repayment Plan – Under this plan, they calculate your monthly payment a little differently. What you pay will either be based on 20% of your discretionary income or what you would pay on a fixed payment plan over a 12 year period that is adjusted to your income – whichever is less.

• Read: Pay off Debt With the Debt Snowball Method

To be redirected to the repayment plan estimator click HERE. This estimator is provided by https://studentaid.ed.gov and gives you a free comparison of estimated monthly payment amounts for all federal student loan repayment options.

kumiko Ehrmantraut

A little about me: I love helping women take charge of their financial lives. As an Accredited Financial Counselor, I love teaching about money management and realistic budgeting. Away from the computer, you can usually find me behind a camera lens or coloring with my 4-year-old son.

Want to share your financial journey with me? Tag @thebudgetmom on Instagram or give me a shout-out on Facebook. I WANNA SEE IT!