5 Proven Strategies to Lower Student Loan Payments When You're Behind

Student loan delinquency is becoming increasingly common, with millions of borrowers struggling to keep up with monthly obligations. Whether you have federal loans, private loans, or both, falling behind on payments can damage your credit and lead to cascading financial problems. The good news: there are legitimate, actionable strategies available right now to help you lower student loan payments and regain control of your finances.

Merge Federal Loans Into One Monthly Payment Through Consolidation

If you’re juggling multiple federal loans with staggered due dates, loan consolidation could be your first step toward simplifying your payment structure. By merging all your federal student loans into a single consolidated loan, you’ll have just one monthly payment to manage instead of several.

To get started, visit studentaid.gov—the official U.S. Department of Education website—where you can initiate the consolidation process. Before proceeding, however, be aware of some important trade-offs outlined by the Federal Student Aid (FSA) office:

• You can choose which federal loans to consolidate; not all loans must be included
• Your monthly payment may decrease, but this typically comes with an extended repayment timeline—meaning more interest paid overall
• Any interest that’s accrued but not yet paid will be capitalized (added to your principal balance)
• Your new consolidated loan will receive a new interest rate based on current federal rates
• If you’ve been working toward income-driven repayment forgiveness, consolidation resets that progress counter

The FSA’s Loan Simulator tool can help you model different consolidation scenarios before committing to this approach.

Select the Right Repayment Strategy to Reduce Your Monthly Obligations

Once your loans are consolidated (or if you opt to keep them separate), the next critical step is choosing a repayment plan that actually works with your current income and expenses. This is where income-driven repayment plans become relevant.

Using the FSA’s Loan Simulator, you can compare various repayment strategies side-by-side to see which one produces the lowest monthly payment aligned with your financial situation. Income-driven plans adjust your payment based on your discretionary income, which often results in significantly lower monthly amounts than standard 10-year repayment schedules.

Keep in mind that the simulator makes educated guesses about your income, tax filing status, interest rates, and loan term to calculate projections. These figures should be used as estimates rather than guarantees, and you should reassess your plan annually or whenever your income changes.

Refinance Private Student Loans If You Have Strong Credit

If you carry private student loans and have achieved “very good” or “excellent” credit status, refinancing might unlock meaningful monthly savings. By refinancing with a private lender, you could potentially reduce your interest rate, which directly lowers your payment amount.

The trade-off: refinancing often extends your repayment term and may strip away current lender benefits like generous deferment or forbearance options. Before switching lenders, carefully weigh whether the interest rate savings justify losing the flexibility and protections your current lender provides.

Convert Federal Plus Loans to Private Options for Lower Rates

For borrowers with Federal Plus or Grad Plus loans, the interest rate difference between federal and private markets can be substantial. Depending on your credit profile, refinancing these federal loans into the private market might allow you to save 1% to 5% annually on interest rates.

However, this strategy comes with significant drawbacks. Moving federal loans into the private sector means losing access to federal hardship programs, income-driven repayment options, and other borrower protections. You’ll also face stricter repayment terms with fewer flexibility options if your financial situation changes unexpectedly.

Tap Into Employer-Sponsored Student Loan Assistance Programs

One underutilized resource: your employer. Many companies now offer educational assistance benefits under IRS Section 127, which allows employers to contribute up to $5,250 per year toward employee student loan repayment—completely tax-free.

If your employer already offers this benefit, enroll immediately. If not, consider advocating internally for the program. More companies are recognizing that offering student loan repayment assistance is an effective employee retention and recruitment tool, so your proposal may gain traction with HR or management.

Taking Action Now

The path to lower student loan payments requires understanding your options and taking deliberate steps to match your loans with your financial reality. Whether you consolidate, refinance, or adjust your repayment plan, each of these approaches can meaningfully reduce your monthly obligations. Start by reviewing your current loan portfolio at studentaid.gov, use the available calculators to model different scenarios, and then execute the strategy that best positions you to lower student loan payments while protecting your long-term financial health.