You guys! I feel like I’ve done the impossible!! After YEARS I finally figured out how to get our student loan interest rates lowered – AND YOU CAN TOO!
I have contacted our student loan companies many times, asking if there was any way to lower or refinance my student loans, and I was always given the same exact line: “If you set up the automatic withdrawal, we can lower it by 0.25%” LAME!
Well last week I called AGAIN seeing if there were any other options, and the customer service representative either
- Took pity on me and FINALLY gave me the info I needed in order to get them lowered, OR
- Read my file and just gave up on giving me the 0.25% line, because he knew I would not stop calling!
Either way, I am here to tell you how you can get your Student Loan Interest Rates Lowered too!
BUT- before I do that, I am going to give you some actual figures of our financial picture. With Scott graduating just last year from Grad School with his executive MBA, we have a combined student loan debt that is closer to 200,000 than it is 100,000! And by combined I mean I can only claim 5,000 of that student loan debt. $20,000 is from Scott’s Undergrad degree, and the rest is just his Graduate degree. : /
Our interest rates varied from 2.5% all the way to 9.75%!!!!! THAT IS INSANE. But at the time the loan was given, that was his only option.
Now that we are paying back the loans our student loan payments are:
- $400.00 MORE a month than our mortgage payment!
- They equal 35% of our take home pay
- IF we paid the minimum payments it would take over 26 years to pay them off
So yeah- when I look at those facts / figures I get physically ill! But I was able to get the rates lowered to 3%, which is a huge saving, and will allow us the ability to put more down on the principle balance. Based on our new budget and our financial plan we will have them fully paid off within 6 years!
6 years still seems like a long time, but it is way better than 26 years. Plus that does not take into account any raises, tax returns, etc. which will be applied to this payoff plan.
So here we go!
How to get your student loan interest rates lowered
- Gather ALL of your financial numbers. Which should be easy for you since you are using my Soon-To-Be Debt Free workbook. Right? RIGHT?
- Take a deep breath and call your student loan company. A customer service representative will pick up (at some point). Ask to be transferred to the Collections Department.
- No, you DO NOT have to be behind on your payments for this. *We were not behind on any payments.*
- Also- You probably won’t get transferred there the first time you ask. When the next representative picks up – Ask if you are speaking to someone in the Collections Department. When they say no ask *NICELY* to be transferred again…then repeat until you finally get there.
- Once you reach the Collections Department ask them if they would be willing to take at look at your Income VS. Expenses to see if you can qualify for an Interest Rate Reduction
- Be NICE!!!! Be so nice it makes you sick. They DO NOT have to look into this for you. They are under no obligation to help you with this, so make sure you are very nice! *Trust me, I know first hand how hard this can be!*
- Tell them your TAKE HOME PAY and then ALL of your expenses. (Mortgage or rent payments – insurances – retirement – car payments – utilities – credit card – educational costs – how much it costs you a month to put gas in your car – etc, EVERYTHING!)
- They will put all of your figures into a program, and will see if based on how much you make, your other expenses and your monthly student loan payment- if they can lower your interest rates!
- Because of how high our monthly student loan payments were along with our other outgoing bills, they lowered them down to 3%! *One came down to 3% from 9.75%!
Seriously, that is all it takes! I was so elated when I FINALLY got to speak to someone that could actually help us. Now that it is a few days later I am a little annoyed that it has taken over a year to get to this point, but I truly hope that this info will be able to help a bunch of you!
Some important things to note:
- The lowest that you’ll be able to have your interest rate lowered to is 3%
- It is only good for one year. You’ll have to call back next year and go through the same process to keep it at this new lower rate
- Now that your rate is lowered, work your butt off this year to pay extra on the principle!
- This will NOT have a negative effect on your credit report.
If you are serious about taking control of your finances – and you want to really get out of debt, than make sure you grab this 40-page workbook – today!!
Meaghan says
You’re a bonafide genius! I’m about to be painfully honest with you: I have only been able to make interest only payments on my loans for the last four years. And that will stop forever for the life of the loan in February. And I am TERRIFIED! I only have 2 loans and they are hovering just above 4% but that third one is over 9%! I’m definitely going to try this tomorrow and see if I can get my lovely lender to bring my interest payment down to 3% for all 3 loans and start paying down some principal! Thanks for the tip!
~Meaghan
Lindsay Butler says
Meaghan, I completely understand! I was always offered to pay just interest payments for 1 – 2 years, but I never wanted to do it because it would not help pay down any of the loan! It actually extends the life of the loan, and since that would take us into retirement I just could not imagine it. I hate how unwilling they tend to be, to assist their customers!
Let me know how it goes when you call!!!
xo,
Lindsay
[email protected] says
Great tip! Student loans can be overwhelming. My husband and I paid off his about 10 years ago and I still remember how tough it was. We were shocked to learn that when he went back to school for his masters degree that his previous college loans were put on hold and at 0%. That was very helpful because we just had to pay the principal. His employer paid for the one class a semester too! So for taking a class a semester we saved a ton in interest. I don’t know if they still offer deferments, but it was a life saver for us. It may be too for others that are thinking of returning to school with student loans.
Liz says
I’m curious was this with private student loans or government loans, does it make a difference when asking them to lower your interest rate? I would definitely love to do this, but most of my loans are government student loans..
Lindsay Butler says
These were private student loans. However, there are a lot more options available to you if you have Federal (government) loans!! You can get even lower than 3% interest rates!
Jenni@DitchingOurDebt says
Hi Lindsay,
I just came across your website and am with you in the student loan struggle – I was wondering what you meant by getting lower than 3% interest rates with Federal loans. My husband has all Federal loans from law school, and we qualify for Income Based Repayment, but I have never seen anything about lowering our interest rate. Could you elaborate? Thanks!
Jenni
Tesla says
I am crying with you. Why can this be legal to get so deep in dept? Besides that, thank you for your help. I will continue to pray God miraculously cancels your debt
Lindsay Butler says
Thank you Tesla! It is a relief knowing we have a plan in place to climb out of this hole! I really appreciate your prayer!
God bless!
xo,
Lindsay
Jailene Santana says
This is fantastic! Though my Pinterest page is [littered] with tons of things I find “useful” to keep, I have this blog page saved not only on a special pinterest board, but also saved to my desktop. I decided to go to grad school to get my MS in the UK as their programs are shorter than master’s programs in the US… anything to take out the minimal amount necessary in student loans.
I have been terrified of the long-term implications of these loans as they will affect my life in so many ways. I felt anxious on a DAILY basis, surely an unhealthy chip to have on one’s shoulder!
Your advice is fantastic, and as soon as I turn my dissertation in I will be calling my federal student loan service providers and asking for the reduction in interest. That and printing out the pages for my Soon-to-be-debt-free workbook!
Thank you for providing this resource!
Brittany @ Equipping Godly Women says
REALLY???? I didn’t know this. Now I have to try it. Did you know you can do the same thing with your credit card too? I don’t usually carry a balance (I do have one now from hospital bills–it was cheaper that way), but for anyone who does–it’s a great trick!
Samantha says
Eeek thank you!! I haven’t started college yet but student loans are scaring me!
Cass@frugalfamily says
Thanks for linking with this week’s Parenting Pin it Party x
Mayra says
Thank you so much for this informative post! I actually have federal student loans and have been informed that I cannot make extra payment towards the principle. All payments (including extra payment) will be put towards interest first. I have called previously and spoken to more than one representative and they have all told me the same. This is horrifying! It will take me forever to pay my 50k+ loans that way. Anyone been relayed the same information? I’m curious to know if the trick is to be EXTRA nice :).
Jenni@DitchingOurDebt says
Marya,
We have all federal loans, and I do know that because we have income-based-repayment, our minimum payment is $0 right now. So what we do is make our whole payment toward the highest interest loan. The rest of the loans continue to accrue interest, but the loan we pay on gets a much higher principle payment. That gives you a bit more progress than spreading it across all the loans.
Jenni
Olivia says
This is awesome !! I have federal loans and I remember asking a long time ago when I realized how much my interest rate was…if I could do anything to lower it and they said no…however, I have not tried this method, I think I will and we what happens. I am currently at 6% interest and would DIE if I could get to 3%. That would help me tremendously. I have great credit and my car loan interest rate is actually less then my student loans. :/
To Mayra, I be live I was told that each payment made will go to interest first and then principle. But if you do not have any back interest and you are paying more then what your loans generate in interest per month then the remainder will go to your principle.
Danielle says
Does this work with government loans or just private loans?
Lindsay Butler says
Yes!