Student loan repayment is a serious problem for graduates who find themselves facing large amounts of debt just as they are trying to start their lives. If you feel overwhelmed by your student loans, you should explore your different repayment options to find one that suits your financial situation.

Income-Based Repayment

Many graduates find that the Income-Based Repayment Plan (IBR Plan) is an effective way to lower their monthly payments.

If you qualify for this program, then you only need to reserve 10 percent to 15 percent of your discretionary income for repayment. In this instance, discretionary income is defined as your income minus 150 percent of your family’s poverty guidelines. For instance, if you are a single person who earns $30,000 per year, you would pay between $101.50 and $152.25 per month.

You can find current poverty guidelines at the U.S. Department of Health and Human Services.

Keep in mind that while you may pay a lower amount per month, the IBR Plan will extend your loan’s term. Your individual payments are likely more affordable, but you will repay more overall and be on the hook for taxes for any forgiven amount.

Loan Consolidation

Loan consolidation is one of the most common options for graduates who want to lower their monthly payments. What many don’t realize, however, is that there are two types of consolidation: government and private.

Private loan consolidation is usually the best option because you can potentially qualify for a lower interest rate. It’s also useful because you can consolidate federal and private student loans into one monthly payment. The downside is that you need good credit to qualify for this type of loan consolidation.

Having the government consolidate your loan will not lower your current interest rate. It can, however, extend your loan term, which will reduce the size of your monthly payments. Unfortunately, you can only use this option to consolidate federal loans. It won’t work for any loans that you received from a private lender. The good news is you don’t need good credit to qualify.

Student Loan Deferment

If you cannot find a job or you face other types of serious financial problems, you may qualify for student loan deferment. Deferment lets you stop making payments for up to three years.

This approach is most useful for people with subsidized loans because the government will pay your interest during deferment. The government will not, however, pay the interest on any unsubsidized loans, which means your total loan amount will grow while you avoid payments.

Before you choose a loan repayment option, take a close look at your finances. In most cases, paying more now will lower the overall amount that you spend.