The Easiest Way To Reduce Your Student Loan Payment

You don't need income or a job to remain current on your federal student loans.

It's one of the little-known facts about the government's student loan program, from which some 42 million Americans have collectively borrowed more than $1.2 trillion to pay for higher education.

More than 1 in 4 of those borrowers, or at least 11 million people, are either behind on their monthly payments or in default, federal data show. Millions more are struggling to make their payments, with nearly half of Americans recently reporting  that they've had to curb their spending due to their student debt.

It needn't be this way.

Every former student who took out a student loan backed by the U.S. government -- more than 90 percent of all student loans are either owned or guaranteed by the federal government -- is eligible to make payments based on her monthly earnings.

And if a borrower has little income, or none at all, her payment can be as low as $0 for up to 12 months, a year-long lifeline that can be renewed annually.

That's because the federal government offers what are called income-driven repayment plans, which link borrowers' required monthly payments to their monthly earnings. While most household loans -- think car loans and home mortgages -- require payments based on the amount of the loan and the date it needs to be repaid by, federal student loans offer a bevy of plans that allow borrowers to make payments based on their income.

There are four of them : Income-Based Repayment, Pay As You Earn, Revised Pay As You Earn, and Income-Contingent Repayment.

Each carries different terms, with payments ranging from 10 percent to 20 percent of discretionary income , which the federal government defines as adjusted gross income (taxable income minus specific deductions) minus 150 percent of the federal poverty level by household size.

After years of steady payments, usually 20 or 25 , whatever is left over is forgiven. The amount forgiven is taxed, unless you work in public service  (such as for a government agency or nonprofit organization). In fact, for borrowers who work in public service, they only need 10 years of payments (120 monthly payments total) before the remainder is forgiven tax-free.

About 3 million Americans with loans direct from the Education Department are making monthly payments based on their earnings, data show.

In 2013, an executive at an Education Department loan contractor boasted that more than 40 percent of borrowers  his company enrolled in income plans had a zero dollar monthly payment.

If you are struggling with your federal student loans and need help, click on this link  to connect to an Education Department website that will estimate your payments based on your financial situation. Separately, check out this website run by the National Consumer Law Center and this one by the Institute for College Access & Success for more information.

You also could call your loan servicer (here's a list of their names and contact information) and demand they determine what your monthly payments might be, based on your household size and monthly earnings.

Remember: The federal government is paying nearly one dozen companies to help you make your payments. They're paid by your taxes, so demand that they work for you. If you qualify for an income plan, demand that they help you enroll.

Income plans won't work for everyone. For example, federal loans that parents took out for their children generally aren't eligible for income-driven repayment plans (there are exceptions ).

Also, there's a good chance you'll end up paying more for your loans in the long run if you elect to stretch out payments over 20 or 25 years rather than equal monthly payments over 10 years, thanks to interest accumulation.

But if you've got federal student loans, and you're struggling, there's little reason not to check out how much you'd save if you enrolled in an income plan. Visit this link or call your servicer .

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