Ask Money

How to reduce student-loan payments?

Chris Farrell Feb 19, 2009

Question: My husband has significant private student loans, about $100K, through Sallie Mae with above market interest rates. The current monthly charge is more than I can afford. What are my options to reduce the amount owed or the payment amount? I am on partial disability and my husband recently joined the military. Many thanks, Tanisha, Orlando, FL

Answer: The first thing I would do is to take advantage of the free legal assistance you can get at offices located on almost every military base, ship and installation. The military lawyers will have dealt with situations like yours many times over. According to (a terrific resource on military benefits), military lawyers can do everything from negotiating with another party to drafting wills to personal finance advice. Unfortunately, there is less financial flexibility with private loans compared to federally-sponsored loans. Still, since your husband is on active duty he may qualify for a 36 month deferment from Sallie Mae. The Servicemembers Civil Relief Act offers active duty personnel debt protections, too. If his military service affects his ability to pay off debts such as credit cards, mortgage and some student loans the rate on the loan can be capped at 6%. The reduction is only for the time of active duty, but any interest above 6% is forgiven. This is for debt taken on before active duty. Again, the military lawyers will be able to walk you through the options available to you.

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