Can You Recast Student Loans?

No, student loans cannot be recast in the way that mortgages can. Recasting is a specific mortgage feature that allows homeowners to make a lump-sum payment toward their loan’s principal, after which the lender recalculates the monthly payment based on the reduced balance. This feature is not available for student loans.

However, there are other options to manage and reduce your student loan payments:

1. Refinancing

If you want to lower your student loan payments or interest rate, refinancing might be an option. Refinancing allows you to take out a new loan with a lower interest rate to pay off your existing loans, which can reduce your monthly payments and the total interest you pay over time. However, this is typically available only for private student loans, and refinancing federal loans with a private lender means losing access to federal benefits like income-driven repayment plans and loan forgiveness.

2. Income-Driven Repayment Plans

For federal student loans, you may be eligible for income-driven repayment plans, which base your monthly payment on your income and family size. These plans lower your payments if your income is relatively low, and after 20 to 25 years of qualifying payments, the remaining balance may be forgiven.

3. Making Extra Principal Payments

Similar to paying down principal on a mortgage, you can make extra payments toward the principal of your student loans. This can help you pay off the loan faster and reduce the overall interest you pay. However, this won’t automatically reduce your monthly payment unless you refinance.

4. Loan Forgiveness Programs

Federal student loans also offer various loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF), where eligible borrowers working in public service can have their remaining loan balance forgiven after making 120 qualifying payments.

In summary, while you cannot recast student loans, options like refinancing, income-driven repayment, and extra payments can help you manage and potentially reduce your student loan burden.