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How to Lower Your Student Loan Debt

When it comes to the largest consumer debt in America, student loans come in second only to mortgages. We've collected 14 useful ways to lower your student debt.
Author: Jack Wickens
Jack Wickens

Writer, Contributor


Jack is a personal finance writer who has been writing for more than a decade. His passion for educating consumers and helping everyday families earn more and live better. He is most knowledgeable with years of experience covering topics such as savings, budgeting, and responsible credit use and always happy to share his expertise with readers.

Review & Fact Check: Baruch Mann (Silvermann)

Jack Wickens

Writer, Contributor


Jack is a personal finance writer who has been writing for more than a decade. His passion for educating consumers and helping everyday families earn more and live better. He is most knowledgeable with years of experience covering topics such as savings, budgeting, and responsible credit use and always happy to share his expertise with readers.
Author: Jack Wickens
Jack Wickens

Writer, Contributor


Jack is a personal finance writer who has been writing for more than a decade. His passion for educating consumers and helping everyday families earn more and live better. He is most knowledgeable with years of experience covering topics such as savings, budgeting, and responsible credit use and always happy to share his expertise with readers.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO


Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. See how we make money.

Table Of Content

As the cost of tuition continues to increase, student loan debt also increases. In this chart using Experian data, you can see that in 2014, student loan debt was at $1 trillion. This has steadily grown over the last six years, hitting a high of $1.57 trillion in 2020.

Student Loan Debt Growth (Trillions)

With the rising cost of education student loans have increasingly become important. In this chart compiled with Federal Student Aid data, you can see that 8.3 million borrowers have a student loan balance of less than $5,000. The most common balance is $20,000 to $40,000 with 9.5 million borrowers. At the other end of the scale, 800,000 borrowers have student loan debt of over $200,000.

Student Loan Balance Number of Borrowers (Millions)

Students typically have a number of options to finance their education. In this chart using NSDLS data, we can see that Stafford Combined has 33.2 million student loan borrowers. This is followed by Stafford Subsidized and Stafford Unsubsidized with 29.5 million and 28.9 million respectively. At the other end of the scale, Grad Plus has 1.4 million borrowers and Perkins with 2 million student loan borrowers.

Student Loan Borrowers (millions) by Loan Type

If you’re looking for a way to reduce how much your debt is going to weigh on you, however, there are ways you can do it. The key is the term, the repayment period and the monthly payment.

Here’s what you could do to make the situation even better for you: 

1.  Increase Your Payment

One of the best ways that you can go about paying off your debt faster is to pay more than you actually owe.

You want to make sure that you go about it right though, which requires you to notify the lender about it. If you don’t they apply the extra payment to the next payment owed instead of to the principal. If you just let them apply it to the next payment you’re not actually going to save any money or pay off the loan faster.

Keep in mind that you don’t actually have to pay a lot of extra money to make a difference. If you can put in an extra $30 or an extra $100 you’re going to make a huge dent in the total you owe.

2. Lower the Expense

If you really want to pay off your debt as fast as you can the best thing you can do is cut the other expenses that you have.

For example, if you can stop spending as much going out to eat or for your rent you’ll have a little bit more that you can put toward your debt. If you keep in mind that every little bit is going to help cut down on your interest you’ll definitely be more than happy to make a few little sacrifices along the way.

Of course, you can do minor things too, like canceling cable or dropping some of your minor expenses. No matter what you prefer, you’ll be able to pay off that debt a whole lot faster.

Is that something you want? A good budget can definitely help you figure it all out.

3. Increase Your Repayment Process

If you’re willing to pay for longer but want to lower the amount you have that option as well. Normally you’re going to pay off your loan over a total of 10 years but you can extend this if you like. With an IDR plan you can get anywhere from 10 to 25 years to pay it off.

Those who owe more than $30,000 can request an extended plan that gives you the option of fixed payments or graduated payments and then gives you up to 25 years to pay back the debt. For those who have more than one debt it’s possible to combine them and get as much as 30 years to pay them off. It’s going to depend on how much you owe and you have to make sure you use a federal direct consolidation loan to do it. You won’t get lower interest, but you’ll get a single payment.

If you decide to go with extending your payment term, just like using an income-driven plan, you’re going to end up paying more money in interest. That’s because you’re going to be incurring interest over a longer period of time.

If you can refinance to a private lender you may be able to lower your interest rate.

4. Pay Earlier Than You Need

If you really want to set yourself up well you should start paying before the debt is even due. If you start paying them while in school you’re going to pay less overall. You’ll reduce the principal and you’ll reduce the amount of interest that you get as well.

If you have an unsubsidized loan this is even more important. So make sure that you have payments applied to your interest and fees and then to the principal. If you start while you’re in school you’ll be applying your payments even better.

5. Follow a Specific Plan

You should always have a great plan for how you’re going to pay off your debt.

That’s going to include your credit card debt, your car loan and more. Make sure you prioritize how you’re paying things off and that you pay attention to interest and taxes. Also, make sure you account for tax deductions for your student loans and then make sure you are working on private loans and other debts more quickly. Having a high-quality plan is going to make it easier for you to pay off your debts more quickly.

If you have a debt of $60,000 and you only make $50,000 the goal should be a repayment plan that takes only 6 years to pay off. This is going to require you to make some adjustments and some changes to your budget and spending. By budgeting, you may even be able to figure out other areas where you can cut expenses and pay down the overall debt.

6. Get a Job

For those who are working on their studies it might be difficult to work, but having a part-time job could really help you to pay more on your loan. Take a look at your situation and circumstances to see if a job could be the right answer.

For those who have a job already, you might want to look at adding some extra hours or getting another job. Make sure you know that you’ll be able to keep up with your schooling while you’re working before you take anything on.

If you’re going to be working hard and then find yourself missing out on your classes or falling behind you’re definitely not going to be getting any benefits.

In fact, you’ll find yourself having to spend even more money to retake classes, which means you’re not getting anything out of those extra hours.

For those who do already have a job, a side hustle could be just what you’re looking for and it could really help you pay down your loan.

7. Consider Loan Forgiveness Programs

There are actually a number of different jobs that could qualify you for loan forgiveness. If you work in some type of service industry or you put your efforts into public service you could actually get your debt completely forgiven. This applies to jobs like lawyers, nurses, volunteer workers, federal employees, doctors and a few more. You want to look at your current goals and your degree and see if there’s anything that you could be doing to qualify for loan forgiveness.

You may even be able to find an employer who is willing to help you with your student loans if you opt for the right place. Some are giving this as part of their benefits so if you are looking for a new job make sure you consider this option. You may even be able to negotiate something even if it’s not what they already offer so you can help cut down your student loan even faster.

8. Find a Cheaper College

One of the easiest ways that you can reduce the amount of student loan debt that you have is to go to a school that’s less expensive.

Look at different colleges and universities in your area and see which ones are going to be the least expensive. Make sure you talk about the loans that are going to be required for different schools and that you’re not taking out more in loans than you should expect to make in your first year.

You could find a number of different options for rates, different scholarship and financial aid options and a whole lot more.

9. Get a Deferment

If you can’t make your payments over the short term you may be able to qualify for deferment or forbearance. These allow you to pause your payments or reduce them for a short period. With a deferment, you don’t have to worry about interest accruing while your loan is not being paid. With a forbearance, you still get more interest added on.

The important thing is to talk with your lender to find out more about these options or to set something up for yourself. You’ll need to qualify in order to activate these options but if you have financial hardship or unemployment or medical expenses or a number of other situations you can definitely use them.

10. Pick The Right College

Pay attention to more than just tuition. Look at things like textbooks and other materials as well as any expenses associated with living on campus or living elsewhere before you choose.

When you look at the top choices that you want to go to make sure you also look at the lifestyle and career opportunities that will be offered. Make sure you’re making a list of pros and cons for each option before you jump in and make a decision.

For those who are having a hard time narrowing things down take a look at their tuition options and see what it’s going to cost for each. Then, look at how it’s going to be trying to get into the classes you want or need. You definitely don’t want to have to push off graduation for a year or more because you can’t take the classes that you need and don’t have other options available.

Keep in mind also that you don’t have to start out at the college you’re going to finish at. You can actually start out at a community college and then transfer to just about anywhere you want to go. If you can get some work done at the local community college you’re going to have no problem getting your grades in better shape and you’re going to have a great chance of getting more help when you move on. Plus, you’re going to save a whole lot of money when it comes to your tuition.

If you’re not totally sure about how you’re going to pay off loans later on make sure you’re not taking out more in loans than a typical first year salary in your field.

11. Use FAFSA to Your Advantage

If you want to reduce the amount of money you’re spending on loans the best thing you can do is fill out the FAFSA. This application is going to make you eligible for a whole lot of free money and that’s definitely going to be a great benefit. You’ll be eligible for things like federal aid and even federal loans. Those loans are generally going to be less expensive overall than a private loan and you’re going to have the option for payment plans and more.

This application also decides whether you can do any kind of work study, which means you could get lower tuition costs. What’s great about these is they’re right on campus and they’re designed for people who are attending school. Just make sure you fill it correctly according to the guideline.

12. Work on Loan Consolidation

Anyone who has more than one federal loan may want to take a closer look at all the details and consider whether consolidation is the best way to go. You could end up extending your loan term and bringing yourself down to only a single payment.

You’ll need to consolidate in order to use forgiveness options or specific plans but even if you don’t qualify for those it might be a good idea to consolidate. You could possibly extend the life of your loan and lower the amount you have to pay each month.

Just note that you’re not going to be saving money through this type of consolidation. You’re not going to lower your interest and you are going to increase the amount of interest that you’re charged over the life of the loan.

So you’ll have to decide if you care more about the interest rate or the amount you’re charged each month.

13. Graduate Early

You actually have the ability to take up to six classes in a semester in most schools and this still counts as full-time tuition. If you’re able to take those six classes every semester and especially if you came into college with some credit applied you could actually graduate early. If you cut a full semester off you’re going to save 12.5% when it comes to tuition and that’s going to save you a lot of money.

Keep in mind you’re not going to have some of the senior fun experiences and you’re going to have to work a whole lot harder. But you could definitely reduce your expenses and still get the exact same degree that everyone else in your graduating class is getting.

14. Look into Refinancing

This is only really going to work if you used private student loans.

With refinancing you’re going to be taking out an additional loan and paying off the loans that you already have. Your overall intention is to cut down the interest rate or get better terms for your repayment. You won’t be able to do this with a federal loan, but if you have private loans you may be eligible.

Lower Your Student Loan Debt - FAQs

Yes, you should try to pay off your student loans early. But before considering you do, it is a good idea to have an emergency fund intact. Emergency funds are funds deposited in bank accounts to deal with sudden crises, such as vehicle repairs, unemployment, or illness.

Having an emergency fund ensures that you don’t have to resort to a credit card if you encounter problems. However, if you don’t have an emergency fund yet, you should consider deferring the payment of the extra cost of the loan and use the cash for savings first.

Direct student loans (loans provided by the U.S. Department of Education to student loan borrowers) may be either subsidized or unsubsidized. Subsidized loans have an interest advantage and can be used by any students who are in financial need (such as federal student loan borrowers).

Unsubsidized federal student loans, however, are student loans that are not adjusted for financial needs. Moreover, subsidized loans don’t accrue interest, while unsubsidized loans do.

If the information in your credit report is inaccurate, you can delete or correct it. Three major consumer reporting agencies provide credit reports. Also called credit bureaus, they are known as TransUnion, Equifax, and Experian.

These three companies are responsible for accurately reporting your credit history, including student loan and payment records. Although incorrect information can be fixed, you cannot delete accurate information from your credit report. As long as your student loan information is accurate and true, you can’t take it off your credit report.

Yes, you can indeed refinance your student loans. This applies to both private and federal student loans. However, in all cases, you must meet the requirements set by the lender in order to refinance your loan.

In most cases, these requirements include having a credit score in the high 600s, making enough money to pay your debts, and having a college degree. Please note that the college must be a qualifying university in order for your request to be approved.

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