How To Lower Student Loan Debt

Lowering your student loan debt may be beneficial for several reasons. You may simply feel burdened by the debt and its effect on your financial health, so paying down the loan could alleviate that stress. Or perhaps your student debt is creating an imbalance in your debt-to-income ratio, keeping you from achieving certain milestones, like purchasing a home. 

Regardless of your reasons,  you may be in a good position to reduce your student loan debt if you have steady employment, an emergency fund, and are saving enough for retirement.

The following methods can be helpful.

Automatic Payments

Setting up automatic payments can easily help reduce your student loan debt. Besides just being a convenient way to pay off a debt, automatic payments offer financial advantages. For example, if you pay student loans automatically you could receive a discount from your lender, your interest rate could be discounted, and your repayment amount could be lowered. The short-term savings might not seem significant, but they add up over time, so you could save a lot over the life of your loan.

Get even more value for your money by paying more than the minimum each month. Depending on the lender, you might be required to pay a specific amount each month or be permitted to pay whatever amount you want. So if your lender – and your budget – permits it, increase your monthly payment over the minimum balance due to speed up your payoff timeline.

Repayment Plans Such as PSLF and IDR

Additionally, options to consider include income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF).


An income-driven repayment plan is available for most federal student loans. These plans calculate your monthly payment depending on your family size and household income. If you still have a balance after you’ve reliably paid the required monthly sum for 20 or 25 years, the remainder will be forgiven.


Those in the public sector can take advantage of this federal forgiveness program. If you’re employed by an eligible organization, such as a nonprofit organization, government agency, or public school, then you’ll make 120 qualifying payments. Any remaining balance is forgiven once you meet those requirements.

Refinance Your Loan

Refinancing your student loans may be a good option if you currently have private student loans, a combination of personal and federal loans, or if you wish to take advantage of lower interest rates.

When you refinance, a private lender lends you the money for repayment. However, you won’t be able to take advantage of federal student loan protections such as deferment, forbearance, income-driven repayment plans, and PSLF. If you have federal loans, consider the pros and cons before refinancing.

Get Help From Your Employer

Employers sometimes offer incentives to encourage employees to pay off student loan debt. There are many types of employer assistance programs, and they vary from company to company. For example, some companies offer matching monthly repayments toward your student debt if the terms of your loan allow it.

Consult your loan terms and your company’s employer assistance initiatives, and you may be able to take advantage of such a program. If they do not currently offer student loan assistance, ask if they will consider it in the future. And remember, if you’re looking for a job, you can inquire about this benefit with prospective employers.

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