6 Strategies to Pay Off $100K in Student Loan Debt

Leaving school with a student loan balance of $100,000 or more isn’t the norm, but it’s also not a rarity among today’s college graduates. Paying off six-figures in student loan debt isn’t simple or an overnight process. You’ll need a solid payoff plan to knock out that kind of debt.

There are several repayment strategies that can help you achieve your debt payoff goal, whether you want manageable monthly payments or simply the fastest way to get student debt-free. Here are six strategies that show you how to pay off $100K in student loans.

1. Explore student loan forgiveness

Best for: Borrowers with public service jobs and other eligible career fields.

Individuals with federal student loans might be eligible for one of the available student loan forgiveness programs. If qualified, you could knock off a large chunk of your total debt bill. Depending on the specific program, you could have your student loans forgiveness tax-free.

Types of student loan forgiveness programs

Available student loan forgiveness programs include:

  • Public Service Loan Forgiveness Program (PSLF): Eligible borrowers who work in public service and select nonprofit jobs can have their remaining loan balance forgiven, tax-free, after making 120 qualifying monthly payments.
  • Teacher Loan Forgiveness: Highly qualified teachers working at qualifying schools might be eligible for up to $17,500 in loan forgiveness.
  • Income-driven loan forgiveness: Individuals on an income-driven repayment plan can get their remaining loan balance forgiven after 20 or 25 years of making payments. The forgiven debt is taxable so you’ll likely pay taxes on that amount. Make sure to financially prepare for the eventual “tax bomb.”

There are other student loan forgiveness programs available based on profession and where you reside. Research available loan forgiveness programs that are relevant to your situation to see if you qualify.

2. Consider an income-driven repayment plan

Best for: Borrowers who qualify for lower payments than with a 10-year standard repayment plan.

The federal government offers several income-driven repayment (IDR) plans for eligible borrowers. IDR plans come with fixed monthly loan payments based on your annual income and your family size. The four primary IDR plans are:

  • Pay As You Earn Repayment Plan (PAYE Plan)
  • Revised Pay As You Earn Plan (REPAYE Plan)
  • Income-Based Repayment Plan (IBR Plan)
  • Income-Contingent Repayment Plan (ICR Plan)

The four IDR plans vary slightly in their structure but typically come with a monthly payment between 10% and 20% of your discretionary income. Depending on your income, you could have a monthly payment as low as $0.

IDR plans generally come with loan terms of 20 or 25 years. As previously mentioned, once your IDR loan term is complete, any remaining loan balance is forgiven. Forgiven funds are considered taxable income, but an IDR plan keeps loan payments low so you can save toward an eventual tax bill.

REPAYE subsidies

While all of the IDR plans can help to lower your monthly payments, you might have an opportunity to save more in interest charges by moving to the REPAYE program. That’s because of interest subsidies that are available from the federal government.

These interest subsidies are especially helpful for high-debt borrowers; for example, if you owe more than twice your income. On REPAYE, the government takes your monthly payment and applies it against the monthly interest owed. The government pays 50% of any remaining interest charges.

One of the best ways to know which plan is best for you is using a student loan repayment calculator. Plug your loan and personal information into the tool and see which repayment options save you the most money. You can change your repayment plan by contacting your loan servicer.

3. Refinance your student loans

Best for: Borrowers with good credit and stable income.

One of the best ways to save money and pay off loans faster is through student loan refinancing. Depending on your credit score and other factors, you might qualify for lower interest rates than your current private and federal student loans. It’s also a great way to combine multiple student loans into one loan with a single monthly payment.

Scoring a lower interest rate could save you thousands of dollars or more in interest over the life of the loan. Plus, most private lenders allow you to check rates without negatively impacting your credit score. Compare refinancing rates to your existing federal and private student loans to see if it’s worth making the switch.

It’s important to note that you’ll lose access to federal benefits and protection when you refinance federal student loans. This includes access to loan deferment and forbearance options, student loan forgiveness programs, and IDR plans.

Add a cosigner

Refinancing with a cosigner could help improve your chances of qualifying for student loan refinancing or score a lower interest rate. You’ll need a cosigner who you share mutual trust with and who has excellent credit. Typically, it might be a parent, grandparent, spouse, sibling, another family member, close friend, or mentor.

When someone becomes a cosigner, they assume financial responsibility for loan repayment if you can’t meet your obligations. Many lenders allow you to check rates with or without a cosigner, so shop around to see which option gives you the best odds of approval and lower rates.

Consider a refi ladder

In refinancing, the lowest rates are reserved for shorter repayment terms. Unfortunately, borrowers often worry about choosing too short of a term because the monthly payment is much higher. A student loan refinancing ladder helps you secure a longer loan term, at lower rates without taking on a high monthly payment for the entire term.

Right now, borrowers can still score low rates on longer, fixed refinancing terms. As your credit improves and your loan balance drops, you can refinance again to a shorter term or even a variable-rate term.

Using a refinancing ladder isn’t difficult, but it can take time and there are some general guidelines you should follow.

  • Start with a longer fixed-rate loan term, typically 10 years or longer. If your rate isn’t dropping by at least 0.25%, pick the longest loan term available.
  • Drop your principal balance down quicker by making extra prepayments over and above lender requirements.
  • If you’re eligible for lower rates, refinance to a shorter fixed loan term, possibly between 7 and 15 years, with a new lender.
  • Once your loan balance is one-third less than your starting point, refinance to a 5-year variable loan term with another new lender. At this point, almost all of your monthly payments will apply towards the loan principal, not interest.

One of the most important aspects of a refi ladder is making extra payments whenever possible. This, along with lower rates, will lower your loan balance quicker than any other factors.

There’s no limit on how many times you can refinance your student loans. There’s also no penalties for refinancing over and over again. Plus, refinancing multiple times allows you to take advantage of cash-back refinancing bonuses from Student Loan Planner’s lending partners. Using a refi ladder minimizes your monthly payments, saves you money on interest charges, and creates more available cash flow to pursue other life goals.

4. Tackle high-interest student loans first

Best for: Borrowers with high-interest student loans.

One way to lower your student loan debt total is to focus your payoff efforts on student loans with higher interest rates first. This payoff strategy is often referred to as the debt avalanche method.

To pull this off, make minimum payments on all other low-interest student loans while putting any extra money toward payments for the highest interest rate student loan. Once you pay off that loan, move on to the loan with the next highest rate, and so on, until all of your student loans are paid off.

Paying off your student loans this way helps you save money by paying less interest overall.

5. Refine your budget

Best for: All borrowers.

Budgeting has become a taboo word. It conjures negative thoughts of limits and cutting out all fun to achieve a financial goal.

In reality, having a budget is freeing. It allows you to prioritize your spending on things you value. Yes, you might need to temporarily cut some expenses that you like (or love) while paying off your student loans. You’re still in control of your spending, though, and can allocate funds toward activities and things you love, while still paying off debt.

Setting up a budget

The first step to creating a budget is analyzing your spending habits. Several budgeting apps exist that link your bank accounts (automatically or manually) and track your spending over several months. As you track your spending, you’ll notice trends in where your money goes. This insight helps inform the spending categories that you can cut back in.

Then, create a budget based on your income, accounting for all of your recurring bills, student loan payments, essentials like food, and any other categories that are non-negotiable. Budgets aren’t a “set it and forget it” process either. You’ll need to monitor your budget and spending to stay on track.

6. Increase your income

Best for: Borrowers with marketable skills and time to build a side business.

There’s only so much you can cut out of your budget to direct more funds toward paying off student debt. Eventually, you need to focus on the other end of the spectrum — your income.

Some ways to increase your income depend on your specific life and work circumstances. If you’re working now, you could approach your boss or supervisor about a raise. Another option is working toward moving up in your company to a position with a higher salary.

If those aren’t options, explore higher-paying job opportunities. If you like where you currently work, ask about picking up an extra shift or overtime hours.

Find a side gig

You could also supplement your income by starting a side hustle. Think of skills you possess or a hobby you like that might translate to a profitable side business. Popular options include:

  • Rideshare driver
  • Grocery delivery
  • Opening an Etsy store
  • Tutor
  • Freelance writer
  • Social media manager
  • Virtual assistant

You can also make money selling items online. Think about items you own that you no longer use, but might be useful to other people. Use platforms like eBay, OfferUp, Craigslist or Facebook Marketplace to sell items online.

Make a list of skills, talents and interests to narrow down a list of side hustle ideas to try.

How long does it take to pay off $100,000 in student loans?

How long it takes to pay off $100,000 in student loans depends on your repayment approach and your loans and how aggressive your payments are. Depending on the repayment path you choose, you could be paying off student loans for the next 10 to 25 years. The more money you dedicate toward paying down your loans each month, the less time it takes.

By refinancing your student loans, you could cut down the repayment time considerably, and save money on interest. It all depends on your choices and how you rank paying off your loans on your list of life goals. Research the options listed above to determine which ones you qualify for and what repayment path is best for you.

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