4 Best Ways To Pay Off Student Loans



If you want to know how to pay off student loans, this is for you.

Here’s what you need to know.

1. Refinance your student loans

When it comes to student loan repayment, the best way to pay off student loans faster is to refinance student loans. Student loan refinancing rates have dropped significantly and are now among the lowest in recent memory.

When you refinance student loans, you can refinance your existing federal student loans, private student loans or both into a new student loan with a lower interest rate. You can choose a fixed or variable interest rate, and can select a loan repayment term ranging from 5 to 20 years. The federal government does not refinance student loans, so if you want a lower interest rate, a private lender is your best option.

You can check your new interest rate online for free within two minutes with no impact to your credit score. You can also apply online in about 10-15 minutes. To get approved for student loan refinancing, you need to be employed (or have a written job offer), have a strong credit score and income, and a history of financial responsibility. When you refinance federal student loans, you receive a new student loan and therefore no longer have federal student loans, including benefits such as forbearance and deferral. However, when you refinance student loans, many lenders offer flexible payments, including potentially pausing your payments, if you lose your job or can’t afford your student loan payments.

Here’s an example of how much money you could save with this

student loan refinancing calculator. Let’s assume that you have student loans at a 9% weighted average interest rate payable over 10 years, strong credit and income, and you can refinance those student loans with a private lender at 3%.

With student loan refinancing, you could save:

Student Loan Balance Monthly Savings Total Savings
$30,000 $90 $10,481
$50,000 $151 $18,069
$75,000 $226 $27,104
$100,000 $301 $36,138

2. Consolidate your student loans

Federal student loan consolidation enables you to combine your existing federal student loans into a single Direct Consolidation Loan. Here’s the catch: unlike student loan refinancing, federal student loan consolidation does not lower your interest rate or monthly payment. Think of this student consolidation this way: it’s a tool to organize your federal loans into a single student loan with a single monthly payment and single student loan servicer. What is your interest rate when you consolidate federal student loans? With a Direct Consolidation Loan, your interest rate is equal to a weighted average of your existing federal student loans, rounded up to the nearest 1/8%. So, your interest rate does not decrease, but may slightly increase.

3. Income-Driven Repayment Plan

Income-driven repayment plans such as PAYE, REPAYE and IBR are available for federal student loans (not private student loans) and are offered by the federal government. Your monthly payment is based on a percentage of your discretionary income, and the percentage may vary based on the income-driven repayment plan you choose. Currently, for example, the monthly payment for REPAYE is 10% of discretionary payment, and you can receive student loan forgiveness after 20 years (undergraduate federal student loans) or 25 years (graduate federal student loans).

4. Public Service Loan Forgiveness



Public Service Loan Forgiveness

program is a federal program created by President George W. Bush that forgives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) nonprofit job who make 120 eligible on-time payments over ten years.

Under Trump’s proposed budget, the Public Service Loan Forgiveness program would be eliminated.

Opponents argue that the cost of public service loan forgiveness is unfairly borne by federal taxpayers, and that all student borrowers can access student loan forgiveness through a single income-driven repayment plan. Proponents argue that the program is essential to attract high-quality individuals to enter public service. 

proposal would impact borrowers who borrow a new student loan starting July 1, 2020, excluding borrowers who are completing their current course study.


Here is a recap:


Student loan refinancing

= save money, pay off student loans faster


Federal consolidation

= same interest rate, organize your student loans


Income-driven repayment

= lower monthly payment, student loan forgiveness


Public service loan forgiveness

= lower monthly payment, student loan forgiveness

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