Managing your student loan debt: strategies for success

By Gina Freeman

Reviewed by Jill Cornfield

May 14, 2024

Read time: 10 min

Mother and daughter doing finances together at home. They talk and handle some bills, looking and pointing at laptop screen

Key takeaways:

  • If you can’t afford your federal student loans, an income-driven repayment (IDR) plan could reduce your payments. All the way to zero if you qualify.

  • Private student loans have no IDR option, but your lender may help if you can’t afford your loan.

  • Borrowing as little as possible and making payments while in school helps you clear student loan balances faster.

You went to college, worked hard, and got your degree—your key to a better future. But years, maybe even decades later, those student loans still linger. You're not alone. Many of us carry this debt well into our adult lives. 

With the right information and strategy, you can manage your student loan debt and plan for a brighter financial tomorrow. We’ll explain how.

How do you deal with student loan debt?

Let’s dive right in. To create a realistic repayment plan to manage your student loan debt, first you need to know what you’re dealing with. List all of your student loan debts, and whether they are private or federal. 

Yes, your student debt roundup might look scary, or at least feel downright unpleasant to look at. A lot of us with student loans are dealing with big numbers. You’ll be okay. The journey to the other side of your debt starts with this first step.

You can get a list of your federal student loans from the National Student Loan Data System. Add your private loans to this list to get your total payment and amount owed. Now you have your starting point. 

Should I refinance my student loans?

Refinancing student loans is a mixed bag. Refinancing means using a new loan to pay off an old loan, and people do this when they can get a new loan that has a lower interest rate or otherwise makes their financial situation better.

However, refinancing student loans can have unintended negative consequences. Federal student loans provide a lot of payment flexibility that private loans don’t. For instance, you can get a repayment plan based on your income for federal student loans, with a payment as low as $0. That’s not possible with private student loans. So replacing federal loans with private loans is a big decision. Before you go that route, you’d want to have a very specific financial plan that makes you feel comfortable with giving up the benefits. 

How does student loan consolidation work?

Consolidating federal student loans brings multiple loans from various lenders into one payment administered by a single loan servicer. Your new interest rate is averaged from your old loans, so the overall cost of your debt won’t drop, but you could consolidate variable-rate loans into one with a fixed rate. Variable-rate loans have a rate that can fluctuate, which makes your future monthly payments unpredictable. Fixed-rate loans have an interest rate that never changes. 

Debt consolidation has pros and cons. You could lower your payment by extending your repayment time, and may gain access to additional income-driven repayment (IDR) options and public service loan forgiveness programs. However, you might also lose access to interest rate discounts, loan cancelation benefits, or principal rebates. 

How can I pay off my student loans faster?

There are several ways to get student loans in the rearview faster:

  • Choose the standard loan term of 10 years instead of an IDR plan or consolidation loan, which can extend your repayment by up to 30 years. Even if you didn’t choose the standard repayment plan when you first started repaying your loan, you still can. Ask your loan servicer how to do it. You may need to change your repayment plan with every servicer if you have more than one student loan.

  • Enroll in autopay, which gets you a 0.25% interest rate reduction from most lenders. A lower rate means less interest on the balance you owe.

  • Pay extra when you can. 

  • On some loans, interest accrues while you aren’t making payments (such as while you’re still in school). Make payments when no payments are required, at least to cover the interest.

  • Refinance to a loan with a lower interest rate. 

  • Consolidate your other debts if you can lower your interest rates or free up cash flow in a way that helps you pay down your student loans.

  • Have a garage sale, start a side gig, and shop every big expense you have (like car insurance). Set a goal to reduce spending by 5 or 10% so that you can direct every money toward your student loans.

Paying down student loans is great practice for meeting other financial goals. Once they’re paid off, you’ll have some effective new habits that'll help you stick to a budget and hit a goal. 

How does student loan debt affect my credit score?

Most student loans are reported to credit bureaus. Your loan’s biggest impact on your credit standing is likely to be the payment history. On-time payments are good, late payments are bad. Unlike with credit cards, high student loan balances don’t lower your credit score (but your balances will show up on your credit report). 

Managing student loan debt

You may have a lot of student loans from various providers, and you may owe a lot of money. Here are some tips for simplifying and managing your student loan debt.

What do I do if I can't make my student loan payments?

Life happens, and you might find yourself struggling to keep up. No debt situation is completely hopeless, and in fact, you may have some special options for adjusting your student loan repayment arrangements in a way that works for you.

For government-backed loans, consider the Saving on a Valuable Education (SAVE) Plan. This repayment plan offers several benefits:

  • Your monthly payment is based on your income and family size, and many borrowers find that they can get a lower payment.

  • Starting July 2024, undergraduate loan payments will be capped at 5% of discretionary income, down from 10%. 

  • If you enroll in this plan and your required monthly payment (even if it’s $0) doesn't cover the interest due, the government covers the shortfall so that your debt doesn’t grow.

  • If you originally borrowed $12,000 or less, your balance is forgiven after 10 years of payments on this plan.

If you have private student loans or don’t qualify for an IDR plan, contact your loan servicer and request a loan forbearance, which allows you to miss or make reduced loan payments. That could be a decent option if your cash flow problems are temporary. 

If your problems are long-term, you may be able to negotiate with your private student loan lenders, especially if you have already fallen behind. You could ask for a lower interest rate and payment or even a balance reduction. And if your problems are truly insurmountable, look into discharging your loans in bankruptcy. Contrary to popular belief, it can be done if repaying your student loans would cause you a real, lasting hardship. Talk to a bankruptcy attorney about your situation.

Are there apps to help manage student loan debt?

Budgeting apps and debt apps could help you manage your debt. 

The Achieve Get Out Of Debt (GOOD) app could help you make a smarter debt payoff plan and get debt-free faster. And the Achieve MoLO (Money Left Over) budgeting app helps you manage your spending so you can find more money each month for debt repayment. 

Student loan repayment plans

A variety of student loan repayment plans are available, depending on your needs and income. Here’s how they work.

What is student loan deferment?

Student loan deferment allows you to postpone paying your loan. Borrowers normally apply for a deferment if they’re still in school, unemployed, in the military, or experiencing financial hardship. However, unless you have a subsidized loan, interest continues to accrue during deferral, and your balance will grow even if you don’t borrow more.

What is student loan forbearance?

Loan forbearance means being allowed to skip or make smaller payments. For Direct Loans, Federal Family Education (FFEL) Program loans, and Perkins Loans, you may be granted up to 12 months of general forbearance. Your balance will continue to rack up interest and will increase. 

Loan forbearance isn’t automatic. You have to submit an application to your loan servicer and wait for approval before you stop making payments. 

What are income-driven repayment plans, and how do they work?

Income-driven repayment (IDR) plans calculate a minimum payment based on your income and household size. If the standard 10-year payment amount is too high, IDR plans can give you more years to pay and a lower monthly payment.  

You can choose from four plans: SAVE, Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). Your minimum payment is a percentage of your discretionary income (money left over after paying for necessities) and can be as low as $0. 

Related: How to get out of debt on a low income

Do private student loans have income-driven repayment plans?

No, private student loans don’t have income-driven repayment plans. If you need help affording your student loan payments, your lender may be willing to work with you. The important thing is to call and talk to them. Don’t ignore your loan or make less than the required minimum payment.

What steps should I take if I can't make my student loan payments?

If you can’t pay your student loan, contact your loan servicer(s) immediately for help. You may be asked to prove your hardship, so gather relevant documents, like medical paperwork to document an illness. 

If you have federal student loans, switching to an income-driven repayment plan could lower your payments. For private student loans, ask your lender for a forbearance or an affordable payment.

Student loan forgiveness programs

The terms “forgiveness,” “discharge,” and “cancelation” all mean the same thing. Student loan forgiveness/discharge/cancelation programs release you from your remaining loan balance(s) if you meet their conditions. There are several sources of loan forgiveness.

  • Income Driven Forgiveness forgives your remaining balance after you make a specific number of payments. 

  • Public Service Loan Forgiveness (PSLF) forgives your student loan balance if you’re on an income-driven repayment plan, work for a government or non-profit organization, and make 120 (10 years’ worth) payments. 

  • Teacher Loan Forgiveness may get you up to $17,500 forgiven if you teach full-time for five complete and consecutive school years in certain schools that serve low-income families.

  • Total and Permanent Disability (TPD) discharge applies if you have a disability that severely limits your current and future ability to work. This can be a physical or a mental disability. 

  • Serving in AmeriCorps VISTA, AmeriCorps NCCC, or AmeriCorps State and National could get you grant money to repay student loan balances.

  • Bankruptcy discharge is possible in some cases. You have to ask the bankruptcy court to decide that repaying your student loan(s) would create undue and ongoing hardship for you and your dependents.

If you don’t qualify for loan forgiveness, cancelation, or discharge, you must repay your loan. It doesn’t matter if you completed your education, found a job in your preferred field, are happy with the education you borrowed to get, or were under 18 when you signed your promissory note or received the loan.

That’s why it’s important to look at your student loans in the context of your whole financial picture. If you have other unsecured debts like credit cards or personal loans, you might be able to negotiate those in order to free up money in the budget for your student loan payments. 

How to apply for loan forgiveness

Applying for loan forgiveness depends on the plan. If you’re not in an income-driven repayment plan, you may have to switch to one before you can apply for federal aid. If you have non-Direct federal student loans, like Perkins loans or FFEL-program loans, you may need to undergo Direct loan consolidation to be eligible.

For private loans, contact your servicer for help with paying your loan. You may be able to negotiate a lower payoff. If you’re not getting anywhere on your own, consider working with a financial counselor or bankruptcy lawyer. 

There’s a lot to unpack here. It’s a great idea to get your questions answered by financial professionals. StudentAid.gov is a valuable resource. Also, the Institute of Student Loan Advisors offers free help. 

If your debt problems go beyond your student loans, Achieve’s debt experts can walk you through your options.

Gina Freeman - Author

Gina Freeman has been covering personal finance topics for over 20 years. She loves helping consumers understand tough topics and make confident decisions. Her professional history includes mortgage lending, credit scoring, taxes, and bankruptcy. Gina has a BS in financial management from the University of Nevada.

Jill Cornfield

Jill is a personal finance editor at Achieve. For more than 10 years, she has been writing and editing helpful content on everything that touches a person’s finances, from Medicare to retirement plan rollovers to creating a spending budget.

Frequently asked questions

The Biden Administration wants to help some borrowers by offering up to $20,000 in debt cancelation. Eligible borrowers include people who have already been paying for 20 years or longer, and people who owe more than they originally borrowed. Visit the White House’s website for more information and to find out if you are in an eligible category. The plan also includes other kinds of help, such as more manageable repayment options for all borrowers. 

There is no statute of limitations on student loans, which means the federal government can come after you for the debt indefinitely. If you don’t pay, the government could garnish your wages (force your employer to withhold part of your wages and send the money to your creditors). They could also withhold your tax refunds (entirely) or your social security or disability benefits (in part). Student loans can’t be ignored, but with a solid plan and the support of people who understand what you’re going through, you can put them behind you.

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