9 Smart Ways to Pay off Student Loans
- Make extra payments to pay down the principal and speed up loan payoff.
- Explore loan forgiveness programs like PSLF or IDR for federal loan relief.
- Use debt snowball or avalanche methods to stay motivated and minimize interest.
Table of Contents
- 1. Make Extra Payments on Your Student Loan
- 2. Refinance Your Student Loans
- 2. Use the Debt Snowball Method for Quick Wins
- 3. Save on Interest With the Debt Avalanche Method
- 4. Set up Autopay for Smart Discounts
- 5. Make Interest-Only Payments
- 6. Stick to Standardized Student Loan Repayment Plans
- 7. Spend Windfalls on Student Loans
- 8. Ask if Your Employer Helps With Student Loans
- 9. Explore Smart Loan Forgiveness Programs
- Student Loan Debt Relief
Navigating student loan debt can feel overwhelming, but you’re not alone—and there’s a way forward. Any strategy that could help you get debt relief is worth your attention. We’ve come up with nine smart ways to pay off student loans that are practical, actionable, and designed to help you take control.
1. Make Extra Payments on Your Student Loan
If you want to pay off your student loans more quickly, one of the best ways is to make extra payments toward your loans. You could potentially shave years off your repayment plan.
Ask your loan servicer to put the money toward the loan principal. Otherwise, your servicer might use the money for the next month’s payment. If you have multiple loans, pick one to focus on.
Here’s how make extra payments on your student loan:
Log in to your online portal to make a payment
Select custom or manual allocation
Select the loan you want your extra payment to go toward.
Tip: Biweekly payments could help you pay off loans even faster.
2. Refinance Your Student Loans
Refinance or consolidate student loans to streamline your finances. Refinancing student loans means you combine your existing loans into a completely new loan.
If you have private student loans, refinancing might be a way to lower your interest rate. If you have federal loans, your interest rate will remain the same.
Refinancing student loans could work well for those who have:
A good credit score (above 670)
Predictable, consistent income
Low debt-to-income ratio
Private student loans with high interest rates
Federal student loans are typically only worth refinancing if you don’t forfeit the benefits. Refinancing federal loans to a new private loan generally isn’t recommended. It’s a good idea to keep federal and private loans separate. When you fold federal loans into a private loan, you lose government benefits such as income-based repayment programs and potential loan forgiveness in the future.
2. Use the Debt Snowball Method for Quick Wins
When your loan balance seems frozen, you may be able to get it rolling with the debt snowball method. This method works by focusing on the loan with the smallest balance first.
How to use the debt snowball:
List your debts from smallest to largest balance.
Put any extra funds you can find toward the smallest debt (in addition to the minimum payment).
Make the minimum payments on all the other debts.
After clearing the smallest debt, roll is payment and your extra funds into your payment on the next smallest debt.
Repeat.
The debt snowball strategy rewards you with quick wins.
3. Save on Interest With the Debt Avalanche Method
The debt avalanche strategy could help you pay less interest. This method works by focusing on the debt with the highest interest rate.
How to use the debt avalanche method:
List your debts from highest to lowest interest rate.
Throw all your extra cash at the debt with the highest interest rate, in addition to its minimum payment.
Pay the minimum on all the other debts.
Once the highest-interest debt is paid off, move that entire payment to the debt with the next highest rate.
Repeat.
The avalanche strategy could help you clear your most expensive debt first and save on interest over the long run.
4. Set up Autopay for Smart Discounts
The Federal Student Aid government website suggests setting up autopay, also called automatic debit, to save money. It’s smart because it puts a stop to missed payments, which helps you avoid late fees.
Many loan servicers will even reduce your interest rate by 0.25% when you automate payments.
How to enroll in autopay:
Log in to your loan servicer's website or mobile app.
Look for an "Autopay" or "Automatic Payments" section.
Follow the prompts to set up your automatic payments and choose your payment method.
5. Make Interest-Only Payments
Federal loans for undergraduates come in two flavors: unsubsidized and subsidized.
On subsidized loans, interest doesn’t begin to accrue until after graduation.
On unsubsidized loans, interest starts accruing as soon as you get the loan—and continues until you pay off the entire balance.
So, for example, if you took an unsubsidized loan out your freshman year, interest will accrue on that loan throughout your time in college. Even during times when payments aren’t required. When your loan status changes to repayment status (usually at the time you graduate), any interest that accrued on unsubsidized loans is capitalized. Capitalized interest means that the unpaid interest is added to your loan balance. Then you’ll pay interest on the new, higher amount.
Capitalized interest isn't good for you.
You could reduce the impact of interest capitalization by always paying at least enough to cover the interest charged that month.
For example, say you take out a $10,000 unsubsidized loan with a 5% interest rate in your freshman year. After you graduate, you’ll owe more than $10,000 because interest will be tacked onto your outstanding balance. It could look like this:
| Original Amount of Unsubsidized Loan | Interest Rate | Capitalized Interest After 4 Years | New Outstanding Balance |
|---|---|---|---|
| $10,000 | 5% | $2,000 | $12,000 |
6. Stick to Standardized Student Loan Repayment Plans
It’s a smart idea to opt for the 10-year standard plan to pay off loans faster, avoiding extended plans (up to 30 years) that increase total interest. This is ideal if you have a stable income.
7. Spend Windfalls on Student Loans
Spend some of the money from raises, bonuses, tax refunds, or side hustle earnings on loan payments. Any amount helps—even an extra $20 a week from walking dogs or a portion of your holiday bonus, if you get one.
8. Ask if Your Employer Helps With Student Loans
Find out from HR if your company has a student loan assistance program. Many companies offer this perk, including Aetna, Google, Hulu, Nvidia, Staples, SoFi, and dozens more.
It’s a smart way to pay off student loans that benefits you and the employer. Employers get a tax break for offering these benefits.
How much you could get: Through December 31, 2025, employers can offer up to $5,250 annually in tax-free student loan repayment and tuition assistance per employee.
9. Explore Smart Loan Forgiveness Programs
The U.S. government offers many ways to pay off federal student loans with special programs. Federal loans have some smart ways to pay off student loans that private lenders don’t offer.
Public Service Loan Forgiveness (PSLF). Work full-time for a government or nonprofit job, make 120 payments, and you can apply to have your Direct Loans remaining balance forgiven.
Income-Driven Repayment (IDR) Plan. Payments are based on your income and family size for 20 or 25 years, depending on the plan. Whatever’s left on your loans is forgiven.
Teacher Loan Forgiveness. Teach five years straight at a low-income school, and you could get up to $17,500 knocked off your Direct or FFEL Loans.
Total and Permanent Disability (TPD) Discharge. If a serious disability stops you from working, your Direct, FFEL, or Perkins Loan can be discharged (forgiven). You’ll need proof from the Social Security Administration, Department of Veterans Affairs, or a doctor.
Military Service Benefits. Military folks get benefits like a 6% capped interest rate and deferments, courtesy of the Servicemembers Civil Relief Act (SCRA). Your service generally also counts toward PSLF.
Segal AmeriCorps Education Award. Finish a term of service with AmeriCorps, and you’ll get cash to pay down your loans. In 2024, the award was $7,395. Plus, that service might help with PSLF.
Check out the studentaid.gov and the Consumer Financial Protection Bureau for more information on student loan debt forgiveness programs.
Student Loan Debt Relief
You can get debt relief even if you only have private student loans. Private loans are ineligible for federal programs, and you can’t consolidate them into federal loans. But you could still consolidate private debt, enroll in a debt settlement program, or check out other options.
Consider the range of private student debt relief options before you commit. There are options for a wide variety of circumstances. Chances are good you’ll find a debt relief method that meets your needs.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during May 2025. The data uncovers various trends and statistics about people seeking debt help.
Credit card tradelines and debt relief
Ever wondered how many credit card accounts people have before seeking debt relief?
In May 2025, people seeking debt relief had some interesting trends in their credit card tradelines:
The average number of open tradelines was 14.
The average number of total tradelines was 24.
The average number of credit card tradelines was 7.
The average balance of credit card tradelines was $15,142.
Having many credit card accounts can complicate financial management. Especially when balances are high. If you’re feeling overwhelmed by the number of credit cards and the debt on them, know that you’re not alone. Seeking help can simplify your finances and put you on the path to recovery.
Student loan debt – average debt by selected states.
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average student debt for those with a balance was $46,980. The percentage of families with student debt was 22%. (Note: It used 2022 data).
Student loan debt among those seeking debt relief is prevalent. In May 2025, 27% of the debt relief seekers had student debt. The average student debt balance (for those with student debt) was $48,703.
Here is a quick look at the top five states by average student debt balance.
| State | Percent with student loans | Average Balance for those with student loans | Average monthly payment |
|---|---|---|---|
| District of Columbia | 34 | $71,987 | $203 |
| Georgia | 29 | $59,907 | $183 |
| Mississippi | 28 | $55,347 | $145 |
| Alaska | 22 | $54,555 | $104 |
| Maryland | 31 | $54,495 | $142 |
The statistics are based on all debt relief seekers with a student loan balance over $0.
Student debt is an important part of many households' financial picture. When you examine your finances, consider your total debt and your monthly payments.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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Author Information
Written by
Cole Tretheway
Cole is a freelance writer. He’s written hundreds of useful articles on money for personal finance publications like The Motley Fool Money. He breaks down complicated topics, like how credit cards work and which brokerage apps are the best, so that they’re easy to understand.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Are private student loans eligible for income-driven repayment plans?
No, income-driven repayment is a program for federal student loans. However, you may be able to negotiate something similar for a private student loan. If your income is too limited to make your scheduled payments, you may be able to work out a more affordable repayment plan. Expect to show the lender proof of your income and other debts when you ask for hardship help.
What are private student loan consolidation interest rates?
If you consolidate debt, you'll pay the market rate for the type of consolidation loan you choose. Interest rates can and do change daily. Interest rates to consolidate private student loans will be based in part on your credit score.
Are private student loans forgiven after 25 years?
No. This kind of forgiveness is available for federal student loans, but not private ones. Private student loan debt forgiveness is available only if you negotiate it.
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