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Borrowing for school, repayment plans, forgiveness programs, and refinancing. Find the repayment path that costs you the least.
To clear your student loans sooner, put extra payments toward principal on your highest-rate loan, and find out whether your employer or your state will pay part of the balance. Before you prepay a federal loan, check that you’ll repay it in full, since extra payments on a loan headed for forgiveness only shrink the amount forgiven.
Bankruptcy can erase federal student loans when repaying them would leave you unable to afford basic living costs for years. Since 2022, government lawyers have used a standard form to decide when to support that relief for loans the Education Department holds. If your income barely covers essentials and that won’t change, ask a bankruptcy attorney whether you qualify.
State programs help repay student loans for many nurses, doctors, teachers, and lawyers in hard-to-fill jobs, and sometimes for people who move to the state. Before you take a job or plan a move, check what the state offers and the strings attached, then make sure the choice works without the money.
Ask HR whether your company has an educational assistance plan that covers student loan payments. Through one, the company can put $5,250 a year toward your loans, and you owe no federal income or payroll tax on that money. If there’s no plan, ask for one.
Extra student loan payments only speed up your payoff if your regular payments keep coming too. By default, many servicers count the extra toward your next bill, so your due date gets pushed back or the amount due shrinks. Tell your servicer to put extra toward principal on your highest-rate loan instead.
Private student loans don’t qualify for federal income-driven plans or forgiveness, so refinancing them gives up almost nothing. Once your credit or income has improved, prequalify with several lenders and take the lowest rate on a term no longer than the one you have left, if the new loan’s hardship terms match yours.
If you carry both a mortgage and student loans, put extra payments toward whichever charges the higher rate after taxes, not the bigger balance. Skip federal loans you expect to have forgiven, since extra payments only shrink the forgiven amount, and leave a low-rate mortgage on its regular schedule.
An income-driven student loan payment stays tied to your income only if you recertify every year, and a missed deadline resets it to the 10-year standard amount. Consent once on StudentAid.gov to share your IRS tax information, and if you’re eligible, the Education Department recertifies you automatically each year.
Earning too much for grants is no reason to skip the FAFSA. The same form is your application for federal Direct Unsubsidized Loans, which have no income test, and some state and college merit scholarships require it too. File it every year, whatever your income.
Applying for student loan forgiveness or a new repayment plan costs nothing on StudentAid.gov or through your loan servicer. Never pay a company to file for you, and walk away from anyone who charges upfront or monthly fees, promises fast forgiveness, or asks for your StudentAid.gov password.
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