How to pay off $100k in student loans

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It is possible to pay off six figures in student loan debt, but you’ll need to take a strategic and determined approach. (iStock)

While some college graduates may only owe a few thousand dollars in student loans, many borrowers owe much larger balances. Often a graduate’s student loan debt is well into six-figure territory — especially those with professional degrees or a private-school education.

With a 10-year standard repayment plan, that kind of debt may equate to a monthly payment of more than $1,000, easily affecting your budget and your ability to save for other goals. Plus, owing a lot of money can be really stressful.

If you’ve got $100,000 in student loan debt, know that you’re not alone. You have several options to help you pay off your student loans faster and for less than you may expect.

Here’s everything you need to know about paying off $100,000 in student loans.

Consider student loan forgiveness if you’re eligible

If you have federal student loan debt, you may be able to take advantage of a student loan forgiveness program. This could eliminate a significant portion of your student loan debt, with no obligation to repay that amount.

The Public Service Loan Forgiveness (PSLF) Program is available to eligible borrowers working in public service. This includes employees working for U.S. federal, state, local or tribal governments, or certain not-for-profit organizations. Monthly payments are set according to an income-driven repayment (IDR) plan. If you qualify for the PSLF Program, any remaining student loan balance on your Direct Loans will be forgiven after you make 120 qualifying monthly payments.

Let’s say you have a principal balance of $100,000 at an interest rate of 6%. With a monthly payment of $600, it would take you 30 years to pay off your debt. Factoring in interest, your total repayment would be $215,838.

But with student loan forgiveness, you could be out of debt in a third of the time. If your monthly payment was the same ($600), you’d only have to contribute $72,000 ($600 x 120 payments) toward your student loan debt before the remaining balance could be forgiven.

Credible lets you compare student loan refinance rates from various lenders in minutes.

Consider income-driven repayment

Income-driven repayment plans, or IDRs, are one of the benefits of most federal student loans. These plans set a monthly student loan payment based on both your annual income and the size of your household.

These are the four types of IDR plans for federal loans. 

  • 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)

These IDR plans generally have a monthly payment maximum between 10% and 20% of your discretionary income. If your income is low enough, your monthly payment could even be $0.

With IDR plans, you make your monthly payments for a specified period of time, usually between 20 and 25 years. Once this time period is up, any remaining loan balance will be forgiven. While this option will take a long time, it can make your loan payments manageable.

If your remaining loan balance is forgiven under an IDR plan, it’s important to note that you may be required to pay income taxes on the forgiven loan amount. Be sure to check current IRS regulations (and consider speaking with a financial professional) to see how IDR student loan forgiveness might affect your taxes.

Refinance your student loans

A student loan refi may be worth considering whether you have private student loans, federal student loans (and don’t qualify for loan forgiveness) or a combination of the two.

When you refinance your student loans, you’re effectively taking out a new loan to satisfy the original debt. This new loan can replace a single existing loan or combine multiple loans into one easy-to-manage account. The new loan can also help you reduce your interest rate(s), lower your monthly payments or get out of debt sooner (or all three).

Remember the 6%, 30-year loan, $100,000 student loan we mentioned above? If you were to refinance that same $100,000 student loan balance mentioned earlier to a 3.5% APR with a 20-year term, your monthly payment would be $580, it would only take 20 years to repay your loan, and your total amount repaid would be $139,200.

Not only would you be able to reduce your monthly payments by $20, but you’d pay off your debt 10 years early sooner and save $76,800 in interest.

It’s important to note that federal student loans come with certain protections for borrowers, such as income-driven repayment plans, forbearance and deferment options. If you refinance your federal student loan debt into a loan with a private lender, you’ll lose those benefits and protections.

While this may be a worthwhile trade-off for some borrowers, you may want to consider refinancing your private loans only.

Pay off the highest-interest loan first

The debt avalanche method is a way to reduce interest and pay off your student loan debt sooner.

This method focuses on paying off your highest-interest student loan balance first. You only make the minimum payments on your other loans, and use any extra money to pay off your student loan with the highest interest rate. Once that loan is paid off, you shift your focus to the next-highest interest rate and repeat the cycle until your student loan debt is gone.

This method saves you the most interest over the long run, but you may want to consider the debt snowball method as an alternative. With the debt snowball method, you pay off your smallest debt first, and then move on to the next-smallest debt, until you’ve repaid all your debts.

Add a cosigner

If you refinance your student loans, adding a cosigner with good to excellent credit may help you get a lower interest rate. Having a cosigner gives the lender assurance that someone will pay off the loan if you default.

Your cosigner can be a parent, grandparent, spouse or sibling, but it doesn’t have to be a family member. Your cosigner could also be a friend or other trusted person.

Be sure to shop around through various lenders to find the best options and loan terms, with and without a cosigner.

With Credible, you can easily compare student loan refinance rates from multiple lenders.

Set up multiple sources of income

In addition to optimizing your student loan repayment, you can work to pay off your balances ahead of schedule in other ways, such as earning more money through alternate sources of income, which you can put toward your student loan debt.

Side hustles are a popular option, offering opportunities to earn extra cash in your spare time, even outside of your day-to-day career. A side hustle could include tutoring, selling homemade goods or driving for a rideshare company. If you have any hobbies or creative skills, you could also use these to generate side income.

You can also find ways to create passive income on the side. As opposed to working more for extra money, passive income streams enable you to earn extra money without always exchanging your time for it — they’re more of a "set it and (mostly) forget it" approach.

Passive income opportunities may include things like investments, interest-bearing savings accounts, blogging and creating online courses. Some effort and time is required to get these up and running, but once they’re established, you may be able to earn extra money without regular, active participation.

Whether you choose a side hustle or a passive income opportunity, you could bring in hundreds (or even thousands) of extra dollars each month. The extra income could help boost your budget and pay off your student loan debt faster.

Budget carefully

A healthy budget can make it easier to manage your student loan payments and find extra money you can put toward your debt.

Spend some time analyzing your typical monthly spending, including recurring bills and discretionary spending. Are there areas of your budget that you could trim down, such as eating out at restaurants or subscriptions that you don’t actually need? If so, reduce or eliminate those expenses to make paying down your student loan debt easier.

Keeping a close eye on your budget can help ensure you have enough to put toward your loans. You can readjust day by day, if needed, or as your financial situation shifts.

Make extra monthly payments

If you’ve managed to trim your budget, earn additional income through a side hustle, or both, you can put the savings toward extra payments on your student loans. This will help you to get out of debt faster and also pay less in overall interest.

Let’s say that you’re paying off a $100,000 student loan balance with a 3.5% interest rate for a 25-year repayment term. Your monthly payment would be $501. In the end, you’d pay $150,187 in total ($50,187 of which is strictly interest).

But if you were to put even $60 extra toward your payment each month, the results would be astounding. You’d pay off your debt in just over 21 years — saving you nearly four years — for a total payment amount of $141,287. That’s a savings of $8,900 in interest alone.

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

The length of time it’ll take you to pay off $100,000 in student debt depends on two personal variables: your current repayment plan and whether or not you’re able to put extra money toward your loans each month. The more you’re able to contribute to your debt per month, the sooner you can pay off the balance(s) —  and the less you’ll pay in total.

It could realistically take between 15 and 20 years to pay off a $100,000 student loan balance, or longer if you require lower monthly payments. By refinancing your student loan, putting more money toward monthly payments, or taking advantage of programs such as loan forgiveness, you may be able to get out of debt in significantly less time.

If you’re ready to refinance your student loans, Credible allows you to compare student loan refinance rates from various lenders in just a few minutes.