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Ascent Blog

Tips for Paying Off Student Loans

Jan 28, 2025 | By: Ascent
Categories: Blog, For College Students, For Parents and Cosigners

Student Loan Repayment Advice for All Borrowers

Student loans can feel overwhelming, especially if you’re juggling payments and worried about falling behind. Understanding the timeline for repayment, your loan details, and the various repayment options is crucial to your financial well-being

Whether you’re a recent graduate or a long-time borrower, getting advice on student loans can help you learn about key dates, actionable steps, and important considerations to keep in mind as you prepare for the next phase of your financial journey. 

Things to Do to Prepare for Student Loan Repayment

Preparation can help you stay in control of your student loans and avoid unnecessary costs like late fees. Here are some steps you can take to set yourself up for financial success.

1. Understand Your Loan Details

First, familiarize yourself with the specifics of your loan. What is the interest rate, and what is the remaining balance on the loan? When are your payments due? Knowing these details can help you create an effective repayment strategy and make more informed financial decisions. Use simple tips like writing down the due dates on a calendar or setting up reminders on your phone so the date doesn’t sneak up on you.

2. Select the Right Repayment Plan

Selecting the right repayment plan that fits your budget is critical to ensuring you stay on top of payments. You might be surprised by the variety of options available. With plans tailored to different financial situations, you should be able to find one that aligns with your current and projected financial status. 

  • Standard Repayment Plan: A fixed monthly payment over a 10-year period. This plan ensures your loans are paid off quicker than other repayment options, so you pay the least amount of interest over the life of your loan. 
  • Graduated Repayment Plan: Payments start lower and increase every two years. This plan is designed for those expecting their income to rise over time. 
  • Extended Repayment Plan: Allows borrowers to pay back their loans over a 25-year period, with either fixed or graduated payments. 
  • Income-Driven Repayment Plans: Monthly payments are based on your income and family size. There are several types, including Income-Based Repayment (IBR), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and the Saving on a Valuable Education (SAVE) Plan (formerly known as the REPAYE Plan). 
  • Loan Consolidation: Combining multiple federal student loans into one loan, potentially with a lower monthly payment and extended repayment term.
  • Immediate Repayment:* Begin making full payments (principal + interest) on the loan right away. Payments of principal and interest begin 30 to 60 days after the loan is disbursed. 

*The Full P&I (Immediate) Repayment option is only available for college loans (except for outcomes-based loans) originated on or after June 3, 2024. (See Terms & Conditions.) 

These options are available whether you’re paying back subsidized or unsubsidized loans. Consulting with your loan servicer can help you make an informed decision about which plan is best suited for your financial situation. You can also check out the Loan Simulator offered on the Studentaid.gov website to find the best student loan repayment strategy for you. 

3. Enroll in Autopay

Automating your payments is one of the easiest pieces of student loan repayment advice. Most loan servicers have an autopay feature, and some private lenders, like Ascent, even offer discounts for setting up automated payments. Ascent’s discount, starting at 0.25%, may seem small but can save you money over the life of your loan. 

When enrolled in autopay, your monthly payment is automatically deducted from your bank account, so you won’t have to remember to make an active payment each month. To set it up, contact your loan servicer or log in to your loan account online. By taking this simple step, you’ll stay consistent with payments and lower your total costs over time. 

4. Stick to a Budget

When you have to pay back student loans, they can take a bite out of your monthly income. Budgeting isn’t just about cutting back on lattes; it’s about understanding where your money goes each month. Determine how much you can realistically allocate toward loan payments each month and set goals for extra payments. If you have savings, consider how much you can use to make a significant payment on your loan. This can help you pay off your loan faster and reduce future interest accumulation.

Tips for Paying Off Student Loans Faster

Following tips for paying off student loans faster could save you money on interest and free up your budget sooner—plus reduce stress and let you focus on other financial goals. Here are a few ways to get started.

1. Pay Off Interest Before It Capitalizes

For many private student loans, interest begins accumulating while you’re still in school or during your grace period (the time before you start making payments). If you don’t pay this interest, it will capitalize—meaning it gets added to your principal balance when repayment starts. Once that happens, you’ll end up paying interest on a larger loan balance, increasing your total costs.

To avoid this, consider paying off the interest while you’re still in school or during your grace period, even if it’s just a small amount each month. For example, if your loan accrues $50 in interest each month, paying that off may prevent hundreds of dollars from being added to your loan over time.

2. Make Extra Payments

When you pay more than the minimum each month, the extra amount goes toward your loan’s principal balance. A smaller principal balance means you pay less interest in the future. That creates a money-saving cycle that helps you pay off your loans faster. 

For example, adding just $50 to a $300 monthly payment might seem small, but over a year, that’s an extra $600 toward your principal. Consistent payments could shave months off your repayment term. 

If you receive extra income, like a tax refund, work bonus, or holiday gift, use it to make a lump-sum loan payment. Just make sure to specify to your loan servicer that the extra payment should go toward your principal and if it is a one-time payment.

3. Apply for Loan Forgiveness

Loan forgiveness isn’t just a hopeful thought—it’s a tangible possibility for certain borrowers who meet specific criteria. Below are a few federal loan forgiveness options for those who meet certain eligibility requirements. 

  • Public Service Loan Forgiveness (PSLF): Specifically designed for those in public service roles, such as teachers, government employees, nurses, doctors, or other medical professionals. After making 120 qualifying payments with an approved repayment plan and while working for an eligible employer full-time, the remainder of your Direct Loans could be forgiven. 
  • Teacher Loan Forgiveness: Educators who teach in low-income schools or educational agencies for five complete and consecutive academic years, might be eligible for up to $17,500 in loan forgiveness for Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans. 
  • Total and Permanent Disability Discharge: Those who are totally or permanently disabled, and have a Direct Loan, Federal Family Education Loan (FFEL) Program Loan, or Perkins Loans, may be eligible for the Total and Permanent Disability Discharge.   

4. Take Advantage of Employer Benefits

An often-overlooked tip for paying off student loans: seek out employers that can help you. Many employers now offer student loan assistance as part of their benefits package. Some companies make monthly contributions toward your student loans, while others provide a one-time lump sum to help with repayment. Some companies tie the assistance to milestones like work anniversaries or meeting performance goals. 

These contributions can directly reduce your balance, saving you money on interest and helping you become debt-free faster. It’s worth exploring if they’re available to you—ask your HR department about the specifics of your benefits package.

Know What to Do if You Can’t Make a Payment

Life happens, and sometimes, all the advice on student loans just doesn’t help. The good news is that there are options to help ease the financial burden. If you find yourself unable to make a payment, here are a few options you may want to explore: 

  • Loan Forbearance: Forbearance allows you to temporarily halt student loan payments, though interest will still accumulate. This option may help borrowers during brief financial setbacks, such as a temporary job loss. However, since interest will continue accumulating, it may not be a long-term solution.  
  • Loan DefermentDeferment also pauses payments, but interest might not accrue during the deferment period for some loans. Loan deferment has specific eligibility criteria and is best suited for borrowers facing long-term financial barriers. 

Always verify details with your loan servicer to understand the options available to meet your unique financial circumstances. 

Learn More with Ascent

As you navigate these tips for paying off student loans, remember that you’re not alone. Reaching out to your loan servicer should be the first step toward learning about your specific loan details and available options. Plus, there are many additional resources to help support your financial wellness.  

At Ascent, we’re dedicated to providing the guidance and support you need to reach your financial goals. Visit our blog or follow us on social media for more helpful tips and resources for students.    

FAQ

What Happens If You Don’t Pay Back Your Student Loans?

Failing to pay back student loans can have serious consequences. Initially, you may incur late fees, and your loan will be considered delinquent. If the delinquency continues for 270 days or more, the loan goes into default.  

A loan in default can lead to severe repercussions, including wage garnishment, withholding of tax refunds, and a significant drop in your credit score. This can make it challenging to secure future credit cards, mortgages, or even rental agreements. This is why it’s crucial to communicate with your loan servicer to explore options like deferment, forbearance, or changing your repayment plan if you’re facing financial hardships. 

What Is the Fastest Way to Pay Off Student Debt?

The fastest way to pay off student loans is to pay more than the minimum each month. This is the best tip for paying off student loans because it reduces your principal balance faster and lowers the amount of interest you’ll pay over time. Consider putting any extra money—like a side hustle income or tax refund—toward your loans.

Are Student Loans Forgiven After 20 Years?

Federal student loans may be forgiven after 20 years if you’re on an income-driven repayment plan, but this doesn’t happen automatically. You’ll need to apply for a qualifying repayment plan and meet specific requirements. Private loans, on the other hand, usually don’t offer forgiveness options.

Is It Financially Smart to Pay Off Student Loans Sooner?

Paying off student loans sooner can save you money on interest and give you more financial freedom. However, if your loan has a low interest rate, it might make sense to focus on other financial goals, like saving for retirement, while making regular payments on your loan. As with most student loan repayment advice, it all depends on your financial situation—you shouldn’t stretch yourself too thin just to pay off student loans early. 

Does Interest Disappear If You Pay Off the Principal?

As you pay off your loan’s principal, it reduces your future interest because that interest is calculated based on the remaining balance. However, your interest doesn’t exactly disappear. Any unpaid interest up to that point still needs to be paid. You’ll continue to pay interest on what remains of your loan until it’s completely paid off. 

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