Since federal student loan payments resumed in October 2023, many borrowers are struggling to manage repayment. In fact, approximately 13 million borrowers with due payments missed the initial payment deadline according to the Department of Education. If you’re feeling overwhelmed, there are several ways you can lower your monthly payments and get some financial breathing room.
Best for: Graduated borrowers with over $60,000 in federal student debt
Consolidating can lower your monthly payments by extending the repayment period of your loans — often up to 30 years, depending on how much you owe. While this might mean paying more interest over time, it does ease your immediate financial burden.
Consolidating your federal student loans essentially merges multiple loans into one. This process can also simplify your payments, replacing multiple due dates with one that has a single interest rate.
To start the consolidation process, you must complete a Direct Consolidation Loan application. Continue to make your regular payments until the consolidation is complete. Also note that consolidation is only available to federal student loan borrowers who have graduated, left school, or dropped below half-time enrollment. Private student loans require a different approach called refinancing.
Best for: Private student loan borrowers with strong credit and stable finances
A student loan refinance involves taking out a new private loan with different terms to pay off one or more existing loans. For borrowers with good credit and a steady income, refinancing may help you qualify for a lower interest rate. In most cases, you’ll also have the option to extend your loan term which could lower your monthly payments even further (though interest will accrue for longer).
Let’s say you owe $30,000 in private student loans with a 7% interest rate and a 10-year loan term. If you refinance to a 5% rate and extend your term to 15 years, you’ll pay $111 less each month. However, you’ll end up paying $904 more in interest over the life of your loan.
Before refinancing, make sure it aligns with your financial situation and your type of loan. For example, you may not want to refinance your federal student loans if you plan on taking advantage of federal income-driven repayment plans or forgiveness options, since you’ll lose access to federal protections if you refinance.
To refinance your private student loans, shop around with various lenders to compare rates and terms. Once you find the right option, the application process typically involves a credit check.
Related: How to refinance student loans in 6 steps
Advertiser DisclosureOverview
Brazos offers student loan refinancing exclusively to Texas residents who have earned at least a bachelor's degree from an eligible school. The company does not charge application or origination fees, and its interest rates could be lower than what you find with other private lenders.
However, Brazos has eligibility requirements that some borrowers might find to be difficult to meet. To qualify, borrowers must have a minimum income of $60,000 and a credit score of 720 or higher. If you can't meet those minimums alone, you can add a cosigner who can be released after making 24 consecutive payments.
pros
- Offers five loan terms
- Competitive rate offerings
- Cosigner release after two years
- Doesn’t charge application or origination fees
- A quarter-point rate discount for using autopay
cons
- Must be a Texas resident to qualify
- Higher minimum credit and income requirements than many other lenders
- Must have earned at least a bachelor’s degree to qualify
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, up to $150,000 for bachelor’s degrees and $400,000 for graduate, medical, law, or other professional degrees
Cosigner release
After 24 on-time, consecutive payments
Eligibility
Borrower must be a Texas resident and a U.S. citizen or permanent resident who has at least one outstanding, fully disbursed education loan
$5,000 up to the full balance
Overview
SoFi®, an online lender established in 2011, offers student loan refinancing for undergraduate and graduate borrowers from Title IV schools. They also provide refinancing options for Parent PLUS loans and medical school graduates in residency or fellowship. With five repayment terms, SoFi caters to various budget needs, and you can prequalify with a soft credit pull, which won't impact your credit score. Loans are serviced by MOHELA.
SoFi stands out for its member perks, including no fees, an autopay discount, and a 0.125 percentage point interest rate reduction for existing members. Additional benefits include free financial planning, unemployment protection, and access to travel deals.
pros
- Rate discounts, financial planning, and travel deals for members
- No application, origination, or late payment fees
- Autopay rate discount available
- You can refinance parent PLUS loans in the student's name
cons
- Cosigner release not available
- Must have at least $5,000 in loans to refinance
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$5,000 - full outstanding balance
Eligibility
Must be a U.S. citizen or permanent resident. Must have made 6 on-time payments in the past 6 months, with no record of default, delinquency, bankruptcy, or foreclosure in the last five years. Employment is required, or you must have a job offer starting within 90 days. Must also have attended a Title IV-eligible school.
$10,000 up to total refinance amount
Overview
ELFI offers student loan refinancing for borrowers who have earned at least a bachelor's degree. A key benefit is that you're assigned a dedicated Student Loan Advisor as soon as you begin the application process. This advisor helps guide you through the refinancing process and assists in selecting the loan terms that best fit your financial situation. Advisors can be reached by text, email, or phone.
ELFI also allows you to refinance a parent's PLUS loan in your name, a feature that sets it apart from many other private lenders. However, ELFI does not offer cosigner release or interest rate discounts.
pros
- Work with a dedicated Student Loan Advisor
- Students can refinance parent loans in their own name
- Transparent eligibility criteria
- Payment relief options for struggling borrowers
cons
- At least a bachelor’s degree required for refinancing
- No cosigner release
- No autopay rate discount
- Fees apply for late or returned payments
Loan terms
5, 7, 10, 15, or 20 years for student loan refinancing; 5, 7, or 10 years for parent loan refinancing
Loan amounts
Minimum of $10,000 with no set maximum.
Eligibility
Must be a U.S. citizen or permanent resident with a bachelor’s degree or higher. Must have at least $10,000 in student loans to refinance and a minimum credit history of 36 months.
Overview
LendKey is a lending platform that partners with credit unions and community banks to help borrowers get low-interest student refinance loans. You can compare lenders all in one place without negatively impacting your credit score.
Because LendKey pairs borrowers with local banks and credit unions, the terms and eligibility requirements can differ, depending on which lender you choose. You'll have many options to compare, but it's important that you carefully review each credit union or bank's terms before signing your loan agreement.
pros
- Doesn’t charge origination or application fees
- Can refinance with an associate degree
- Offers a discount for autopay
cons
- Terms vary by the lender you choose
- Potentially need to meet membership requirements for certain credit unions or banks
Cosigner release
Varies based on lender's terms
Eligibility
Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from one of LendKey lenders’ eligible institutions.
Overview
INvestEd is a nonprofit lender that offers student loan refinancing with competitive rates. Borrowers can take advantage of an autopay discount, as well as cosigner release after only 12 on-time payments.
The lender's maximum refinance loan limit is $250,000, which is lower than some other lenders. International students aren't able to refinance their student loans. INvestEd has a minimum credit score requirement of 670, and borrowers must meet an income requirement. However, the lender doesn't offer prequalification, so potential borrowers can't find out what their rate would be without a full application.
pros
- Don’t need a degree to refinance
- Offers rate discount for autopay
- Can release cosigner after 12 on-time payments
- Various deferment options available
cons
- Can’t prequalify before applying
- Maximum loan limit is lower than some lenders
- Not able to transfer a parent loan to a student
- International students aren’t eligible
Eligibility
U.S. citizens or permanent residents are eligible. Borrowers must meet minimum requirements including a FICO score of 670 or higher, annual income of $36,000, a debt-to-income ratio below 40% to 50%, a year of continuous employment, and no defaults or serious collection activities in recent years.
Overview
If you have at least $10,000 in student loans to refinance, Citizens may be a good option.The lender has a relatively high loan maximum of $300,000 for undergraduate borrowers, and graduate or professional degree holders can refinance up to $500,000 or $750,000.
Citizens offers loan repayment terms ranging from five to 20 years, and rates can be either fixed or variable. Medical residents can refinance loans with fixed monthly payments of $100 for up to four years.
pros
- Offers prequalification to check rates
- Discounts for autopay and loyalty
- Wide range of repayment terms
cons
- Higher minimum loan requirement than some lenders
- Cosigner release only available after 36 payments
- 12 payments required for borrowers without at least a bachelor’s degree to be eligible to refinance
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, with a maximum of $300,000 for bachelor’s degree or below; $500,000 for graduate degrees; and $750,000 for professional degrees
Eligibility
Must refinance at least $10,000 in student loans and be a U.S. citizen, permanent resident, or resident alien with a valid U.S. Social Security number. Must have earned at least a bachelor's degree to qualify.
Overview
EdvestinU is a nonprofit student loan lending and refinancing organization that's part of the Granite Edvance Corporation. It offers student refinance loans, with fixed- and variable-rate options available.
The lender offers student loan refinancing in 20 states. It has higher loan minimums and lower maximums to qualify for refinancing than some competitors. Eligible borrowers have a range of student loan repayment term options to choose from.
pros
- No degree required to qualify and can refinance while still in school
- Rate discount of 0.25 percentage points for autopay
- New Hampshire residents may qualify for a 1.5 percentage point rate reduction
- Can prequalify and see rate offers with no impact on credit score
cons
- Not available to borrowers in all states
- Higher minimum balances and lower maximum balances than some competitors
- Stricter cosigner release requirements than many other lenders
Eligibility
U.S. citizens or permanent residents who are at least 18 years old and reside in Alaska, Arkansas, Colorado, Connecticut, Florida, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Puerto Rico, Rhode Island, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
$10,000 up to the total amount
Overview
The Massachusetts Educational Financing Authority (MEFA) provides refinancing options for student borrowers, even if you haven't earned your degree. While MEFA doesn't offer variable-rate loans, its fixed-rate options are competitive with what other lenders offer.
You can refinance loans starting at $10,000, but you'll need to have made six on-time payments on your current loans within the last six months to qualify. If your credit history isn't strong enough, you can apply with a cosigner. However, MEFA doesn't offer cosigner release, meaning the cosigner remains responsible until the loan is fully paid off.
pros
- You don’t need a degree to refinance
- View your estimated rate through prequalification
- No application, origination, or late fees
cons
- Variable rates are not offered; only fixed
- No autopay rate discount
- Cosigner can’t be released from the loan
- Parent loans are not eligible for refinancing
Loan amounts
$10,000 up to your total debt
Eligibility
Must be a U.S. citizen or permanent resident who is the primary borrower on education debt used to attend an eligible college or university. Must have made six on-time loan payments over the most recent six months. Must have no history of default or delinquency on education debt for the past 12 months and no history of bankruptcy or foreclosure in the past five years.
Overview
Rhode Island Student Loan Authority (RISLA) is a nonprofit lender founded in 1981 that offers refinance loans to borrowers in all 50 states. While most private student loan lenders cater exclusively to borrowers who have earned degrees, RISLA also refinances loans for those who did not complete a degree program.
One of the benefits RISLA offers is income-based repayment, which is usually only available with federal student loans. Borrowers experiencing financial hardship may also qualify for forbearance for a period of as long as 24 months. Those returning to resume graduate studies school may defer repayment on their refinancing loans for as long as 36 months.
pros
- Offers income-based repayment
- Forbearance periods of as long as 24 months available
- Graduate school deferment periods as long as 36 months
- Can refinance even without a degree
cons
- Cosigners cannot be released from loans
- Limited range of repayment terms
- Must have income of at least $40,000 to qualify
- Doesn’t offer variable-rate loans
Loan amounts
$7,500 minimum up to of $250,000, depending on degree
Eligibility
Borrower or cosigner must meet credit requirements. Student must be a U.S. citizen or permanent resident and have used original student loans to attend an eligible degree-granting institution.
Overview
Brazos offers student loan refinancing exclusively to Texas residents who have earned at least a bachelor's degree from an eligible school. The company does not charge application or origination fees, and its interest rates could be lower than what you find with other private lenders.
However, Brazos has eligibility requirements that some borrowers might find to be difficult to meet. To qualify, borrowers must have a minimum income of $60,000 and a credit score of 720 or higher. If you can't meet those minimums alone, you can add a cosigner who can be released after making 24 consecutive payments.
pros
- Offers five loan terms
- Competitive rate offerings
- Cosigner release after two years
- Doesn’t charge application or origination fees
- A quarter-point rate discount for using autopay
cons
- Must be a Texas resident to qualify
- Higher minimum credit and income requirements than many other lenders
- Must have earned at least a bachelor’s degree to qualify
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, up to $150,000 for bachelor’s degrees and $400,000 for graduate, medical, law, or other professional degrees
Cosigner release
After 24 on-time, consecutive payments
Eligibility
Borrower must be a Texas resident and a U.S. citizen or permanent resident who has at least one outstanding, fully disbursed education loan
Loan Amounts
$5,000 up to the full balance
Overview
SoFi®, an online lender established in 2011, offers student loan refinancing for undergraduate and graduate borrowers from Title IV schools. They also provide refinancing options for Parent PLUS loans and medical school graduates in residency or fellowship. With five repayment terms, SoFi caters to various budget needs, and you can prequalify with a soft credit pull, which won't impact your credit score. Loans are serviced by MOHELA.
SoFi stands out for its member perks, including no fees, an autopay discount, and a 0.125 percentage point interest rate reduction for existing members. Additional benefits include free financial planning, unemployment protection, and access to travel deals.
pros
- Rate discounts, financial planning, and travel deals for members
- No application, origination, or late payment fees
- Autopay rate discount available
- You can refinance parent PLUS loans in the student's name
cons
- Cosigner release not available
- Must have at least $5,000 in loans to refinance
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$5,000 - full outstanding balance
Eligibility
Must be a U.S. citizen or permanent resident. Must have made 6 on-time payments in the past 6 months, with no record of default, delinquency, bankruptcy, or foreclosure in the last five years. Employment is required, or you must have a job offer starting within 90 days. Must also have attended a Title IV-eligible school.
Loan Amounts
$10,000 up to total refinance amount
Overview
ELFI offers student loan refinancing for borrowers who have earned at least a bachelor's degree. A key benefit is that you're assigned a dedicated Student Loan Advisor as soon as you begin the application process. This advisor helps guide you through the refinancing process and assists in selecting the loan terms that best fit your financial situation. Advisors can be reached by text, email, or phone.
ELFI also allows you to refinance a parent's PLUS loan in your name, a feature that sets it apart from many other private lenders. However, ELFI does not offer cosigner release or interest rate discounts.
pros
- Work with a dedicated Student Loan Advisor
- Students can refinance parent loans in their own name
- Transparent eligibility criteria
- Payment relief options for struggling borrowers
cons
- At least a bachelor’s degree required for refinancing
- No cosigner release
- No autopay rate discount
- Fees apply for late or returned payments
Loan terms
5, 7, 10, 15, or 20 years for student loan refinancing; 5, 7, or 10 years for parent loan refinancing
Loan amounts
Minimum of $10,000 with no set maximum.
Eligibility
Must be a U.S. citizen or permanent resident with a bachelor’s degree or higher. Must have at least $10,000 in student loans to refinance and a minimum credit history of 36 months.
Overview
LendKey is a lending platform that partners with credit unions and community banks to help borrowers get low-interest student refinance loans. You can compare lenders all in one place without negatively impacting your credit score.
Because LendKey pairs borrowers with local banks and credit unions, the terms and eligibility requirements can differ, depending on which lender you choose. You'll have many options to compare, but it's important that you carefully review each credit union or bank's terms before signing your loan agreement.
pros
- Doesn’t charge origination or application fees
- Can refinance with an associate degree
- Offers a discount for autopay
cons
- Terms vary by the lender you choose
- Potentially need to meet membership requirements for certain credit unions or banks
Cosigner release
Varies based on lender's terms
Eligibility
Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from one of LendKey lenders’ eligible institutions.
Overview
INvestEd is a nonprofit lender that offers student loan refinancing with competitive rates. Borrowers can take advantage of an autopay discount, as well as cosigner release after only 12 on-time payments.
The lender's maximum refinance loan limit is $250,000, which is lower than some other lenders. International students aren't able to refinance their student loans. INvestEd has a minimum credit score requirement of 670, and borrowers must meet an income requirement. However, the lender doesn't offer prequalification, so potential borrowers can't find out what their rate would be without a full application.
pros
- Don’t need a degree to refinance
- Offers rate discount for autopay
- Can release cosigner after 12 on-time payments
- Various deferment options available
cons
- Can’t prequalify before applying
- Maximum loan limit is lower than some lenders
- Not able to transfer a parent loan to a student
- International students aren’t eligible
Eligibility
U.S. citizens or permanent residents are eligible. Borrowers must meet minimum requirements including a FICO score of 670 or higher, annual income of $36,000, a debt-to-income ratio below 40% to 50%, a year of continuous employment, and no defaults or serious collection activities in recent years.
Overview
If you have at least $10,000 in student loans to refinance, Citizens may be a good option.The lender has a relatively high loan maximum of $300,000 for undergraduate borrowers, and graduate or professional degree holders can refinance up to $500,000 or $750,000.
Citizens offers loan repayment terms ranging from five to 20 years, and rates can be either fixed or variable. Medical residents can refinance loans with fixed monthly payments of $100 for up to four years.
pros
- Offers prequalification to check rates
- Discounts for autopay and loyalty
- Wide range of repayment terms
cons
- Higher minimum loan requirement than some lenders
- Cosigner release only available after 36 payments
- 12 payments required for borrowers without at least a bachelor’s degree to be eligible to refinance
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, with a maximum of $300,000 for bachelor’s degree or below; $500,000 for graduate degrees; and $750,000 for professional degrees
Eligibility
Must refinance at least $10,000 in student loans and be a U.S. citizen, permanent resident, or resident alien with a valid U.S. Social Security number. Must have earned at least a bachelor's degree to qualify.
Overview
EdvestinU is a nonprofit student loan lending and refinancing organization that's part of the Granite Edvance Corporation. It offers student refinance loans, with fixed- and variable-rate options available.
The lender offers student loan refinancing in 20 states. It has higher loan minimums and lower maximums to qualify for refinancing than some competitors. Eligible borrowers have a range of student loan repayment term options to choose from.
pros
- No degree required to qualify and can refinance while still in school
- Rate discount of 0.25 percentage points for autopay
- New Hampshire residents may qualify for a 1.5 percentage point rate reduction
- Can prequalify and see rate offers with no impact on credit score
cons
- Not available to borrowers in all states
- Higher minimum balances and lower maximum balances than some competitors
- Stricter cosigner release requirements than many other lenders
Eligibility
U.S. citizens or permanent residents who are at least 18 years old and reside in Alaska, Arkansas, Colorado, Connecticut, Florida, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Puerto Rico, Rhode Island, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
Loan Amounts
$10,000 up to the total amount
Overview
The Massachusetts Educational Financing Authority (MEFA) provides refinancing options for student borrowers, even if you haven't earned your degree. While MEFA doesn't offer variable-rate loans, its fixed-rate options are competitive with what other lenders offer.
You can refinance loans starting at $10,000, but you'll need to have made six on-time payments on your current loans within the last six months to qualify. If your credit history isn't strong enough, you can apply with a cosigner. However, MEFA doesn't offer cosigner release, meaning the cosigner remains responsible until the loan is fully paid off.
pros
- You don’t need a degree to refinance
- View your estimated rate through prequalification
- No application, origination, or late fees
cons
- Variable rates are not offered; only fixed
- No autopay rate discount
- Cosigner can’t be released from the loan
- Parent loans are not eligible for refinancing
Loan amounts
$10,000 up to your total debt
Eligibility
Must be a U.S. citizen or permanent resident who is the primary borrower on education debt used to attend an eligible college or university. Must have made six on-time loan payments over the most recent six months. Must have no history of default or delinquency on education debt for the past 12 months and no history of bankruptcy or foreclosure in the past five years.
Overview
Rhode Island Student Loan Authority (RISLA) is a nonprofit lender founded in 1981 that offers refinance loans to borrowers in all 50 states. While most private student loan lenders cater exclusively to borrowers who have earned degrees, RISLA also refinances loans for those who did not complete a degree program.
One of the benefits RISLA offers is income-based repayment, which is usually only available with federal student loans. Borrowers experiencing financial hardship may also qualify for forbearance for a period of as long as 24 months. Those returning to resume graduate studies school may defer repayment on their refinancing loans for as long as 36 months.
pros
- Offers income-based repayment
- Forbearance periods of as long as 24 months available
- Graduate school deferment periods as long as 36 months
- Can refinance even without a degree
cons
- Cosigners cannot be released from loans
- Limited range of repayment terms
- Must have income of at least $40,000 to qualify
- Doesn’t offer variable-rate loans
Loan amounts
$7,500 minimum up to of $250,000, depending on degree
Eligibility
Borrower or cosigner must meet credit requirements. Student must be a U.S. citizen or permanent resident and have used original student loans to attend an eligible degree-granting institution.
Fox Business does not make or arrange loans.
Best for: Borrowers with federal student loans who earn a low income
Income-driven repayment (IDR) plans adjust your monthly federal student loan payments according to your income and family size, ensuring they’re more in line with what you can realistically afford to pay. These plans also forgive the remaining balance on your student loans after making a certain number of payments.
Under these plans, your monthly payments are calculated based on a percentage of your discretionary income — typically 10% to 20%. They can also extend your repayment term up to 25 years:
| | | | |
|---|
| Borrowers with high student debt relative to income | Borrowers with low-income and high debt who received a Direct Loan after Oct. 1, 2011 | Borrowers with low income and an original loan balance of $12,000 or less | Parent PLUS loan borrowers |
| 10% of discretionary income; 15% if you borrowed before July 1, 2014 | 10% of discretionary income | 10% of discretionary income | The lesser of: 20% of discretionary income, or what you’d pay over 12 years, adjusted to your income |
| 20 years; 25 years if you borrowed before July 1, 2014 | | 10 to 25 years depending on original loan balance | |
| Forgives remaining loan balance after repayment period | Forgives remaining loan balance after repayment period | Forgives remaining loan balance after repayment period | Forgives remaining loan balance after repayment period |
To switch to an income-driven repayment plan, apply online or send a physical copy of your application to your loan servicer. The application process involves providing information about your income and the number of people in your household. You need to recertify this information each year, as your payments may change with fluctuations in your income or family size.
Tip:
To see which repayment plan can save you the most money, use Federal Student Aid’s loan simulator using your specific loan details.
It’s important to remember that while these plans significantly reduce your monthly payments, they also extend the term of your loan, which could result in more interest paid over time.
Best for: Federal student loan borrowers who can’t benefit from income-driven repayment plans.
Consolidation isn’t the only way to extend your repayment period. If you have federal student loans, you can also switch to the Extended Repayment plan. The Extended Repayment plan allows you to change from the standard 10-year repayment plan to a 25-year term, reducing your monthly payment amount. You’ll be paying more in interest over the life of the loan, but it’ll make your monthly payments more manageable.
To extend your repayment timeline, contact your loan servicer. They can provide information on the different repayment plans available and guide you through the process of switching to a longer-term plan.
Best for: Federal student loan borrowers who expect their income to increase in the future.
The Graduated Repayment plan starts with lower monthly payments that gradually rise every two years. The idea is to match your payments with your expected income growth, making it easier to manage payments early in your career when your earning potential is lower.
The Graduated Repayment plan may keep the same 10-year repayment term as the Standard Repayment plan or extend your repayment timeline up to 30 years for Direct Consolidation Loans.
It’s important to keep in mind that while your payments will start lower than they would be under a standard 10-year repayment plan, they will increase. You may also end up paying more in total interest over the life of the loan compared to the Standard Repayment plan for Direct Consolidation Loans.
Best for: Borrowers facing temporary financial hardship and are struggling to make monthly payments
Deferment and forbearance can temporarily pause or reduce payments, providing relief when making regular payments becomes a challenge.
- Deferment is a period during which your loan servicer postpones payments under specific circumstances, such as unemployment, economic hardship, military service, or re-enrolling in school. Both federal and private student loans typically offer deferment, but private lenders have their own qualifying criteria.
- Forbearance allows you to stop or reduce payments for up to 12 months at a time. However, unlike deferment, interest continues to accrue on all federal student loans during forbearance. This can end up increasing your total loan balance.
Whether you have federal or private student loans, contact your loan servicer to see what your options are for deferment or forbearance. They can provide the necessary forms and guide you through the application process.
Important:
In most circumstances, interest continues to accrue during periods of deferment and forbearance. But if you have subsidized student loans, the government will cover interest charges during a deferment.
Best for: Borrowers who qualify for federal loan forgiveness programs
Having a student loan forgiven means you’re no longer required to repay some or all of your loan. There are various student loan forgiveness programs available for federal borrowers, each with its own criteria.
- Public Service Loan Forgiveness: The PSLF program is available for people working full-time for the government, not-for-profit organizations, and in other qualifying public service jobs. Under this program, your remaining loan balance is forgiven after making 120 on-time payments under an income-driven repayment plan.
- Income-Driven Repayment forgiveness: If you have eligible federal student loans, you also have access to four different income-driven repayment plans that clear your remaining loan balance after making 10 to 25 years of payments.
- Teacher Loan Forgiveness: The TLF program is designed for teachers who work full-time for five consecutive years in certain elementary and secondary schools or educational agencies. Eligible teachers can have up to $17,500 of their federal student loans forgiven.
To find out if you qualify for a loan forgiveness program, contact your loan servicer or check the eligibility requirements for each program to see if you meet the criteria. Note that private student loans don’t qualify for federal forgiveness programs.
Related: How to get student loan forgiveness in 2024
Best for: Federal and private student loan borrowers with employers that offer educational assistance
In recent years, more employers have offered educational assistance programs as part of their benefits package. Federal law allows employers to offer up to $5,250 in annual tax-free educational assistance per employee. These benefits can be used to cover tuition, books, and other education expenses, and to help pay off student loans.
If your employer offers this benefit, they may make payments directly to your lender or reimburse you for payments you made to your lender. To take advantage of this benefit, ask your HR or employee benefits department if your employer offers such a program and how to enroll.
Best for: Married borrowers with federal student debt on an income-driven repayment plan
If you’re married, filing taxes separately from your spouse while enrolled in an income-driven repayment plan can potentially lower your student loan payments. Your monthly payment will be based solely on your income rather than the combined income of you and your spouse.
This strategy can be especially beneficial if your spouse earns a lot more than you do.
You and your spouse would need to file separate income tax returns and switch to an income-driven repayment plan — all of these plans consider only your own income when you file separately from your spouse. It’s a good idea to discuss this strategy with a tax adviser, as filing separate tax returns could mean losing out on certain tax deductions and credits.
Tip:
Eligible borrowers can also benefit from a student loan interest tax deduction of up to $2,500 each year. This deduction can significantly reduce your annual tax burden while freeing up funds to apply towards your student loan payments.
Best for: Anyone with federal or private student loans.
Signing up for autopay on your student loans means allowing your loan payments to be automatically deducted from your bank account each month. This ensures you never miss a payment, and many lenders offer an interest rate discount for those who enroll.
The autopay interest rate reduction for most student loans is around 0.25 percentage points, which may seem small but can add up to significant savings over the life of your loan.
To sign up for autopay, log in to your account on your loan servicer’s website. Enrolling is usually fairly quick; it involves providing your bank account details and authorizing the monthly deductions from your account. Just make sure you have sufficient funds in your account each month to cover the payment and avoid potential overdraft fees.
Meet the contributor:
Janet Berry-Johnson
Janet Berry-Johnson is an authority on income taxes and small business accounting. She was a CPA for over 12 years and has been a personal finance writer for more than five years. Her work has been featured by The New York Times, Forbes, Business Insider, and MSN.
