Strategies for Managing Student Loan Debt

If college were a party, then student loans are the hangover. Unfortunately, the “hair of the dog” won’t cure this headache, but here are some ideas for managing your student loan debt.

What Income-Driven Repayment Programs (IDR) Are Available for Student Loans?

There are four different types of income-driven repayment choices that may help to manage your monthly federal student loan payments:

1. SAVE Plan (formerly REPAYE): This plan offered reduced payments based on income and family size and paused interest accumulation for low-income borrowers. As of August 2025, interest has resumed and the program is set to be replaced by the Repayment Assistance Plan (RAP) in coming years. Borrowers should stay in contact with their loan servicers for transition details.
2. Pay As You Earn Repayment Plan (PAYE Plan): This plan caps your monthly payment at 10% of your discretionary income and offers forgiveness after 20 years of qualifying payments.
3. Income-Based Repayment Plan (IBR Plan): IBR sets payments at 10–15% of your discretionary income, depending on when you borrowed, and offers forgiveness after 20 or 25 years. You must demonstrate partial financial hardship to qualify, and payments are recalculated annually.
4. Income-Contingent Repayment Plan (ICR Plan): ICR is the only IDR plan available to Parent PLUS borrowers (after consolidation) and sets payments at 20% of discretionary income or what you’d pay on a fixed 12-year plan—whichever is less. Forgiveness occurs after 25 years of qualifying payments.

You may be eligible for one or more of these payment choices depending on the types of student loans you have, your family size, your income, and certain other factors.

Under these income-driven repayment plans, any remaining loan balance may be forgiven at the end of the payment period. Payment periods vary depending on the payment option you enroll in but typically range between 20-25 years.

Repayment Plan Features at a Glance

What Other Options Can Help Reduce or Eliminate Student Loan Debt?

If traditional repayment plans don’t seem like the right fit, there are a variety of alternative strategies that may help reduce your balance faster, lower interest costs, or even qualify you for forgiveness.

Public Service Loan Forgiveness

Certain federal loans may be forgiven after 10 years of qualifying payments if you take a job with federal, state, or local government; a non-profit; or certain other public service organizations.

Pros

• Forgives the entire remaining federal loan balance tax-free after 120 qualifying payments
• Encourages long-term public service careers
• Can be combined with an income-driven repayment plan

Cons

• Requires full-time employment with a qualifying employer
• Complex rules and paperwork tracking (e.g., annual employer certification)
• Forgiveness only applies to Direct Loans under eligible repayment plans

Volunteer

There are a number of programs, such as AmeriCorps, Peace Corps, and the military, in which service may accrue a benefit that reduces an outstanding loan balance in an amount that varies depending upon the program.

Pros

• Provides loan forgiveness, education awards, or deferment
• Offers meaningful work experiences and potential job networks
• May cover living stipends, housing, and other benefits

Cons

• Forgiveness amounts vary and may not fully eliminate debt
• Service typically requires full-time commitments in specific locations
• May delay career advancement or earnings

Pre-Pay Principal

Pre-payment of principal may help lower the lifetime interest costs of a student loan. To raise cash to fund pre-payments, one idea is to ask that birthday and holiday gifts be cash to put toward pre-payments. You could also direct any raises, bonuses or overtime pay to pre-payments. If you do pre-pay principal, be sure to target the loans with the highest rate of interest.

Pros

• Reduces total interest paid over the life of the loan
• Shortens repayment term without needing refinancing
• Provides a sense of progress and control

Cons

• No forgiveness benefit; you’re still paying the full balance
• Funds used for pre-payment could be directed to savings or emergencies
• May not be ideal if you’re eligible for forgiveness under other programs

Loan Consolidation and Refinancing

Loan consolidation through the Direct Loan program combines multiple federal loans into one, while refinancing (usually through a private lender) creates a new loan to replace existing ones, ideally at a lower interest rate.

Pros

• Simplifies repayment with a single monthly bill
• May reduce interest rate (if refinancing privately)
• Can reset your repayment term or make you eligible for IDR

Cons

• Federal consolidation doesn’t lower interest – it averages your current rates
• Refinancing federal loans through a private lender removes eligibility for forgiveness programs, income-driven plans, and federal deferment
• Credit score and income heavily impact refinancing offers

What Modern Payment Strategies Can Help You Pay Off Student Loans Faster?

Not every student loan solution involves forgiveness programs or refinancing. Sometimes, simple payment strategies can help you chip away at debt more efficiently and save thousands in interest along the way.

Avalanche vs. Snowball Method

When you have multiple loans, choosing the right order to pay them down can make a big difference.

• Avalanche Method: Pay off the loan with the highest interest rate first. This method minimizes total interest paid.
• Snowball Method: Pay off the smallest balance first to build momentum and stay motivated.

Both approaches work best when you make extra payments (even small ones) in addition to your required monthly minimums.

See How Fast You Could Be Debt-Free

Try our Loan Payoff Calculator to see how long it will take to eliminate your loan and how much interest you could save by adjusting your payments.

How to Avoid Default and Navigate Collections

If you’re struggling to make payments—or you’ve already fallen behind—you’re not alone. And more importantly, you have options.

Student loans typically go into default after 270 days (about 9 months) of nonpayment. At that point, serious consequences can follow: damaged credit score, loss of access to future aid, and involuntary collections such as wage garnishment, tax refund seizures, and even offsets to Social Security income.

What You Can Do:

• Contact your loan servicer immediately: Ignoring the issue can limit your options. Servicers can help set up a temporary forbearance, deferment, or a new payment plan based on your current income.
• Explore Loan Rehabilitation: This one-time option allows you to “cure” a default by making 9 on-time payments within 10 months. Once complete, the default is removed from your credit report.
• Take advantage of the “Fresh Start” program: If you defaulted before or during the pandemic pause, the federal government has offered a one-time opportunity to return your loan to good standing. Visit studentaid.gov for details and deadlines.

Facing default can feel overwhelming, but you don’t have to handle it alone. Reaching out early is the most important step toward regaining control.

Final Thoughts: Taking the Next Step

Managing student loan debt can feel overwhelming, but you don’t have to navigate it alone. Whether you qualify for loan forgiveness, can benefit from smart payment strategies, or need help avoiding default, there’s a path forward that fits your situation.

Start by reviewing your loan details, exploring your eligibility for repayment programs, and reaching out to your loan servicer or a trusted financial professional. Taking just one step, whether it’s enrolling in autopay, making an extra payment, or exploring loan rehabilitation – can move you closer to freedom from student debt.