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College Students and Recent Grads

8 Ways to Pay Off $100k in Student Loan Debt (or More)

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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With tuition costs higher than ever, some college grads are finding themselves with student loan balances of $100,000 or more. If you’re one of them, you might be feeling completely overwhelmed about tackling this mountain of debt.

But there are ways to pay off this much without sacrificing decades of your life to student loans. If you’re thinking about how to pay off $100k in student loan debt — or more — read on for some solid strategies that will help.

1. Write down all the details of your loans, and set goals for repayment

Before you can start conquering your debt, you need to know exactly what you’re dealing with. So your first step should be writing down the details of your loans, from your total balance to your interest rates to your loan servicers.

You can use our personal loan calculator to estimate the long-term costs of your debt. By seeing how much you’re spending on interest, you might get motivated to pay off your loans ahead of schedule. If that’s the case, you can also this Student Loan Hero calculator to estimate how much you’d have to pay each month to shave years off your debt or to save a certain amount in interest. (Note: Both MagnifyMoney and Student Loan Hero are owned by LendingTree.)

If you owe $100,000 at a 6.8% rate, for example, you could pay it off in 10 years with monthly payments of $1,151. But if you increase your monthly payment to $1,500, you could get out of debt three years early. If you can afford to double your monthly payment, you could actually cut your repayment term by five years and nine months and save $22,967 in interest.

Of course, throwing extra money each month at your student debt might not be financially possible at this time in your life. If you’re dealing with a balance of $100,000 or more, you might need to put your debt on an income-driven repayment plan until you can increase your payments in the future.

For now, come up with a repayment plan that works for your current budget, while keeping “stretch goals” in mind for the future. If you eventually start earning more, adjust your plan to reflect the change in your financial situation.

2. Consider the debt snowball or avalanche strategy for debt payoff

The average graduate with student debt has 3.7 loans in their name, according to Experian. So if you’re considering making extra payments, you might not know which loans to pay off first.

When it comes to paying off multiple debts, there are two tried-and-true strategies that are especially popular: the ”debt snowball” and the “debt avalanche”.

With the debt snowball strategy, you target your smallest balances first and then work your way up to your biggest. This approach can be psychologically motivating, since you’ll be able to completely close your individual accounts as quickly as possible.

With the debt avalanche, on the other hand, you would target the student loans with the highest interest rates. By going after high-interest debt first, you’ll save the most money on interest. You might also target variable-rate loans over fixed ones if you see your interest rate is going up.

At the same time, of course, you’ll be keeping up with payments on all your student loans. But the debt snowball and avalanche strategies are useful if you want to make additional payments on one or two loans but can’t afford to pay extra on all of them.

Each of these tactics is effective in different ways, so think about which would work best as you attack your debt.

3. Find ways to reduce your spending

People paying off $100k in student loans (or more) are usually eager to get out the shadow of debt as fast as they can. Throwing extra payments at your student loans could help you chip away at your balance faster, but first you need to find the money.

If you don’t have one already, create a budget to track your earning and spending. Once you’ve written down your major spending categories, search for areas where you can cut back. Maybe this involves moving to a less expensive apartment or cooking at home instead of eating out; perhaps you have to forgo nights out at the bar in favor of inexpensive potlucks with friends.

Although reducing your spending will only take you so far, chances are there are areas where you could save — or at least resist the temptations of lifestyle inflation.

Even though it might involve living like a college student for a few more years, you’ll likely be glad you made the sacrifice once you finally dig your student loan balance down to zero.

4. Get creative about boosting your income

When it comes to budgeting for your student loan payments, spending less is only one side of the coin. The other is increasing your income.

If you took on all this debt to pay for medical school, law school, or another post-graduate program, you might be well on your way to a high-paying job. Whatever your background, though, think about what salary you’re aiming for. By having a clear goal in mind, you can narrow down your job search to positions that are financially feasible for your situation. You’ll also have a clear number to bring to the table during salary negotiations.

And if you’re already working, consider switching employers to boost your salary. In fact, “job hopping” could get you a higher salary than sticking with the same company. Instead of waiting for a 4% raise at the end of each year, you could see a big jump in your income all at once by starting somewhere new.

Alternatively, you could look for ways to supplement your income with a side hustle. According to Bankrate, more than 44 million Americans are working some kind of side hustle. (Incidentally, about the same number of Americans have student loans.)

From driving for Uber to renting out a room on Airbnb to freelancing online, the side hustle possibilities are endless. Consider where your skills and interests lie, and get creative about ways to monetize them.

Once you set up another income stream, you could put those earnings right toward paying off your $100k+ in student loans.

5. Refinance your student loans for lower interest rates

If you’re dealing with a large student loan balance, then you know that keeping up with interest is half the battle. Over 10 years, for example, a $150,000 debt at a 6.8% interest rate accumulates a whopping $57,145 in interest.

But if you could reduce that rate to 3.0%, then the interest cost plummets to $23,809. How can you lower your interest rates? That’s where student loan refinancing comes in.

When you refinance student loans, you essentially give your old loans to a bank and take out a new one in their place. Depending on your credit and income, you could qualify for much lower rates than you have now. Or you can apply with a cosigner if your credit isn’t up to scratch.

And along with potentially snagging a lower interest rate, you might also be able adjust your monthly payments with new repayment terms, typically between five and 20 years. And you don’t have to refinance just once — you can refinance multiple times as your circumstances or goals change.

All that said, refinancing does come with a significant risk: When you refinance federal student loans, you turn them private. As a result, you lose access to federally sponsored programs such as income-driven repayment plans and federal loan forgiveness.

So before trading your government loans for private refinancing, make sure you’ve weighed the pros and cons. If you’re not relying on any federal programs, however, refinancing could be a savvy way to save money on your student debt and perhaps even pay it off faster than you originally planned.

6. Consider working toward loan forgiveness or repayment assistance

Instead of diligently paying off your student loans each month, what if you could get your entire balance — or at least, a big chunk of it — forgiven?

Federal forgiveness programs such as Public Service Loan Forgiveness and Teacher Loan Forgiveness will discharge all or part of your federal student loans in exchange for service in a given field or for certain employers.

What’s more, some states offer student loan repayment assistance programs (LRAPs) that pay off a chunk of your federal or private student loans after a set period of qualifying work. Some universities also have LRAPs for graduates, especially those who work in public service or non-profit organizations.

Of course, choosing to work in a non-profit for the sake of getting loan forgiveness could limit your long-term earning potential. So before pursuing these programs, think carefully about your professional and financial goals to make sure everything lines up.

Outside of forgiveness programs, you could also seek out an employer that offers a student loan benefit. Much like a 401(k) matching benefit, some employers will match part of your student loan payments every month to help you pay off your debt faster.

When it comes to how to pay off $100,000 in student loans, the more help you can get, the better. Explore your options for student loan forgiveness or repayment assistance to see if any could help you conquer your debt.

7. Use a windfall to pay down your balance faster

In mid-2018, the Consumer Financial Protection Bureau took a look in its Data Point report at how borrowers repay student loans. It found that borrowers who pay off a student loan ahead of schedule make a final payment that’s 55 times larger than their scheduled payment.

In fact, 94% of borrowers made a final payment that exceeded what was due. When the end is in sight, you might feel motivated to make a lump sum payment to crush your remaining balance once and for all.

Even if you’ve still got a ways to go on your debt, making a lump sum payment can speed up repayment and cut down on the long-term costs of interest. So if you get a cash windfall, such as a bonus from work or a lucky lottery ticket, consider putting that toward your loans.

Just make sure your loan servicer applies the payment correctly, so you don’t end up paying off interest when you meant to cut away at your principal.

8. Focus on your end goal of a debt-free life

When you’ve got $100,000 or more in student loans, it can feel like there’s a huge weight holding you down. But hopefully you can use your hard-earned degree to build a career you love while earning money to pay down your debt.

Or if you’re drawn to public service or non-profit work, you might qualify for forgiveness of your student loans. Whatever your approach, paying off this amount of debt might require some sacrifices along the way.

But while it can feel disheartening to stay in a cheap apartment or forgo vacations for a few years, remember that your efforts are bringing you closer to a debt-free life. Ultimately, your hard work will be worth it when you see that student loan balance finally disappear.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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College Students and Recent Grads

Sallie Mae Loan Consolidation Is Over, But Here Are Some Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Sallie Mae has a long history in the student loan world. Since the 1970s, this student loan giant has provided or serviced loans for college and graduate school students, as well as their parents.

Although Sallie Mae used to be government-sponsored, it’s now a private company that lends private student loans to cover education costs. And while it once offered consolidation options, you can no longer consolidate student loans through Sallie Mae.

So if you were looking for Sallie Mae loan consolidation, the bad news is that it no longer exists. But the good news is you have two other options for combining multiple loans into one.

2 alternatives to Sallie Mae student loan consolidation

While Sallie Mae loan consolidation is a thing of the past, you still have two options for consolidating debt: borrowing a direct consolidation loan from the federal government, or refinancing with a private lender. Here’s what you need to know about each.

1. Consolidate your federal student loans with a direct consolidation loan

If you’ve got federal student loans, then you can apply at StudentLoans.gov to combine them into a single direct consolidation loan.

The main benefits to federal student loan consolidation include:

  • Combining multiple loans into one: A consolidation loan can replace several loans with one new one, thereby simplifying repayment.
  • Choosing new repayment terms: You could stick with the standard 10-year term or put your loans on another plan, such as income-driven repayment or extended repayment.
  • Adjusting your monthly bills: If you’re struggling to pay bills each month, putting your consolidation loan on an income-driven or other plan could lower them. Plus, income-driven plans can end in loan forgiveness after 20 or 25 years of repayment.
  • Making certain loans eligible for income-driven repayment: Parent PLUS Loans, for example, don’t qualify for income-driven repayment unless you consolidate them first. After you do, you could put them on the income-contingent repayment plan.
  • Getting your loans out of default: Along with loan rehabilitation, consolidation is one way to get your loans out of default and back into good standing.
  • Switching to a new loan servicer: If you’ve had a bad experience with your loan servicer, you could change to a new one. Some federal loan servicers include Nelnet, Navient, and Great Lakes.

Although consolidating helps you simplify repayment and lets you choose a new repayment plan, it won’t save you money on interest. In fact, if you choose a longer term than what you have now, you’ll likely pay more interest over the life of your loan.

It’s important to note that consolidation doesn’t lower your interest rate, but rather takes the weighted average of your previous rates and rounds up to the nearest one-eighth of a percent. So, if you’re looking to save on interest, student loan refinancing could be a better option.

2. Combine federal and/or private loans through student loan refinancing

Your second option for combining several pieces of debt into one is via student loan refinancing. Unlike federal consolidation, you refinance with a private lender, such as a bank or credit union.

You can combine both federal and private student loans through refinancing. Note, however, that if you refinance federal loans, you lose access to federal programs, such as income-driven repayment and federal loan forgiveness.

Refinancing has its own benefits, however, with one of the biggest being the potential to save money by lowering your interest rate. Here are some major reasons to refinance:

  • Qualifying for a lower interest rate: If you meet a lender’s requirements for credit and income — or can apply with a cosigner who does — you could qualify for a lower rate on your refinanced student loans.
  • Choosing between a fixed and variable rate: Most lenders let you choose between a fixed rate, which never changes, and a variable rate, which is sometimes lower to begin with but can fluctuate over the life of the loan.
  • Saving money on your student loans: With a lower interest rate, you could save hundreds or even thousands of dollars.
  • Choosing new repayment terms: Private lenders often offer repayment terms between five and 20 years.
  • Adjusting your monthly payments: If you can afford higher payments, you could choose a shorter term than you have now and get out of debt more quickly. But if you’re feeling strangled by student loan bills, you might choose a longer term to reduce your monthly payments and create more breathing room in your budget.

If you’re interested in refinancing student loans, it’s easy to get a rate quote from a few lenders. By checking prequalification offers, you can see if you could snag a lower interest rate on your student debt.

Combining your loans can help simplify repayment

The average student loan borrower holds 3.7 loans, according to a 2017 report by Experian. With so many loans and loan servicers, you could have trouble keeping track of your monthly bills.

But if you consolidate your loans, you’ll only have to make one payment per month to a single loan servicer — plus, you might get the added benefit of selecting different repayment terms or even lowering your interest rate.

Even though you can’t consolidate student loans with Sallie Mae anymore, you still have the option of consolidating with the federal government or refinancing with another private lender. Before making any changes to your debt, though, make sure you understand the differences between federal consolidation and private refinancing.

Once you’ve thought through the pros and cons of each, you can choose an approach that will bring you one step closer to a debt-free life.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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College Students and Recent Grads

5 Times Refinancing Your Student Loans Is a Bad Idea

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Is refinancing student loans a good idea?

In many cases, the answer to this question is yes. Refinancing may bring down your interest rates if you qualify, saving you money on your student loans. Plus, it gives you the chance to choose new repayment terms and adjust your monthly payments.

But there could also be downsides to refinancing student loans, so it’s crucial to weigh the pros and cons before you make any changes to your debt.

If any of the following five scenarios apply to you, you might be better off avoiding refinancing and going with a different repayment strategy for your student debt.

1. You’re relying on federal repayment plans or forgiveness programs

If you refinance government-provided federal student loans with a bank or credit union, you turn them into a private student loan. Since you won’t have federal loans anymore, you’ll no longer have access to federal repayment plans or forgiveness programs.

The government offers a variety of repayment plans to help you adjust your monthly payments, such as income-driven repayment, extended repayment, and graduated repayment. Private lenders, on the other hand, typically don’t let you change your payments once you’ve selected terms. If you want to keep the option of income-driven repayment or another federal repayment plan open, refinancing might not be the right move for you.

You could also lose eligibility for federal forgiveness programs, such as Public Service Loan Forgiveness or Federal Teacher Loan Forgiveness. These programs only forgive federal loans, not private ones, so you should likely avoid taking your debt private through refinancing if you’re working toward federal loan forgiveness of any kind.

2. You don’t have a stable source of income

Before approving you for student loan refinancing, lenders look to see if you have strong credit and a stable income. Not only does this reassure them that you have the means to repay a loan, but it also helps you avoid taking on private debt you won’t be able to pay back.

Without a stable income, you run the risk of missing payments and going into default. And as described above, private lenders don’t have as many flexible repayment options as the federal government does if you’re struggling to pay.

Private lenders typically don’t offer income-driven plans, and as mentioned, few will let you adjust your bills once you’ve selected a term (unless you refinance for a second time). Some will let you postpone payments through forbearance if you run into financial hardship or go back to school, but this varies by lender and is just a temporary solution.

So if you’re worried about your ability to pay back your college debt, you might want to wait until your income is more stable before refinancing your student loans.

3. Your interest rates are already low

One of the biggest perks of refinancing student loans is getting a lower interest rate on your debt. Reducing your rate could save you money over the life of your loans.

Let’s say you owe $25,000 at a 6.8% annual interest rate. Over 10 years, you’d pay $9,524 in interest. But if you could bring that rate down to 4.5% through refinancing, you’d pay just $6,092 in interest over 10 years — and if you could pay back the debt faster, you’d save even more on interest.

But this perk only applies if you’re able to lower your rate through refinancing. If your rates are already low, you might not derive much benefit from refinancing.

Fortunately, it’s easy to get an instant rate quote from many refinancing providers online. You’ll enter a few basic pieces of information — e.g. loan amount, school, income — and the lender will show you prequalification offers.

By shopping around a little, you can see if refinancing would bring down your interest rate and save you money on your student loans.

4. Your cosigner isn’t happy about sharing debt

If you can’t meet a lender’s requirements for credit and income, you could apply with a cosigner who does. Even if you can qualify on your own, adding a cosigner to your debt could help you get the lowest rates.

But sharing debt is a big responsibility, and your cosigner will be on the hook for your student loan in the event you can’t pay. What’s more, the debt will show up on your cosigner’s credit report and could affect their debt-to-income ratio.

This could make it harder for your cosigner to take out a loan if they need one in the future, so enlisting a cosigner shouldn’t be taken lightly. You should even be careful about talking a parent into sharing your debt if they’re reluctant to do so.

If any financial issues arise in the future, this cosigned debt could put a strain on your relationship that’s simply not worth the lower interest rates you might get from refinancing.

5. You don’t have much time left on your student loans

When you refinance student loans, you have the chance to choose new repayment terms. Most lenders offer terms between five and 20 years. Unless you’re specifically trying to lower your monthly payments, you need to be careful not to accidentally extend the life of your loans.

If you’ve only got a few years left on your debt, choosing a term of five years or more could leave you owing money (and making repayments) for longer than you need to. That being said, you can typically prepay your loan without penalty — but at the same time, you might not feel as motivated to pay more than you’re required to each month.

So if you’re on track to get out of debt in a short period of time, be careful you don’t refinance for an even longer repayment term.

Is it bad to refinance student loans?

So is refinancing student loans a good idea or a bad idea? In many cases, refinancing is a savvy move, but there are some scenarios when the cons could outweigh the pros.

If you’re relying on federal repayment plans or forgiveness programs, for instance, turning your debt private wouldn’t be a good move. And if you’re concerned you won’t be able to afford monthly payments, you might also wait to refinance until your finances are more secure.

But if none of these concerns are an issue, refinancing could be a smart strategy to lower your interest rate, adjust your monthly payments and choose new terms. It also lets you switch to a new loan servicer, which could have better customer service than the one to which you’re currently assigned.

When it comes to managing student loan debt, avoid making rash decisions that could cost you. Make sure you’ve educated yourself on the advantages and disadvantages of student loan refinancing, so you can feel confident you’re making the best decision for you and your finances.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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