If you owe $300K in student loans — or more — you might feel like you’re doomed to a lifetime of debt. While debt of this size is certainly a burden, it’s possible to take control with the right repayment strategies.
If you’re figuring out how to pay off $300,000 in student loans, consider the following steps:
1. Get to know your loans
2. Cut down on living expenses
3. Increase your income
4. Use the debt snowball or debt avalanche method
5. Look into income-driven repayment
6. Explore loan forgiveness programs
7. Consider refinancing your loans
Before you can start tackling your debt, you need to know exactly what you’re working with. Chances are you owe multiple loans to more than one loan servicer. You might also owe a mix of federal and private student loans.
Track down the details of your loans by signing into your various accounts. Write down your balances, interest rates, monthly payments and repayment terms. You can also use our student loan payment calculator for a bird’s-eye view of your repayment plan and interest charges.
To find your federal loans, head to your Federal Student Aid account. Your private student loan information won’t be in there, however, so you’ll need to check directly with your lender or consult your credit report to see what you owe.
Once you have a clear understanding of what you owe and to whom, you can start to come up with a plan to conquer your debt.
If you owe $300K in student loans (or any large amount), you know how quickly interest charges can add up. For instance, if you have a 5% interest rate on your loans, then you’d pay a whopping $81,836 in interest over a typical 10-year repayment period.
If you can afford to pay your loans off faster, however, you can keep some of that money in your own pocket. One way to find more room in your budget for extra student loan payments is to cut down on living expenses.
Take a look at your budget, and identify major areas of spending. Perhaps you can reduce your rent or mortgage costs by moving to a less expensive place. Or maybe you can slash your car payment by trading in for a cheaper vehicle.
Along similar lines, try to avoid the allure of “lifestyle inflation” if your income increases. While it may be tempting to upgrade to a nicer house or take pricey vacations, you might be better off continuing to live like a student for a while.
If you can keep expenses low in the short term, you could pay off your $300K in student loans more quickly. Once that debt is out of your life, you can enjoy your income without the burden of paying student loans every month.
While saving more money is one side of the budgeting coin, the other is increasing your income.
If you took on $300K in student loans to pay for graduate school, for example, you might very well have a professional degree that has increased your earning potential.
But even if you’re pulling in a high income, consider whether there are ways to increase it with a side hustle. If you can set up an additional income stream, you could put that extra pocket money toward your student loan debt.
From freelance writing to driving for Uber to starting your own online business, you might find a creative way to make money on the side that helps ease the burden of your debt.
When it comes to making extra payments on your debt, there are a couple of strategies that are particularly effective: the debt snowball and debt avalanche.
With the debt snowball, you use any extra payments to target the loan with the smallest balance. If you have a loan of $5,000, a loan of $10,000, and a loan of $50,000, for example, you would make extra payments on your $5,000 loan first.
Once that balance is completely paid off, you’d move on to the loan with the next highest balance. This approach can help you get some “quick wins” in order to keep up your motivation.
However, the debt avalanche might be preferable if you want to save money on interest. With the debt avalanche, you target the loan with the highest interest rate first.
Of course, you’ll continue to make minimum payments on all your loans so you don’t fall behind. But these strategies can help you chip away at your debt faster and save money on interest.
While some borrowers aim to pay off their $300K in student loans faster, others need to lower their monthly payments. If your bills are unaffordable, consider applying for income-driven repayment.
Income-driven repayment plans adjust your monthly payments in accordance with how much you earn. Your minimum federal student loan payments will be adjusted to between 10% and 20% of your discretionary income, depending on which plan you choose. (Discretionary income excludes necessities like food and rent, as well as taxes.)
There are four options:
You can read over the details of each plan to see which would be most beneficial to you. Alternatively, you can request that your loan servicer choose whichever plan would give you the lowest monthly payment when you apply.
Along with adjusting your student loan bills, these plans extend your loan term to 20 or 25 years. If you still owe money after this time, the remainder will be forgiven.
Only federal student loans are eligible for income-driven plans. If you have private student loans, contact your loan servicer about your options. You might also look into refinancing your loans, as doing so can sometimes result in lower monthly payments. (See below for more on this option.)
Loan forgiveness programs can be lifesaving to borrowers who owe hundreds of thousands of dollars in student loans. These programs forgive all of part of your debt, usually in exchange for a certain period of service.
The Public Service Loan Forgiveness program, for example, forgives your full balance after 10 years of working in an eligible organization. Teacher Loan Forgiveness is available for teachers who work five consecutive years in low-income schools.
Check out this guide for more details on loan forgiveness programs.
You might also find out if your state or your alma mater offers loan repayment assistance programs (LRAPs). While federal forgiveness programs only forgive federal loans, some LRAPs help students pay off federal and private student loans.
Our database of state-based loan repayment assistance programs is a great place to start.
When thinking about how to pay off $300,000 in student loans, don’t forget to consider refinancing. Refinancing student loans could result in a lower interest rate, which could save you money over the long run.
Along with potentially getting you a lower rate, refinancing allows you to choose new repayment terms. You could choose a longer term for lower monthly payments, or opt for a shorter term to get out of debt faster.
What’s more, refinancing lets you combine multiple loans into one for a single monthly payment. At the same time, your new lender might offer more benefits than your current lender, such as unemployment protection or cosigner release.
That said, refinancing isn’t right for every borrower. For instance, refinancing federal loans with a private lender will strip them of federal plans and protections. In other words, refinanced federal loans will no longer qualify for income-driven plans, federal forgiveness programs or other federal benefits.
It’s also worth noting that you’ll need a decent credit score and steady income to qualify for refinancing in the first place. If you can’t meet a lender’s criteria (and can’t find a cosigner who can), you won’t be able to refinance your loans until you bolster your financial credentials.
Before committing to a refinancing offer, you can check your rates with a few different lenders online with no impact on your credit score. By shopping around, you can find the best student loan refinancing offer for you.