When paying for college, a few thousand here and there might not seem like much. But overtime, it adds up quickly. And, with more expensive programs and advanced degrees, it’s hard to dodge the colossal tuition bills.
If you’re staring at a student loan balance of over $200,000, you might be feeling overwhelmed, and rightfully so. It may be challenging to conceptualize how one could possibly attack such a mountain of student loan debt.
The good news is this: It’s entirely possible, and we’re here to help you break it down. Here’s how to pay off $200,000 in student loans.
Look for Loan Forgiveness Options
Student loan forgiveness programs can wipe out all, or some, of your student loan debt. That, combined with the very specific criteria of some programs, makes it a necessary starting point.
Oftentimes, student loan borrowers are unaware of such programs and their requirements, only learning about them when they are further along in their debt payoff journey. For example, the Public Service Loan Forgiveness program requires recipients to have made 120 qualifying monthly payments on an income-driven repayment plan. It is not uncommon for borrowers to have made payments for years without recognizing that they don’t count toward forgiveness as they weren’t on the proper repayment plan.
Thus, it’s important to consider these programs as soon as possible in your debt payoff journey. Making yourself aware of the options available can help you begin the process of meeting the necessary criteria before making non-qualifying payments.
Consider Refinancing Your Student Loans
If you have high-interest loans, refinancing should be your next step. Refinancing, in a simple sense, is the process of swapping your current loan(s) for one with a better interest rate or terms.
If affording your monthly payments is your main concern, refinancing to a longer repayment term will be helpful. By doing so, your monthly payments will decrease. Be aware, however, that a longer repayment period typically leads to paying more in interest over the life of the loan.
If you’d simply like to get out of debt faster and pay less over the life of the loan, refinancing to a lower interest rate and/or a shorter repayment period will be a great route. Knocking down your interest rate, even just a few percentage points, can save you thousands over the life of the loan.
You can refinance all types of student loans, including both federal and private student loans, regardless of whether they were for medical school, law school, or a simple undergraduate degree. However, you’ll need a strong credit score and stable income to qualify.
If your financial situation isn’t up to par in those areas, consider adding a creditworthy cosigner to the loan. If adding a cosigner isn’t an option, consider working with a lender that has low credit score requirements.
Make Sure You’re Debt Payoff Plan is Strong
While throwing any and all cash on your student debt is a great start, having a more well-thought-out debt payoff strategy will likely generate better results. Here are a few ways to strengthen your approach:
Use the Avalanche Method
While there are a variety of debt payoff strategies, the Avalanche Method will save you the most money over the life of the loan. With this method, you will make minimum monthly payments on all loans. Then, make monthly surplus payments on the loan with the highest interest rate until it is paid off.
Once that loan is gone, take the amount you previously allocated toward it, and start directing it toward the next highest interest rate loan until that loan is gone, too. Continue this process until all loans are paid off.
Make Biweekly Payments
Student loan interest typically compounds daily. So, by the time you’ve made it to your monthly payment, interest has accrued for nearly 30 days.
To get ahead of the interest, and make more of your payment go toward the principal, take the amount you’d contribute each month and divide it into two payments. Then, make that half payment every other week, instead of once per month. While a small change, it can reduce how much you pay over time quite significantly, especially when done with high-balance loans.
Make Surplus Payments
If you happen to get a raise, a bonus at work, or a hefty tax refund, consider throwing it at your student debt. While tempting to spend that cash on more exciting purchases, putting it toward your debt may be more rewarding in the long run.
The latest rates from Sparrow’s partners
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Cut Back Expenses Where You Can
Digging yourself out of $200,000 in student loan debt will take some discipline. If you don’t already utilize a budget to guide your spending, now is the time to make one.
A budget will allow you to track your income and expenses, giving you a better idea of where you can cut back. For example, if you happen to spend $200 per month on coffee, consider cutting that in half and directing the remainder to your debt.
Negotiate a Raise or Pick Up a Side Hustle
If cutting back on expenses isn’t possible, consider increasing your income through negotiating a raise or picking up a side hustle. While it may only lead to a few thousand dollars per year, it can make a serious dent in your debt.
For example, let’s say that your increased income leads to an additional $500 per month. On a $200,000 loan balance with a 4.5% interest rate and a 10-year repayment term, that $500 monthly surplus payment would save you over 2 years of repayment and $11,300 over the life of the loan.
Find a Job with Debt Payoff Benefits
Just as some employers provide healthcare benefits or a 401k match, some provide debt payoff benefits as well. While it may seem too good to be true — I mean, an employer paying off your debt is pretty sweet — it might be more common than you think. In fact, around 17% of employers offer student debt assistance, and another 31% plan to offer it in the future.
If you’re in the market for a new role, consider searching for one with debt payoff benefits. Companies like Aetna, Chegg, Fidelity Investments, Google, Hulu, and Lockheed Martin all offer competitive debt payoff benefits, some providing up to $6,000 per year.
Student loan rates from our partners
Ascent
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 12/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 12/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
LendKey
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
Earnest
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
College Ave
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.
(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 12/2/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.
(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 12/2/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
FAQ About Paying Off a Lot of Student Debt
How long will it take me to pay off my student loans?
It depends on the amount of debt you have, your interest rate, your repayment period, and your debt payoff strategy. To find the exact timeline for your specific situation, use a debt payoff calculator.
How much student debt is too much?
There is no numerical threshold that is widely recognized as “too much” student debt.
For example, the average dental student graduates with nearly $300,000 in student loan debt. However, with dentist salaries often in the $150,000-$200,000 range, it may not be an unreasonable amount of debt for that industry.
That amount of debt, however, for an entry-level civil engineer with a starting salary of roughly $60,000 may be overwhelming. What is considered “too much” debt is entirely subjective.
Is it better to have savings or pay off student loans?
Before dipping into savings to pay off student loans, be sure to have a solid emergency fund worth 3 to 6 months of expenses.