While the average student loan balance is just under $40,000, a small percentage of borrowers owe substantially more. According to the Brookings Institute, about 6% of student loan borrowers owe more than $100,000. Becoming debt-free can feel like an impossible dream if you owe $100,000 or more in student loan debt. But by creating a plan — and making some sacrifices — it’s possible to pay off your debt faster than you may think. Continue reading to learn how to pay off six-figure student loan debt and regain control of your finances.
If you left college with $100,000 or more in student loans, it’s easy to feel discouraged or overwhelmed. But you’re not alone — there are millions of people in the same situation. Whether you’re making a six-figure income or are struggling to pay your bills, these seven tips can help you manage your loans and become debt-free sooner:
1. Apply for an Income-Driven Repayment Plan
If you have federal student loans and aren’t making enough money to afford your payments comfortably, you may be eligible for an income-driven repayment (IDR) plan. If you qualify, your loan servicer will recalculate your payments based on a percentage of your discretionary income. Depending on how much you make and your household size, your payments could be much smaller than you pay now. And with IDR plans, you make payments based on your income for 20 or 25 years. If you still have a loan balance at the end of that period, the government discharges the remainder, freeing you from your debt. Applying for an IDR plan is free, and you can start the process online at studentaid.gov.
2. Work for a Non-Profit Organization or Government Agency
Federal student loan borrowers may be eligible for loan forgiveness through the Public Service Loan Forgiveness (PSLF) program. To qualify, you must work for a qualifying non-profit organization or government agency full-time for at least ten years while making 120 qualifying monthly payments toward your debt. Under the terms of PSLF, payments that you make under an IDR plan count as qualifying payments, so you can pay a reduced amount and still get loan forgiveness after ten years. Use the PSLF Help Tool to see if your employment, payment plan, and loans meet the criteria for forgiveness.
3. Ask Your Employer for Help
If you’re employed, talk to your manager, human resources department, or benefits manager about student loan repayment assistance benefits. Some companies — approximately 17% of employers — provide student loan repayment assistance to their workers. The companies match their employees’ student loan payments up to a percentage of their salary or annual maximum. If your employer offers a program like that, you can get help repaying your loans faster.
4. Research State Loan Repayment Programs
Some states operate student loan repayment programs to encourage skilled workers to live and work in high-need areas. Professionals in certain fields can get money to repay some or all of their debt in exchange for a work commitment. Undergraduate
- Alabama Advanced Practice Loan Repayment Program: In Alabama, certified registered nurse practitioners, certified nurse midwives, or certified registered nurse anesthetists can qualify for up to $15,000 of loan repayment assistance. In exchange, recipients must work for at least 18 months in an area of critical need.
- New Mexico Teacher Loan Repayment Program: To address the shortage of teachers in the state, New Mexico launched the Teacher Loan Repayment Program. Eligible teachers can receive up to $4000 per year to repay their loans if they commit to teaching at a public school in a designated shortage area.
- Tennessee State Loan Repayment Program: In Tennessee, primary care practitioners practice at an ambulatory public, non-profit or private non-profit primary care site in a federally designated health professional shortage area. Eligible recipients can get up to $50,000 to repay their loans for an initial two-year service commitment.
State loan repayment programs can pay off both federal and private student loans and can be used along with other repayment strategies. States may also offer grants for your student loan debt alongside these programs. To find out if your state offers student loan repayment assistance, contact your state education agency.
5. Make Extra Payments
To get rid of your debt faster and save money, making extra payments is critical. If money is tight, finding the cash to make additional payments can seem impossible. But here are a few ideas for how to come up with the cash:
- Sell your stuff: If you’re like most people, you have some unused items cluttering up your home. You can turn old electronics, clothes, books, and even kids’ toys into cash by selling them on eBay or Mercari.
- Cut unnecessary expenses: Review your spending and make ruthless cuts. Eliminate streaming services (or cut back to just one!), cancel subscriptions and paid apps, and cook at home. These changes can yield big results and free up more cash you can apply to your debt.
- Get a side gig: You can pick up freelance work, deliver food or do yard work for neighbors to earn money.
With these changes, you can find the money to make additional payments to your loans. Even if you can only make a small extra payment, it can pay off over the long run. For example, let’s say you had $100,000 in loans at 6% interest and a 10-year repayment term. Here’s how much you’d save by paying an extra $25, $50, and $100 per month:
| Original Loan | +$25 Per Month | +$50 Per Month | $100 Per Month | |
|---|---|---|---|---|
| Payment Amount | $1,110 | $1,135 | $1,160 | $1,210 |
| Time to Repay | 120 months | 117 months | 114 months | 107 months |
| Total Cost | $133,233 | $132,163 | $131,160 | $129,335 |
| Savings Compared to Original Loan | N/A | $1,070 | $2,073 | $3,898 |
6. Use the Debt Avalanche Method
The debt avalanche method is a powerful way to tackle six figures of student loan debt. It’s a repayment strategy where you focus on paying off your loans with the highest interest rates first. This approach can save you money in the long run and help you become debt-free faster. To use the debt avalanche method, list your debts from highest to lowest interest rates. Then, make extra payments to your highest-interest loan until it’s paid off. Once that loan is paid off, move to the next loan on your list and continue making extra payments until it’s gone too. For those with six figures of debt, the debt avalanche method is especially useful since it reduces how much you repay in interest.
7. Refinance Your Student Loans
When you have such a large loan balance, finding a way to reduce your interest rate is key to paying off your debt. For borrowers with $100,000 or more in outstanding loans, student loan refinancing can be a great option. When you refinance your loans, you combine your existing student loans into a new, single loan with one monthly payment. You could also qualify for a new interest rate, saving you thousands of dollars over the life of your loan. For example, let’s say you have $100,000 in loans at 6.00% interest and a 10-year repayment term. If you refinanced your loans and qualified for a 10-year loan at 4.75% interest, your monthly payment would drop from $1,110 to $1048 — a savings of $62 per month — and you’d save $7,407 over the life of your loan.
| Original Loan | Refinanced Loan | |
| Interest Rate | 6.00% | 4.75% |
| Monthly Payment | $1,110 | $1,048 |
| Total Repaid | $133,225 | $125,817 |
| Savings: $7,407 | ||
Use the student loan refinance calculator to see how refinancing can help you save money and pay off your loans faster.
Dealing With Student Loan Debt
Managing student loan debt can feel like a daunting task, but following these tips can help you get on track. If you’re trying to figure out how to pay off six figures of student loan debt, focus on creating and sticking to a budget, freeing up cash to make extra payments, and refinancing your loans to reduce the interest rate so you can cut down on the amount of interest that accumulates. There’s no getting around it; Paying off six figures of student loans is hard. But if you create a plan and stay focused on your goals, you can be well on your way to being debt-free.
