Whether you’re a freelance graphic designer or own your own bakery, self-employment is increasingly popular. According to the Pew Research Center, about 16 million American workers — more than 10% of the workforce — are self-employed. While being your own boss can give you more control over your schedule and earning potential, being self-employed can make student loan repayment more difficult. But there are ways to better manage your debt.
Self-Employed: Top 5 Student Loan Repayment Options
If you’re self-employed, student loan repayment can be challenging due to fluctuations in income. With these five strategies, you can effectively manage your loans — or pay them off faster.
1. Enroll In an IDR Plan
If you have federal student loans, you can qualify for an income-driven repayment (IDR) plan. These plans base your payments on a longer repayment term and a percentage of your discretionary income. Self-employed individuals are eligible for IDR plans. You’ll just need to submit proof of income, such as past tax returns, 1099 forms from clients, or a letter from your accountant. You need to recertify your income and family size every year with IDR plans to stay on the plan with a lower payment. However, IDR plans can be especially helpful if your income is prone to changes. For example, if you lose a major client or a project ends that causes your income to drop, you can recertify your income early to potentially get a lower payment.
2. Wait for Loan Forgiveness
If you’re self-employed, you’re unlikely to qualify for Public Service Loan Forgiveness; the only exception would be if you started and work for a recognized 501(c)(3) non-profit organization. If that’s not the case, you don’t qualify for PSLF. However, you could be eligible for IDR plan forgiveness. With this option, you make payments under the IDR plan for 20 to 25 years. At the end of your loan term, the government will forgive your remaining balance of the loan that hasn’t been paid in full. Currently, there is a provision that makes this sort of loan forgiveness non-taxable, but that may change in the future, so talk to a tax professional to find out how loan forgiveness may impact your tax bill.
3. Make Extra Payments
Increasing your monthly payments is key to paying off your debt faster and saving money. Extra payments don’t have to be huge to make a difference; increasing your payments by as little as $20 per month can help you save a significant amount of money. You can find that amount in your budget by canceling streaming services, brown-bagging your lunch, or carpooling with a coworker. To show you how impactful extra payments can be, here’s how much you’d save — and how much faster you’d get out of debt — by increasing loan payments by $20, $50, and $100 per month. For this example, assume you have $30,000 in student loans at 5% interest and a 10-year term.
| Original Loan Terms | $20 Additional Payment | $50 Additional Payment | $100 Additional payment | |
|---|---|---|---|---|
| Time In Repayment | 10 Years | 9 years 4 months | 8 years 4 months | 7 years 2 months |
| Payment Amount | $318 | $338 | $368 | $418 |
| Total Interest | $8,192 | $7,535 | $6,731 | $5,719 |
| Total Cost | $38,192 | $37,535 | $36,731 | $35,719 |
| Savings Compared to Original Loan | N/A | $656 | $1,461 | $2,473 |
4. Set Up Your Own Student Loan Repayment Assistance Program
More and more employers are offering student loan repayment benefits. But did you know you can take advantage of an employer repayment program if you’re self-employed? Through 2025, employers can take advantage of the Consolidated Appropriations Act. Under this act, employers can provide up to $5,250 in student loan repayment assistance per employee on a pre-tax basis. If you are self-employed and own a sole proprietorship, LLC or S-Corp, you can utilize this provision to give yourself up to $5,250 in pre-tax employer student loan repayment assistance. Although there aren’t federal tax advantages for employers, some states provide tax deductions, grants for student loan repayment, or credits for employers that offer this benefit, so there may be other advantages to this strategy too.
4. Refinance Your Student Loans
If you’re self-employed, another way to tackle your debt is student loan refinancing. Especially effective if you have high-interest loans, refinancing can allow you to secure a lower rate, adjust your monthly payments, and save money. Refinancing lenders typically have minimum income requirements, but as long as you can provide proof of income, being self-employed won’t hold you back from refinancing. If you’re relatively new to self-employment and don’t yet have tax returns or 1099s, consider asking a parent, relative, or friend to co-sign your loan application. A co-signer can help you qualify for a loan and get a lower interest rate. Just be sure to do your homework before refinancing, especially if you have federal loans. Once you refinance, federal loans become private, and you’ll no longer qualify for programs like IDR or loan forgiveness. If you weigh the pros and cons and decide that student loan refinancing makes sense, you can get a rate quote and start your application online with ELFI.
