How to Pay Off $100k in Student Loans: 5 Strategies to Consider
If you have over $100K of student loan debt, there are several strategies you can use to pay it off quickly or strategically.
I know the feeling of this level of debt all too well. Together, my husband and I have nearly $400,000 in student loans from graduate school and medical school. And my husband’s not even done with medical school yet — or finished adding student loans to that total.
Because he’ll be a physician in a few months, he’s on his way to earning a high income. However, that doesn’t diminish the student loan burden we both feel. So we’ll be trying a combination of things to eliminate this debt.
If you’re also six figures or more in the red and are looking for the best strategies to pay off $100K in student loans, you could consider these:
1. Minimize lifestyle inflation
Good idea for: All borrowers looking to pay down debt fast
If you have $100K in student loan debt or more because you attended professional school, chances are you now also have a high income because of your education. Whether you’re a doctor, lawyer or went to business school, you likely had to put in a lot of time over several years to learn your craft.
Average debt by common degree programs
Because you’ve spent so long at school, it’s easy to inflate your lifestyle once you get that first paycheck. However, I want to encourage you to keep living like a student for as long as possible.
For example, if you lived off of $30,000 per year while you were in graduate school, try to survive on the same amount during your first few years in the professional world. Hold off on making a new car purchase or buying a home.
If your take-home pay is $100,000 per year and you live on only $30,000, you now have $70,000 to put toward your debt and the interest your debt has accrued. Do this for a year (or more, if needed), and you could pay off your debt easily while having the rest of your career to enjoy the high income you worked so hard to achieve.
It’s important to note that avoiding lifestyle inflation can help anyone pay off their debt, regardless of their income level. It just comes down to spending much less than you earn so that you can pay off debt aggressively and enjoy a life without it.
2. Research student loan forgiveness programs
Good idea for: All borrowers, but particularly those working in public service careers
Six figures of debt can be daunting for anyone, no matter how high your income is. However, there are many different types of loan forgiveness that can help you pay off large portions of your debt.
Perhaps the best-known loan forgiveness program is Public Service Loan Forgiveness. With PSLF, you have to work in a nonprofit, governmental organization or another approved entity. After making 120 eligible on-time payments, your loans can be forgiven — and it doesn’t matter whether you have $100K of student loan debt or much less.
That said, the PSLF program might not be around forever, especially since some politicians have proposed eliminating it altogether. Plus, it requires that you diligently file the right paperwork every year so your application doesn’t get rejected. For now, the program remains functional, but there’s no guarantee that will always be the case.
Outside of PSLF, explore other loan forgiveness programs, including:
- Teacher loan forgiveness
- Student loan repayment assistance opportunities
- Student loan payment assistance via your employer
- Forgiveness via income-driven repayment
3. Consider income-driven repayment for federal loans
Good idea for: Borrowers who earn low wages, especially if you’re pursuing forgiveness or repayment assistance
Yes, enrolling in an income-driven repayment (IDR) plan can erase your balance after 20 or 25 years of payments, but it could make sense to take this route even if you’re not in it for the long haul.
IDR plans keep your monthly payments in line with your discretionary income, so you shouldn’t ever miss a payment deadline. These plans could give you the breathing room you need in your monthly budget while you’re starting or ascending in your career, or they could make sure you pay as little as possible toward your debt while you await PSLF after 10 years or another form of forgiveness in less time.
IDR plans include:
Do the math, and you may find that you’ll pay less over time on an IDR plan than you would by refinancing (see below). You can calculate your monthly dues under each plan using the Department of Education’s Loan Simulator.
4. Look into student loan refinancing
Good idea for: Borrowers with strong and steady cash-flow
With student loan refinancing, you might be able to get shorter repayment terms and larger monthly payments, saving you money on interest over the life of the loan. Alternatively, you can choose a longer term to make your monthly payments less burdensome. And in both cases, you could qualify for a lower interest rate that would save you money regardless.
If you started out with private student loans, you could have interest rates that are higher than what’s available on the market now. In that case, it’s probably worth comparison-shopping student loans to see if you can save through refinancing.
Just keep in mind that refinancing federal loans is a permanent choice and will strip the original debt of access to forgiveness programs mentioned above. Your new private loans also won’t be eligible for the Department of Education’s expansive menu of options to pause or postpone payments if you struggle in repayment.
5. Focus on increasing your income
Good idea for: All borrowers, but particularly for those earning low salaries
If you’re serious about paying off your six figures worth of debt quickly, finding ways to increase your income is also an effective strategy.
You might switch to a new career or change companies to pursue a higher salary. Or you could search for opportunities for a promotion and pay raise at your current employer.
Outside of boosting your main source of income, you could supplement it with a side hustle. There are a lot of freelance opportunities to choose from, but think about where your skills and experiences lie. If you have an MBA, for example, you could work part-time and help businesses learn how to budget and turn a profit.
As long as it doesn’t consume too much of your time or energy, a side hustle is something you could do outside of your regular office hours to make extra money. Then, you can apply those funds to your $100K student loan balance to pay it down faster.