If you have $80,000 in student loan debt, you may find it to be a significant burden — though it isn’t difficult to understand how you were saddled with such a high debt amount. Undergraduates owe an average of $27,500 for their education, according to a Congressional Research Service’s report, while graduate students have an average of $71,800 in debt and doctoral degree-holders owe well over six-figures.
Fortunately, there are ways to pay off $80K in student loans. Create a repayment plan, consider budgeting strategies, and explore refinancing or consolidation to repay your debt as quickly as possible.
- Understand your student loans
- Create a repayment plan
- Explore refinancing, consolidation
- Alternate strategies to pay off your loans
Understand your student loans
There are two different types of student loans: private loans and federal loans. With $80K in student debt, you might have only one type or a mix of both.
Federal loans are distributed by the Department of Education, which offers a few borrowing options:
- Direct Subsidized Loan
- Direct Unsubsidized Loan
- Direct PLUS Loan
- Direct Consolidation Loan
These loans come with special borrower protections, such as income-driven repayment plans, forgiveness programs, and more lenient deferment and forbearance. Depending on your loan, your interest costs may even be paid by the government when you’re not in active repayment.
Good to Know: If your federal loans aren’t listed above, it could be because they’re Federal Family Education Loans (FFEL) or Perkins Loans. If that’s the case, your repayment options may differ, though you could opt for a Direct Consolidation Loan to access the Direct Loan features mentioned above.
Private student loans, on the other hand, are offered by online lenders, banks, or credit unions. These loans aren’t eligible for any federal protections, and each lender sets its own repayment and hardship policies.
Interest rates are another key difference between federal and private debt. Federal loans have fixed interest rates, which means they stay the same throughout your repayment term. These rates are also standardized and not based on your credit, so everyone who qualifies in a given year receives the same interest rate.
Private loans use your credit, income, and other factors to determine your eligibility, interest rates, and loan terms. Private education debt may also have variable interest rates, which can change during repayment. This can make it harder to estimate your total loan costs.
How to find your loan details
No matter which type of debt you have, you can typically access your student loan information online. All federal loan information can be accessed through your account on the Federal Student Aid website. To view your private loans, log into each lender’s website (or the site of its contracted, third-party loan servicer) to view your account details.
If you’re not sure what type of loans you have or who your lender is, your credit report will list this information. You can download a free copy of your credit report at AnnualCreditReport.com. Checking your report can also help ensure that you’re not forgetting about a student loan you took out years ago.
Create a repayment plan
When you work to pay off $80K in student loans, you can choose to make only the minimum required payments. However, this means you’ll likely pay more in interest. If you’re hoping to repay your loans faster or pay as little interest as possible, create a repayment plan to help you reach your goals.
Though you can certainly choose and commit to a rigid repayment plan when facing a large debt, some borrowers might prefer a flexible set of strategies that cater to your budget and lifestyle. You can use one or multiple methods, especially if your income level, monthly expenses, or family size changes.
Debt snowball vs. debt avalanche
Two common repayment strategies include the debt snowball and debt avalanche methods. These can help you prioritize which student loans to pay off first, though each has its own pros and cons.
- Debt snowball method: List your loans from the smallest to largest balance. Continue making minimum payments on all your debts, but put any extra cash towards your smallest student loan until it’s paid off. Once that’s done, focus on the next-smallest loan, and repeat until you’re debt free. This approach won’t save you in interest, but it can keep you motivated as you tally small wins quickly.
- Debt avalanche method: List your loans from highest to lowest interest rate. Make the required payments on all your debts, but put any extra money towards your highest-interest debt until it’s paid off. Then, move to the loan with the next-highest interest rate, and repeat. Because you’re paying off the highest-rate balances first, you can save money over the long-term.
Revamp your cash flow
Finding extra cash in your budget can help you pay off $80K in student loans more efficiently. To do so, you’ll either have to spend less or earn more (or ideally, both).
- Reduce monthly expenses: Look for subscriptions you don’t use, luxuries you no longer need, or high bills that might be renegotiated. Housing is a significant cost for most people, so moving to a cheaper area or getting a roommate could make a big difference. A free budgeting app can make it easier to track your spending and spot patterns.
- Increase your income: Side hustles, freelance work, and part-time jobs can help you create a revenue stream that goes directly toward your monthly student loan payments. You might also ask for a raise at your current job, if it’s been a while since your last pay bump. Lastly, commit any windfalls to your student loans. Yearly bonuses, an inheritance, or cash from selling your car could also make a big dent in your debt.
Tip: Use a student loan payment calculator to see how much you could save by increasing your monthly payment.
Explore refinancing and consolidation options
Although it might not be your first option, refinancing or consolidating your student loans can help you better manage your debt and even save money.
Federal consolidation
Federal student debt can be combined into a Direct Consolidation Loan, which can lower your monthly payments or offer access to federal repayment and forgiveness programs. This method won’t save you money on interest, as your new interest rate will be a weighted average of your old rates (rounded up to the nearest one-eighth percent). But you can streamline repayment by combining multiple loans into one.
However, federal loan consolidation can give you a longer repayment period, which typically results in more interest paid over the long term. Your interest will also be capitalized when you consolidate, meaning that any accrued interest will be added to your balance. You might also lose certain benefits that are included with your current loans.
Private refinancing
An alternative to federal consolidation is student loan refinancing through a private lender. You’ll get a new loan with a single monthly bill, but you could also save money on interest if you secure a lower rate. You can also use this opportunity to lower your monthly payments, though that may increase your interest costs.
It’s important to note that refinancing federal student loans carries some added risk. When you do so, your loans become a form of private debt and you’ll lose access to all federal borrower protections. This is not reversible, so be sure you won’t need those in the future if you choose to refinance federal loans.
To privately refinance, shop around and compare refinancing lenders. You can often prequalify for a loan after inputting a few pieces of information (and without committing to a hard credit check). This will show you the estimated rates and terms you might qualify for, and can give you a better idea of each lender’s offerings. When you’ve found some lenders you’re happy with, you can submit a formal application on their websites.
Tip: A shorter repayment term usually means a higher monthly payment and lower interest costs; a longer repayment term usually means a lower payment but higher interest expenses. Use a student loan refinance calculator to see how a loan’s new terms will impact your finances.
Alternate strategies to pay off $80K in student loans
If you need some extra help with your loans, you might be surprised at the programs and opportunities that are available.
- Research federal repayment programs: If you have federal student loans, there are many options to help you manage your repayment. Income-driven repayment plans set your payment at a percentage of your earnings, and offer loan forgiveness on any remaining balance at the end of your term. Your monthly payment could be as low as $0 with these plans.
- Review forgiveness options: You might also qualify for loan forgiveness programs if you have federal loans. For example, Public Student Loan Forgiveness will pay off a portion of your debt if you work for a government or nonprofit organization and meet the repayment requirements. Teacher Loan Forgiveness is another federal program that can discharge teachers’ student loans in certain circ*mstances.
- Ask your employer for help: Employer-sponsored student loan payments are becoming increasingly common. With these programs, employers typically offer a flat monthly amount to contribute to employees’ student debt. Ask your employer about adding this benefit, or consider moving to a job that does.
- Consider career-based repayment programs: Some special repayment assistance programs offer relief to workers in certain fields. These opportunities are most common in healthcare, dental, legal, and teaching jobs, and you typically must work a number of years in a high-need area to get your student loans paid off. To find these opportunities, talk to your employer’s human resource department, a professional association, or colleagues in your network.
You have many ways to repay your student loans, and you don’t need to choose just one. Combining strategies can help you pay off $80,000 in student loans as quickly, comfortably, and affordably as possible.
