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6 Smart Student Loan Repayment Strategies

Student loans can be like a lingering cough. They seem to hang around longer than we would like. And with the recent Supreme Court decision, which denied President Biden’s proposed loan forgiveness plan, this means that there is no getting out of repayment.

What are some best practices for paying off education loans? We look at six strategies. But first, we examine the current status of student loans in America.

The Supreme Court recently ruled against Biden’s loan forgiveness program. So, what happens now? We look at some loan repayment strategies.

Student Loans

What are student loans? Sometimes called education loans, this money is borrowed for the purpose of paying for higher education such as community college, public or private universities, and vocational institutions. The money is loaned to the student by the U.S. government or private lenders.

The loan money isn’t just used for tuition. It can also be used to pay for textbooks, school supplies, student housing, meal plans, computers, study abroad programs, and transportation. Anything that is considered a qualified educational expense is included.

There are two main sources of student loans: the federal government and private lenders. In general, federal loans have lower interest rates and flexible repayment options, but they also cap out at lower borrowing limits and are based on financial need. Private loans have higher interest rates and less flexible repayment plans, but they have higher borrowing limits and are not based on financial need.

The U.S. Department of Education oversees the federal student loan program. To apply for a federal loan, the Free Application for Federal Student Aid (FAFSA) must be completed and submitted by the deadline. The department calculates how much aid a student is eligible to receive and forwards this information to the student’s school of choice.

The financial aid office at the college, university, or vocational school then determines how much aid to offer. The loan may cover all or part of the cost of attending. Shortfalls can be made up through grants, scholarships, work-study programs, or private loans.

Currently, 45 million Americans have student loans with the debt owed totaling $1.78 trillion. The overwhelming majority of that money was loaned by the federal government, or $1.64 trillion.

The Biden administration proposed a student loan debt relief plan for lower-income Americans. It included $20,000 in loans being forgiven if the individual was a Pell Grant recipient and their income was less than $125,000 annually. For non-Pell Grant recipients, the figure was $10,000.

This past month, the Supreme Court ruled 6-3 that the administration was not authorized to forgive the proposed $400 billion in student loans. Now that the plan is not moving forward, the repayment schedule for the loans is starting up again this September 1 after being paused for over 3 years.

Six Student Loan Repayment Strategies

You’ve borrowed the money, so now it has come time to repay it. Unlike consumer debt, which can be wiped off the books when filing for bankruptcy, student loan debt is rarely discharged. As morbid as it sounds, the only way to get out of federal student loans is to die.

What are some smart ways to make sure you stay on track to repay student loans?

Cut it in half and pay twice monthly: Payment schedules are usually for one bill every month. You also have the option of paying half of your bill every two weeks. Depending on your situation, this may be easier on your budget. It also results in an additional payment or two annually, which saves some time on your repayment schedule and saves money on interest paid.

Hit up your employer: Some companies participate in an employer student loan repayment program. It’s not so common, but it is worthwhile to find out if your company is part of this program. The CARES Act lets employers contribute up to $5,250 tax-free to their employees’ student loans until 2025.

Make extra payments toward the principal: You can make an extra payment at any time without penalty. However, you must indicate to the loan servicer that you want this bonus payment to be applied to the principal. Otherwise, the servicer may wind up pushing out your next month’s payment by a month or use that money to pay on interest.

Sign up for autopay: With this option from the lender, your loan payment is automatically drawn from your bank account each month. Signing up for this provides two main benefits. First, you don’t have to think about it or remember as it’s automated. Second, when you sign up, your interest rate is lowered by a quarter-point so you will be paying less in interest. Granted, this isn’t a jumbo saving, but it is still lowering your monthly cost.

Start a side hustle: We are big fans of earning additional income as a way of getting ahead. Online freelance work can be things like accounting, blogging, Etsy or Facebook Marketplace sales, payroll, social media management, or tutoring. In-person side jobs can be anything like food delivery, house sitting, seasonal retail work, pet sitting, or vending machine routes. Having a side hustle can provide enough extra income to make your student loan payment and then some.

Stick to the plan: As tempting as it is to take options like income-driven repayment plans, which lower your monthly payment if you qualify, resist signing up if you can. While the monthly outgo is lower, this plan extends the life of the loan. The difference is paying on the loan for 10 years or paying a smaller monthly payment for 20 or 25 years.


Student loans aren’t going away. They have given you the opportunity to pursue higher education, but there comes a time when they must be repaid. By applying effective repayment strategies, you can have your loan paid off relatively quickly and relatively pain-free.


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