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If you have six figures of student loan debt, you know how daunting repayment can seem. Student loan debt in excess of $100K can cause you to pay thousands in interest charges, and your monthly payments can take up a substantial amount of your cash flow.
However, there are ways to make your payments more manageable and even accelerate repayment.
How Much Is $100K in Student Loans?
Only a small percentage—about 6% of borrowers—owe $100,000 or more. Nationally, the average student loan balance per borrower is $39,032, so if you have $100,000 in student loan debt, you have about 2.5 times the national average balance.
But your loan principal is just one part of the problem. A $100K student loan balance can become much worse when you consider how much interest will accrue over the life of the loan.
For example, let’s say you had $100,000 in loans at 5% interest. If you have a 10-year repayment term, your monthly payment would be about $1,061. By the end of your repayment period, you’d pay a total of $127,279—interest would add more than $27,000 to your total repayment cost.
7 Ways To Pay Off $100K Student Loans
How long does paying off $100K in student loans take? Although the standard repayment plan is typically 10 years, some loans and repayment plans have longer terms, so you could be repaying for 20 or even 30 years.
How long it will take to repay your loans depends on your income and career path, but you can make your repayment more manageable by following these tips:
1. Ask Your Employer for Help
Many companies offer employees student loan repayment assistance benefits as a recruitment and retention tool. The Employee Benefit Research Institute reported that 25% of surveyed employers provided student loan debt assistance in 2022.
Although the benefits vary by company, employers that help with debt repayment typically match their workers’ student loan payments up to a monthly or yearly maximum. For example, an employer may match up to $100 per month of an employee’s payments.
2. Apply for Student Loan Forgiveness
If you have federal student loans, you may qualify for full or partial loan forgiveness through one of the following programs:
- Public Service Loan Forgiveness (PSLF). If you work full-time for a nonprofit organization or government agency for at least 10 years while making 120 monthly payments, you can qualify for PSLF and your remaining balance will be forgiven.
- Teacher Loan Forgiveness. Teachers who work for low-income schools or education service agencies for at least five years can qualify for up to $17,500 of loan forgiveness.
3. Consider an Income-Driven Repayment Plan
A large loan balance combined with high interest rates can equal a hefty monthly payment. If the amount due is more than you can comfortably afford, you may be eligible for an income-driven repayment (IDR) plan. These plans give you a new monthly payment calculated on a percentage of your discretionary income and give you a different loan term.
If you make your payments and still owe money at the end of the new loan term, the government will cancel the remaining balance.
The Biden administration announced a new IDR plan, the Saving on a Valuable Education (SAVE) plan, replacing the Revised Pay As You Earn (REPAYE) plan. Eligible borrowers could qualify for loan forgiveness sooner and SAVE will discharge loans in as little as 10 years rather than 20 or 25.
4. Start a Side Hustle and Make Extra Payments
To get rid of your debt as quickly as possible—and to save more money—making extra payments is an essential strategy. Finding extra money on a tight budget can be difficult, so picking up a side hustle to earn additional cash can be helpful.
Delivering groceries, walking dogs, assembling furniture and driving passengers are all potential side hustle ideas. You can work when it’s convenient for your schedule and put the extra money toward your debt.
You don’t have to earn hundreds of dollars to make a difference; even smaller additional payments can help chip away at your debt. For example, if you had $100,000 of debt with a 10-year term and a 5% interest rate, your monthly payment would be $1,061. If you paid an extra $50 per month—bringing your payment to $1,111—you’d pay off your loans six months sooner and save over $1,600 in interest.
5. Use Your Tax Refund To Pay Down Debt
Most taxpayers receive a tax refund. The average tax refund for the 2023 tax filing season was $2,812—a substantial amount of money.
If you put the money toward your debt, you could cut down on interest and accelerate your repayment. For instance, if you had $100,000 of debt at 5% interest and a 10-year term, you could repay your debt four months earlier and save $1,432 over the life of your loan.
6. Tap Into Unused 529 Funds
If your family set up a 529 account—or if a 529 was made for another family member and transferred to you—you may have some unused money.
Your expenses during your last year of college may have been cheaper than expected and you didn’t use all the money. Or perhaps a sibling received a scholarship, so they didn’t need all the money in their 529 account. Whatever the case, a 529 can be a useful option for repaying student loan debt.
Although 529 accounts are primarily considered tools for saving for college, the list of permitted uses was recently expanded. Thanks to the Setting Every Community Up for Retirement Enhancement (SECURE) Act, borrowers can use up to $10,000 from a 529 account to pay student loan debt without paying withdrawal penalties.
If the 529 is in your name, you can apply the unused funds to your debt. If the funds are in another person’s name, your family can make you the beneficiary so you can use the money to repay your debt.
Find the Best 529 Plans Of 2023
7. Refinance Student Loans
If you have private student loans or high-interest federal loans, refinancing is another strategy you can use to lower your interest rate and save money. By refinancing your student loans, you use a new loan to pay off your existing debt. Moving forward, you only have one loan to manage.
With good credit and a stable income—or by adding a co-signer with good credit to your application—you can qualify for a lower rate or different loan term and reduce your payments, too.
However, refinancing federal loans can be risky. When you refinance federal loans, you transfer them to a private lender, losing eligibility for federal benefits and protections, such as IDR plans or loan forgiveness.
You can use our student loan refinance calculator to calculate your payments and overall repayment cost, which will help you decide if refinancing makes sense. Before choosing a lender, compare rates from the best student loan refinancing lenders to find the right loan option for you.