How to Reduce Your Total Student Loan Debt: 13 Strategies

It can be overwhelming learning how you can reduce your total loan costs when it comes to your education. The FAFSA only provides colleges with information about your parents’ finances, which tells you what type of aid you will receive. If there’s a gap in what your school offers you and what your parents can afford, most students turn to student loans.

There are several ways to pay less in student loans overall, and it comes down to smart strategies when you’re taking out loans and when you’re deciding on the best way to pay them back. Below are our top tips for reducing student loan debt, starting with the most impactful decisions that can save you the most money.

Table of Contents

1. 1. Choose your college wisely
2. 2. Choose federal student loans first
3. 3. Borrow only what you truly need
4. 4. Pay interest while you’re in school.
5. 5. Avoid deferment or forbearance
6. 6. Apply for Income-Driven Repayment (IDR)
7. 7. Apply for student loan forgiveness 
8. 8. Consolidate or refinance federal loans
9. 9. Make extra payments when possible
10. 10. Research and compare lenders
11. 11. Set up autopay for a rate discount
12. 12. Minimize graduate school debt 
13. 13. Live frugally

1. Choose your college wisely

According to the Education Data Initiative, a student who attends a public university will borrow just under $31,000 for college. However, starting life as a young adult with the heavy burden of student loan debt can be challenging. That’s why it’s essential to choose your college wisely. 

Consider attending a community college for two years and transferring to a four-year university afterward. You might think a particular college is your dream school, but stay open to the possibility of enrolling in other colleges, especially if you get scholarships or grants from a different school.

About 35% of college graduates with student loan debt report that the benefits of getting a college degree weren’t worth the financial burden that student loans bring, according to the Pew Research Center. So if you have the opportunity to attend school for less, it can be a wise financial choice for your future self.

2. Choose federal student loans first

If you still need to take out student loans, take out federal student loans first. Although some federal student loans might have a higher interest rate than private student loans, especially for the most creditworthy borrowers, federal student loans come with many protections, repayment methods, and forgiveness options that can benefit you in the future.

3. Borrow only what you truly need

It can be easy to borrow more student loans than you need. However, doing what you can to minimize the amount of student loans you take out will go a long way in helping you to pay down debt in the future. The total amount of educational borrowing has actually been declining, according to a report from the College Board.

The report showed that borrowing for the 2023 – 2024 school year totaled $99 billion, down from $159.2 billion (adjusted for inflation) in 2010 – 2011.

4. Pay interest while you’re in school.

There are several types of federal student loans. Direct Subsidized Loans are when the federal government pays for your interest while in school. If you have Direct Unsubsidized Loans, you accrue interest while in school, even if you don’t have a payment due. 

If you’re accruing interest, try to pay your student loan interest while in school. Even a small amount can make a difference as interest compounds over time.

5. Avoid deferment or forbearance

According to the Pew Research Center, 32% of low-income borrowers are behind on student loan payments. Nonpayment or entering into deferment or forbearance (depending on the type of loans you have) can cause interest to accrue fast on your loans, making your balance higher.

If you’re having difficulty making your student loan payments, call your student loan servicer. Your servicer will be able to tell you your options for getting current, pausing payments, or adjusting your payment plan.

6. Apply for Income-Driven Repayment (IDR)

According to the Consumer Finance Protection Bureau’s most recent student loan borrower survey, 42% of borrowers said they’ve only been on a standard repayment plan, and 21% of borrowers don’t remember choosing a plan at all.

However, switching to a different repayment plan, like an IDR plan, can help you reduce student loan payments and avoid forbearance. The downside is that if your payment does not cover the interest you accrue each month, it can be challenging to pay off your loan quickly. That said, making a small payment is better than having interest accrue in forbearance.

7. Apply for student loan forgiveness 

If you’re eligible, apply for student loan forgiveness. The Education Data Initiative lists 143 student loan forgiveness programs, including PSLF, the Teacher Loan Forgiveness Program, Nurse Corps Loan Repayment Program, and many more. 

Pursuing student loan forgiveness, especially if you borrowed a large amount, can dramatically improve your personal finances if you’re approved. If you’re still in school or recently graduated, take the time to understand these forgiveness programs to get insight on what types of jobs can lead to student loan forgiveness in the future.

8. Consolidate or refinance federal loans

Consolidating and refinancing your federal loans are separate strategies, each with unique pros and cons.

Student loan consolidation

If you consolidate your federal student loans, you may restart the clock on your payments toward loan forgiveness programs. That’s why it’s essential to understand the impact of consolidation first before taking that step.

If you decide not to pursue student loan forgiveness, consolidation can be a helpful step, especially when it comes to the mental and emotional side of reducing student loan debt. When you consolidate your federal student loans, your new loan’s interest rate will be the average of the loans you consolidate.

You can move from having several student loan payments to managing only one, which can help you stay organized with your finances.

Take a look at the Pros and Cons of Consolidating Student Loans for more.

Refinancing federal student loans

When you refinance federal student loans, you can get a lower interest rate and better terms, which can help you pay off debt and reduce the interest you pay over time. However, the downsides of refinancing include losing federal student loan protections, like flexible repayment strategies and eligibility for student loan forgiveness.

9. Make extra payments when possible

Whether you consolidate your student loans, refinance them, or leave them as is, try to make extra payments when possible. That’s one of the fastest ways to reduce total student loan debt. Making additional payments shortens the time it takes to repay your loans and reduces your overall interest costs. 

10. Research and compare lenders

Another way to reduce your total student loan debt is to compare private student loan lenders if you decide to refinance. Federal student loans have set interest rates depending on the type of loan, but when it comes to private student loans, you can use a comparison shopping tool. Credible is our team’s favorite.

Credible allows you to compare several lenders to ensure you get the best rates and terms. Depending on your circumstances, applying with a lender that allows cosigners can help you lower your interest rate even more.

11. Set up autopay for a rate discount

Paying with autopay is another simple way to reduce student loan debt. Many lenders and loan servicers will offer a discount of 0.25% off your interest if you enroll in autopay. While it may not sound like much, if you have significant student loan debt, every little bit helps. Plus, setting up autopay prevents you from missing your payment and getting late fees.

12. Minimize graduate school debt 

If you decide to go to graduate school, consider the decision carefully. There are many ways to get graduate school paid for, such as getting a teaching assistantship. Also, look for employer tuition reimbursement programs and employers that offer student loan repayment benefits. With those programs, you can continue working and attend graduate school part-time.

If a client is considering grad school, we first discuss long-term career goals to determine whether it’s the right fit. We weigh lower-cost alternatives, such as professional certificates, that might offer similar value. If a graduate degree supports their goals and income potential, we estimate the return and evaluate repayment of current and future student debt.

We also explore assistantships, employer tuition benefits, and flexible programs. I view career advancement as an investment and work with clients to build a responsible repayment plan that aligns with their goals and financial life.

13. Live frugally

Finally, living frugally and learning to live within a budget can help you reduce your total student loan debt. If you can spend a few years living beneath your means or move back in with your parents while you’re still young, you can make significant progress paying down your student loans. 

There’s no rush to buy a house, either. The Educational Data Initiative reported that 47% of borrowers with student loan debt are delaying homeownership because their debt makes it difficult to save for a home down payment. Instead, set your sights on a debt-free future, and use any cash windfalls like work bonuses or gifts to pay down debt.

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One strategy I see consistently overlooked is student loan forgiveness—often because clients don’t realize they qualify or aren’t working with a financial professional who can guide them. In contrast, making interest payments in school or extra payments early in a career may be unrealistic for many.

Paying down student loan debt usually results from making several wise choices and combining many of the strategies above over time. Most people don’t pay off their student loans in one payment, but it’s possible to accelerate repayment over time.

Choose one or two main tips from this list to implement. Above all, you should always consider your personal financial situation, research your options, and make the best choice for you. Taking your time with these decisions can go a long way and ensure you strategically reduce your total student loan debt as soon as possible.