Tips For Repaying Your Student Loans

Jan 13, 2015

Post reporter Danielle Douglas-Gabriel welcomes financial planner Felicia Gopaul and the Department of Education’s Ian Foss to take your questions about repaying student loans.

Thank you for joining us this afternoon to chat about all things student loans. I hope that you find this discussion useful as you plot out how to repay your debt.

Is it possible to refinance private student loans without a cosigner? If not, what other option does a student have?

Yes it is possible.  Generally the original loan recipient will have to make on time payments for 12 months (or whatever is the agreement) and then he can ask that the co-signer b released.  If the other obligations of the original loan recipient are current, then the private loan company can release the co-signer.

Hello there, thanks for your chat, very timely. I'm (finally) finishing up a PhD, don't want to say how long it's taken me and how much money (I know, I know--basis for a whole 'nother chat). Two questions - 1) is there any possibility for deferment of any of my loans for working at a Postsecondary school that meets certain criteria re. student body make-up, etc.? Also, what is the single best thing I can do to manage the many different loans - consolidate? Repay-even if have to do it with retirement funds and start saving again? thanks much!

There is no deferment that is specifically targeted at those who are working at postsecondary institutions. However, that isn't to say there is no benefit for your situation.

The student loan debt burden forbearance, which allows you to cease making payments when your student loan payments exceed 20% of your income or a discretionary/general forbearance will allow you to stop making payments. However, deferment and forbearance are best used when there is a temporary problem that you have with making payments because many of them are time-limited.

For a long-term solution, you  may want to look into an income-driven repayment plan, which keeps payments affordable by setting them at a percentage of your income. Visit for more about these plans.

Both deferment/forbearance and income-driven repayment plans will lead to your paying more interest over time that might have otherwise occurred, though. So be sure that you are willing to accept higher interest costs over time before pursuing these options.

As for loan consolidation, it is a great way to simply repayment for yourself. You will have one loan with one payment that you make each month, and that's far easier for many people than managing multiple loans with multiple payments.

Another benefit of consolidating your loans is that you may set yourself up to receive Public Service Loan Forgiveness if you consolidate and then repay under an income-driven repayment plan. Visit to learn more about that option. Public and not-for-profit postsecondary institutions should all count as qualifying employment for Public Service Loan Forgiveness.

What is the normal period to pay off your loans?

On federal student loans, if you do not select a repayment plan, you will be placed on the 10-year standard repayment plan. This repayment plan will ensure that your loan will be repaid in full within 10 years of repayment. However, there are other options that can extend the period of time you have to repay (and lower your payment). You can learn more about all your repayment option here:

My daughter graduated from college in May and has a collection of $3,000-$5,000 loans that add up to about $32,000. The loans are currently deferred while she does a year of public service and then will be deferred again while she goes to grad school. However, I was wondering if we should start chipping away at the loans now by paying off some of the smaller ones (a $3,000 Perkins loan from her freshman year for example) even though they are not technically "due" at this time? What is the best strategy?

If you are in a position to start paying down the loans now, why wouldn't you do that?  It means that she will have less debt after the deferment.  It makes sense to pay the debt with the highest interest rate first and make either no payments during the deferment or or the interest only.  

How do I know if consolidation is a good move for me? If it is, what is the best way to go about it?

Loan consolidation is typically a good option for borrowers who have to make multiple student loan payments every month, who want to extend the period of time they have to repay their loans, or who are seeking Public Service Loan Forgiveness.

That being said, loan consolidation is not the best option for everyone. You can read more about the pros and cons of loan consolidation here:

For more information about Public Service Loan Forgiveness, visit

If consolidation is something you want to pursue, you should probably consolidate all of your federal student loans, and can start the process by visiting

Why is repayment based on gross income instead of take-home pay? My take-home pay is 30% less than my gross pay, and that is before I even pay my mortgage and other bills. I can't save money AND pay my student loans.

The types of repayment plans that are based on income, like the Income-Based Repayment Plan and the Pay As You Earn Repayment Plan are governed by a Federal law which specifies that payments are generally to be based on your adjusted gross income, which will take certain deductions into pay into account (if they come out of your pay on a "pre-tax" basis), but will not considered all of your deductions to pay.

I have two small private loans (undergrad and bar exam) and a large federal loan (law school). Do you recommend consolidating the two private loans?

Without knowing your situation, it's hard to say.  Consolidation makes sense if  the interest rate on the consolidated loans is lower than the interest rate on the two private student loans.    Or if you can consolidate with a fixed interest rate loan rather than a variable interest rate loan.  And finally, some people consolidate if they want to have one single payment rather than two.

When will the new student loan repayment options (i.e. repayment based on your take-home income versus gross income) that Obama signed into law via Executive Order take place in 2015?

The Executive Order I believe you are referencing directed the Department of Education to expand an existing repayment plan, the Pay As You Earn Repayment Plan, to more borrowers than are currently eligible for it.


This plan generally sets federal student loan payments at 10% of discretionary income, but does look at "adjusted gross income", not take-home pay.

The expansion of the plan must work its way through a negotiating process with various stakeholders. This process is called "negotiated rulemaking". The goal is to have the plan available to borrowers by the end of the year.

I don't understand why my student loan payment gets applied to my interest first and why I can't change it to be applied to my original capital. I'm never going to pay these off!

Payment application is a subject of federal regulation. On federal student loans, for any payment to satisfy principal (or, capital, as you called it), all outstanding interest must be satisfied. Indeed, this is how nearly all forms of consumer finance work.

Of course, after you have satisfied all outstanding interest on your loan, any excess amount you pay will also automatically satisfy principal on the loan, and will save you money on interest in the long run. If you want to pay your loans off as quickly as possible, pay a little extra each month and be diligent about it.

I have a hard time seeing the economic value of going back for a graduate degree. If your employer isn't going to pay for the degree and there isn't a written offer for more money upon completion, how can one gauge if it is worth the time and expense? I know that some programs will give credit for experience, but if my job has already given me the experience the program is designed to offer, do I even need a degree? It seems like it is only an expensive piece of paper.

You bring up an important issue.  People go back to school for many different reasons, often it is for their own personal goals and aspirations.  If you see no economic value in returning to school and you are getting the experience from your current position, maybe going back to school doesn't make sense for your situation.  

I've read some about the Public Service Loan Forgiveness Program, which I should qualify for as someone who's worked in nonprofits since I graduated. At such point that I'm eligible, how would I go about applying for this?

Don't wait! There's a form that you can fill out now to get an assessment of whether your employment and payments are qualifying for the program. We recommend that borrowers fill the form out early and often to get an ongoing sense of whether you're doing everything you need to do to qualify for forgiveness.

If you do not fill this form out now (and regularly), then you will be required to submit them for the period of employment that you want counted toward forgiveness at the end of your 10 years of public service.  Ten  years is a long time to wait.

I recommend you fill out the form. It is available here:

Paying my student loans (private and government) I end up sending about 1/3 of my take-home pay to student loans. Is there a way to get relief?

Yes you can.  The government has several loan repayment plans that might work for you.  In particular, you may qualify for the income based repayment plans.  Please visit to see if your situation fits one of the repayment plans.

Also, some of the private loan companies are starting programs that will alway you to pay less of your income for student loans repayment.  Talk to your private loan company to see if you are eligible.


Is there such a thing as student loan debt forgiveness due to hardship?

In a way, yes. Income-driven repayment plans based your payment on a percentage of your discretionary income. If you have made payments under those plans for a period of 20 or 25 years, you can qualify to have the remaining balance forgiven. Visit for more information about these plans.

For other forms of forgiveness and discharge, visit this page, where we detail the forgiveness/discharge benefits available to borrowers of federal student loans:

What is the best way to pay off high student loans while on a small income?

First, visit to get a handle on your student loans (amounts, interest rates, payments).  Then see if you qualify for any of the income based repayment plans (  Consider consolidation if it will improve you situation and cash flow. And finally, see what you can do to improve your cash flow.  Are you willing to work another job to improve your situation?

I completed graduate/professional school this past May. I know there is some kind of automatic deferral for the first six months after graduation. However, for some reason the records with my lenders show that I will not graduate until May of this year, hence, my loans are not officially due at the moment. Am I committing a crime by not correcting the record on this? I am underemployed and not yet working in my field, so the repayment will be a hit to my monthly budget.

The best thing for you to do is to contact your lender loan/servicer and explain the situation for them. Eventually, the error will be discovered, and, while you will certainly not be "in trouble" for what happened, the time period will be covered with a benefit that is not as beneficial as the one you are currently receiving.

Though this will mean that your automatic deferral period will end sooner than your lender/servicer currently has in its records, there are many options that you can pursue that provide many of the same benefits that you are currently receiving. Specifically, as your loan servicer about an unemployment deferment or an economic hardship deferment. If you expect your situation to be more long term, you should explore income-driven repayment options. An income-driven plan should help you feel confident that you can always afford what you're being asked to pay (which can sometime be $0). For more about income-driven repayment plans, visit


If I have an extra $200/month of discretionary income, would that money be better spent on my student loan (above the minimum payment) or investing extra into my 401k/ long-term savings plan? I'm 27 years old.

I love this question when it comes up.  My answer is to do both.  Put another $100 into your 401k/ long-term savings plan and the other $100 to paying down your student loan debt.  This way your are working on your long-term retirement goals, as well as, improving your short/medium term net worth goals.  Both improve your situation and position you better for the future.  

Is it possible to reduce the total amount of interest repayment?

On federal student loans, the amount of interest that accrues is a function of the interest rate, the principal balance on the loan, and the period of time that you are repayment.


If you want to minimize the amount of interest you pay, chose a repayment plan with a shorter repayment period, such as the 10-year standard repayment plan, and then pay more than what you're required to pay. By paying extra, you reduce your principal balance more quickly, and that will lead to your paying less interest in the long run. For more on how interest accrues, visit this web page:

If you cannot afford your current "interest  payment", then choosing a repayment plan with a short repayment period will not help you, as your payment will be higher than under other repayment plans. If you are facing this type of struggle, I recommend that you investigate an income-driven repayment plan, which allows your payment to be less than the amount of interest that accrues each month. This plan will cause you to pay more in the long run than would be the case if you chose another plan, but will keep your payment affordable. Visit for more on these plans.

Are there any jobs (Government, law enforcement, etc) that a person can get, that will qualify them to not have to repay student loans? If so, then please list part of them. My son is saddled with a large student loan debt and since he just graduated he is looking for jobs. Thanks.

There are a variety of forgiveness, cancellation, and discharge benefits to federal student loans. They all have eligibility criteria. So, the best place to start is this web page, which compares the various benefits:

The broadest benefit is the Public Service Loan Forgiveness Program, where it doesn't matter what you do for your employer, it matters who employs you. Visit for more about this program.

I owe significant money for private loans that were taken out to pay for my college education. While I am employed, I do not make the almost $2,000 extra I need to pay the student loans and keep them current. Do you have suggestions as to what I can do to lessen the amount and have some funds to live on? I have tried to talk with with them but have little wiggle room.... I really need to talk with someone!!!!

If you have federal student loans as well as private student loans, I have a tip that can help you manage the federal student loans: consolidate them.

When you consolidate federal student loans, your repayment period will be based on the amount of your "total education indebtedness", which includes private student loans. You cannot consolidate your private student loans into a federal student loan, but by extending the repayment period for your federal student loans, you will likely lower the amount due on those loans each month, giving you some breathing room to pay off your private student loans.

Visit this page to learn more about loan consolidation:

If you choose to consolidate, be sure to specifically list your private student loans on the application under the section about "loans you do not want to consolidate, but you want considered in establishing your repayment period".

Hey, So I'm trying to boost my credit score, and after 20 some-odd years finally have the money to pay off all my loans. Is it worth it to keep making the routine payments plus extra to get credit points for regular payments, or just pay it all off completely and get rid of the debt? We're looking at house hunting so I'm more interested in what helps the FICO score and would be willing to pay a little more to boost it over the long run. Any advice?

Both reducing your debt and making routine on-time payments improve your credit score.  Do you have a timeline when you want to buy a house?  Will your also be able to use the money you've saved up to put a more substantial amount down for a downpayment.  Take a look a a FICO Score Analyzer to see what makes the most sense for your situation.  Just remember that the Analyzer is a approximation not the real thing so your results may be different.


Hi Danielle! I will be finding out in the next month or so if I have been admitted to a graduate program. I was very lucky to come out of undergrad debt-free, but would have to take out loans for this program. Do you have any tips on things to consider or avoid when first taking out loans that will eventually impact repayment? I am trying to think as long-term as possible. Thanks!

If you have to borrow, go for federal loans, which offer the most consumer protections and income-driven repayment.  Private lenders are generally not as flexible about repayment, which may matter to you depending on your job prospects after graduation. 

Do you have any resources for someone who has already defaulted on a loan? A close friend has been in default for many years on a very large (probably six figures) student loan. I don't know specific details but the loan is almost certainly private and I know she was trying to avoid collectors at one point (not sure if for this loan or other debt, though). This default affects all aspects of my friend's life - she works only under the table jobs and ended up divorced after her spouse's tax refund was garnished a few years ago.

Are there any options to help people in long-term default on private student loans? I'd love to help her find some resources or even just someone to talk over her loan with to find out what the reality is. I don't want to pry but she seems very open to help (and to hope for figuring out some way of getting out from under/paying off this loan someday), so if you have suggestions for what steps to take next or websites to visit for more specific information on dealing with private loan default, I'd be very grateful!

There are a few ways to resolve a default on a federal student loan.


The first is the fastest: consolidate the loans and then agree to repay them under an income-driven repayment plan.

The second takes longer, but can also help repair credit: loan rehabilitation. Under this process, a borrower agrees to make a "reasonable and affordable payment" (usually 15% of discretionary income) for 9 months, after which point the loan is removed from default.

These processes are discussed here:

I have about $80,000 is school loans from both federal and private that I will need to repay in 3 months. Should I look at consolidating the loans? Would this provide a lower payment?

Consolidating your federal student loans could provide you with up to 30  years to repay those loans, and that will result in a lower payment than you would see if you did not consolidate. To receive this long of a repayment period, however, you will need to list your private student loans on your consolidation application under a section about "loans you do not want to consolidate but want considered in establishing your repayment period".

Of course, this will only lower the payment on your federal student loans. You cannot consolidate your private student loans into a federal consolidation loan, but you may be able to refinance the private student loans over a longer repayment period to lower the payment.

Both of these options will increase the amount of interest you pay over time, but can make the payment more manageable.

For more on consolidating federal student loans, visit this page:

Danielle, I read it recently that many students are not using the loan forgiveness program. Can you detail how can one get the student loans forgiven? For a Medical school student, this sounds very appealing to me.

Here are two great resources to learn about student debt loan forgiveness:


For someone like you, the US Department of Health and Human Services offers loan forgiveness programs through the National Health Service Corps and theNurse Corps Loan Repayment Program. These programs offer loan forgiveness to physicians and registered nurses who agree to practice for a set number of years in areas that lack adequate medical care(including remote and/or economically depressed regions).

The US National Institutes of Health's NIH Loan Repayment Programsrepays up to $35,000/year of student loan debt for US citizens who are conducting clinical medical research.

I consolidated my loans to a 30 year repayment plan for a lower payment after graduating in 2007. I became a fed in 2010. From what I've read, there's no way to try to attempt the public service loan forgiveness program in 2020 because it's not a qualifying repayment plan nor is it a payment equal to or greater than what I would have paid in the 10 year repayment plan, right? Even if I can't get forgiveness, I'm just glad that I can pay my student loans. I'll just keep hacking away at them one payment at a time!

It's true that this isn't a qualifying repayment plan for Public Service Loan Forgiveness, but if you change repayment plans to an income-driven repayment plan, you can START making qualifying payments, and that would set you up for forgiveness starting in 2025.

For more on an income-driven plan, visit

To help estimate your payments under an income-driven plan, visit the repayment estimator at

I have some money saved up and I am at the point where I am considering paying off my private loans with variable interest rates or taking advantage of the low mortgage rates and buying a house for the first time. My fear is that interest rates will be rising so I was wondering what would be a more prudent financial decision at this point.

It's a tough decision.  Mortgage interest rates have been low for a while.  Will paying off the private loans mean having to save again and buy a house in the future when interest rates are higher?   How quickly will you be able to save up if you didn't have the private loan payments? How long did it take you to save up?  These are all questions that you have to answer for yourself.  

My best guidance would be to pay off the private loans (or most of the private loans) and then set an aggressive plan to save up for a mortgage.  You'll be a more solid situation financially and could possibly get a better interest rate because you have less debt.

I think I am missing something here. I looked at the form (thanks for the link!) and the rules state that I am required to be in 10-year repayment status (I don't qualify for the other programs because I earn too much), but also that I have to pay 10 years of payments while working for a nonprofit. How exactly would I benefit from this program if the required length of loan time required is exactly the same amount of time as the work/payment requirement?

Good catch. If you don't qualify for an income-driven plan, you will not derive any benefit from Public Service Loan Forgiveness, because you will have repaid the loan in full after 10 years. While income-driven plans are separate from Public Service Loan Forgiveness, the two work together.

I would note that all borrowers with Direct Loans qualify for the income-contingent repayment plan. There is no income cut-off for that plan, but it also tends to have higher payments than the other income-driven plans (which do have income cut-offs; they vary based how much debt you have related to your income). Visit the repayment estimator to get an estimate of whether you can afford a payment under the income-contingent repayment plan:

I work at an international development bank (international organization - think World Bank, etc). Can these organizations count for public service loan forgiveness? I feel like they should as they are large organizations devoted to international development and poverty alleviation.

Unfortunately, the answer isn't so simple. It depends on how the organization is, well, organized. If it's a 501(c)(3) organization, then it qualifies regardless of the work that it does. If it's an international, intergovernmental organization, then it does not qualify as a "government" organization. You can read more about international organization in the Public Service Loan Forgiveness Q&A document:

I am a fellow (post-residency training) at a hospital. I have $225,000 in student loans, 98% from medical school. The amount includes the interest that built up through medical school until my intern year, at which point I began to repay my loan. Due to my moonlighting (which I have done to pay off loans), my payments were increased to almost $600/month on the income-based repayment. I also have $12,000 (was originally $7,000) in private loans from med school for which I pay $100/month.

While I love my job helping people, especially at the end of their lives, these loans stress me out. I would like to pay off the private loan with the moonlighting money I have earned while working the holidays ($11,000). But my 12-year-old car has has breaking down, costing me an average of $1,000 per breakdown. Despite being fixed the last time (early Dec 2014), it still makes a horrific noise when I accelerate, making me anxious about driving it to and from work (fellowship and moonlighting).

Should I pay off the private loan or buy a used (2010-2012) car? Do you think Congress will truly fund the Public Service Forgiveness program (we should know by 2017)? I have been paying on my loans for the past 5 years (almost 60 of the 120 payments needed).

And before anyone judges, I am the American Dream and have believed from the time I arrived as a young immigrant that I would be successful. My family has always been poor and I have had a job since the age of 14 (pizza hut, shoe stores, restaurants, etc...). I studied hard and sacrificed any ounce of fun to get to where I am, the first in my entire family. I have been financially independent since I was 18 and received scholarships for my undergrad education. I'm in my mid-30s and I would really like a life one day-- like one that includes a family of my own.

It may be best to pay off your private loans now, if you can afford it. The interest rate on private loans are high and the longer you take the more interest will accrue. Since you are working in the medical field, you may be eligible for public service loan forgiveness. Check out these two sites to learn more about your options:


What interest rate can I expect if I consolidate my student loans?

The interest rate on a Direct Consolidation Loan (a federal student loan) is the weighted average of the loans that are being consolidate, rounded up to the nearest 1/8 of one percent. If you consolidate (refinance) private student loans, your interest rate will be determined by your lender.

Hi. Curious what would be recommended in terms of general financial planning (while acknowledging that individual circumstances matter most): I may be coming into a bit of money from a relative in the $20-30k range. Yes, exceedingly generous. My wife and I are desperate to move to sell our home and move to a new one. However, she still has about $35k in student loans to pay off. While we do have some cash to put toward the move and home purchase, more would be great. So the question is, if I were to spend that money, am I better off having a smaller mortgage or smaller student loan payment (let's assume interest is identical on both)? My gut tells me to pay off the student loan first but I'm not sure.

As a Certified Financial Planner, my recommendation is pay down the student loan debt, and use the proceeds of your home sale to purchase another one.  Then you end up in a much stronger position of little to none student loan debt and a smaller mortgage on your home.  That way you can pay it down quicker and that's a nice position to be in.  

Thanks, appreciate greatly that you are doing this chat, and I will definitely follow up on the information that you provided!

I recently applied to consolidate my federal loans with FedLoanServicing and was notified that it would wipe out my 4 plus years of eligible payments to PSLF (I already had the bulk of my federal loans with them, but I had a couple of Perkins loans that were administered and managed by my school that I wanted to consolidate). Why is this the case? Is there any way to consolidate my loans without losing my qualifying payments?

Public Service Loan Forgiveness is what we call a "loan-based benefit". This means that, in the context of the forgiveness program, that  you must make the 120 qualifying payments on the loans you want forgiven.

When you consolidate your loans, the loans you consolidated cease to exist, and you instead have a new loan. On the new loan, then, you have to make 120 qualifying payments to get Public Service Loan Forgiveness.

To consolidate a Federal Perkins Loan, you do have to combine it (or them) with a Direct Loan (which it sounds like you have) or a FFEL Program loan (which are "federal" loans that were made by banks, but which it sounds like you don't have).

If you really want to maximize your PSLF benefit and consolidate the Perkins Loan, ask FedLoan Servicing about combining your smallest Direct Loan with your Federal Perkins Loans. This will "reset" your PSLF clock, but only on the smallest balance Direct Loan.

Understand, too, that the various Perkins Loan cancellation benefits will be lost if you consolidate them into a Direct Loan.

What options do we have as past students when our loans change hands to a servicer who does not have the same repayment policies as the previous. In my case, I had one servicer for 1-2 years then was changed to another. Although with my first servicer I had been making payments through an arrangement, the new servicer would not offer me a monthly payment anywhere near that amount.

Your options really depend on if your loans are private or federal. If they are private, then you are really at the mercy of the servicer. But if they are federal, then the repayment options should be the same regardless of which company is servicing the loan.

I have 3 federal student loans each with a different interest rate (7%, 6% and 7.25%) being serviced by an independent company. The loans total $46,000 and I'm still in school. I started paying back the loans but the company suspended my payments because I went back to school. I'm not able to consolidate the loans because they are federal loans. I'm considering taking out a personal loan to pay them off at a lower interest rate (9%) for the total; is this a good idea? I do not qualify for any programs to help with this and having this debt bothers me..

I'm not sure I fully understand your situation.  You can certainly make payments on student loans while your in school and you can certainly consolidate federal loans.  If you were to take out a personal loan at 9%, that doesn't make sense based on the facts that you presented.  You would be taking out a personal loan at a higher interest rate than your student loans.  

If you are uncomfortable with having this debt.  Start to make payments while you are in school.  

If my spouse and I file jointly, we will no longer qualify for a low IBR amount? We are trying to weigh the decision to file jointly or separately. Any factors we should consider? What specific tax benefits will we miss out on by filing separately?

I am not a tax advisor.  My best recommendation is to ask your tax professional this question.

Thank you all for joining us this afternoon for a very informative chat about student loans. Sorry that we couldn't get to all of your questions. Please feel free to contact me with any additional questions or comments. I'm more than happy to find answers for you.

In This Chat
Danielle Douglas-Gabriel
Danielle Douglas-Gabriel covers the student debt for The Washington Post.
Ian Foss
Ian Foss works at the Financial Student Aid division of the Department of Education.
Felicia Gopaul
Felicia Gopaul is a financial planner at the College Funding Resource.
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