Paying Off Student Loan Debt

10 Mar 2023

Paying Off Student Loan Debt

Student loan debt is a reality for millions of people in America. The average public college education borrower owes over $35,000 and over $55,000 for private – and that’s just for a bachelor’s degree. If you’re one of the millions looking at how to best pay off your public or private student loan debt, or your child’s if you have Parent PLUS Loans, there are a few strategies to consider.

Wait for a Congress, President, and Country to all agree on canceling everyone’s debt

This strategy is talked about frequently, especially in election years, but is a lot like playing the lottery as your retirement plan. It is a “strategy” that many base their lives around and kick the can down the road as much as possible hoping the miracle happens, but is it really going to happen? Maybe? More likely not. So, why wait when you can take control of your finances and work towards paying off that debt right now? Let’s explore some real, time-tested strategies below to start chipping away at this mountain you may be facing.

Make extra payments. Paying more than your monthly minimum can help you pay off your debt faster and reduce your total interest charges.

Paying more than the minimum on your student loan debt is like giving your future self a big hug or a high five. Not only will following this strategy reduce the amount of interest you pay over time, but it will also help you pay off your debt faster. Think of it this way, the more you pay now, the less you’ll owe later and the closer you’ll be to a debt-free life. Assuming a $50,000 loan at 5% interest, with a repayment period of 15 years, here’s a simple calculation of how much money and time someone could save by making extra payments towards the loan:

The monthly payment amount would be approximately $377. Over the course of 15 years, the total amount repaid would be $56,662, which includes $6,662 in interest.

Comparatively, if just an additional $100 is paid towards the loan each month, the loan can be paid off approximately 2 years sooner, and the total amount repaid would be approximately $54,634, which includes $4,634 in interest – saving a little over $2,000.

If you don’t currently have the extra cashflow to make those additional payments, consider talking with your employer about them taking advantage of a recent CARES Act provision that was extended through 2025. This allows them to give you $5,250 annually to put towards student loan payments. These funds are 100% tax free to you and are 100% tax deductible for them, it really is a win-win. Another Employer – Employee benefit around student loans is included in Secure Act 2.0. Beginning in 2024, employers can make matching contributions to employees’ 401(k) plans dollar-for-dollar up to the maximum deferral amount set by the IRS ($22,500 in 2023), for student loan repayments made by the employees. In other words, if an employee makes a student loan payment, their employer can now match that payment with an equal amount that gets added to the employee’s 401(k) account. This can help you reduce your student loan debt faster and also save for retirement at the same time. Note that this provision is not automatic and would need to be manually put in place by your employer for you to receive the benefit, but it is another win-win for you and your employer.

Consider loan refinancing and loan consolidation.

If you have a good credit score and lower rates are available, you may be able to refinance or consolidate your loans at a lower interest rate, saving you money over time.

Refinancing and consolidating your student loans is like combining all of the scattered puzzle pieces into one cohesive picture. Not only does it simplify the repayment process, but it can also potentially lower your interest rate, which saves you money overtime. In the interest rate environment, we find ourselves in early 2023, it is unlikely that refinancing makes sense right now. Having said that, it is still an option that is worth taking a look at and knowing about in the future when rates become more attractive. If you’re able to do so, why keep juggling multiple loans when you can bring them all together and create a clearer path to debt freedom? If you’re interested in pursuing student loan refinancing or consolidation, consider checking out SoFi or NaviRefi.

Enroll in an income-driven repayment plan.

If you have federal loans, an income-driven repayment plan can potentially lower your monthly payment and make it easier to pay off your debt.

An income-driven repayment plan for federal student loans is like a financial superhero in disguise. It adjusts your monthly payment based on your income, giving you a lower payment and making it easier to pay off your debt. Think of it as a sidekick to your budget, helping you conquer student loan debt one month at a time. The best part? It’s available to all federal loan borrowers, personal and PLUS loans.

Apply for loan forgiveness programs.

If you work in certain public service jobs, you may be eligible for loan forgiveness after a certain number of years of service.

There are those in our country who have dedicated their lives to public service – teachers, first responders, city officials, to name a few – who our country has decided we do not want them to be saddled with debt forever. The public service student loan forgiveness program is open only to those who have worked in a qualifying public service job for 10 years and make 120 qualifying payments. After doing so, the remaining student loan balance can be 100% forgiven. While it sounds easy, it is not quite as easy as snapping your fingers, so if you think you may qualify, be sure to check with your employer and to get all of the details.

One of the questions that many people often ask us when we discuss debt reductions topics is “should I focus more on paying off my debt or investing that money for retirement?” And like many things in financial planning, we will typically give the common response of, “it depends.” We say that a bit tongue in cheek, but it is true, it depends on each person’s unique goals and lifestyle. If your student loans come with a high-interest rate, you are unable to refinance, and don’t qualify for public service forgiveness, it may be wise to use extra funds to pay that off first. On the other hand, if you have low-interest federal loans and a long-term investment strategy already, investing extra funds into your IRA, 401(k), etc, may be a better choice for you. Ultimately, the best approach will depend on your financial situation, risk tolerance, and long-term goals. If you’re unsure which route is best for you, it may be a good idea to consult your financial advisor for guidance.


In conclusion, it looks like for the time being, we won’t be getting a hall pass from Congress on student loan debt, but that’s okay! The good news is that people every day have successfully paid theirs off by using the host of options we laid out. Making extra payments, refinancing and consolidating, or enrolling in an income driven repayment plan are all ways to make student loan repayment a little less daunting. And if you’re in a public service job, or considering one, check with the HR representative and see if you qualify and what the exact steps are to ensure you are on track for forgiveness. We know you might be staring a monumental debt mountain in the face but just remember, every payment is one step closer to being student debt free. Reach out to us today if you’d like to discuss anything you read in this post or for anything else in your personal financial life.

BentOak Capital® – Better Together


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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More about the author: AJ Bunn