6 Ways to Lower Student Loan Payments

Published on May 14, 2021 by Daniel Azzoli

Student smiling and writing at her desk.

When you’re on the cusp of graduating from college, you have a lot to look forward to. It’s a time to close an important chapter of your life to begin an exciting new one. Maybe you’ll move back home or to a new city, begin the job hunt, and start a brand-new career that you’ve been preparing for diligently for years. But if you’re like nearly 45 million other Americans, there are also some less fun prospects waiting for you at the end of your college road: namely, student loan debt[1].

Paying off student loans early (or even within a reasonable timeframe) can be a difficult battle to manage, and things can get even more complicated when you factor in all of the other responsibilities that someone entering the workforce often faces, like rent payments, grocery bills, utility bills, and more. But this doesn’t mean that there isn’t any light at the end of the tunnel. There may be some useful techniques to lower student loan payments if you approach things the right way.

So, if you’re facing a mountain of debt and looking for ways to start paying off student loans effectively, we’re diving into some tips to help people just like you.

1. Cut Out Redundant Spending

You’ll be facing an uphill battle in your quest to lower student loan payments if you don’t have clear visibility into what your money is going towards. One of your goals in this process should be to create a well-optimized budget for you to follow (which we’ll go over in more detail later), but in order to do this, you’ll need to start by poring over your bank account statements, your bills, and any other relevant financial information to get a clear view of your expenses.

A bunch of shopping bags.

If you haven’t done this exercise before, you might run into some surprises that you weren’t expecting. Specifically, you might find that some of your regular spending habits are adding up to more than you would have guessed. For example, do you spend more money on coffee in a week than it would cost you to buy supplies to make lunch at home for that same week? Are your weekend outings costing you more than it would cost to pay off your gym membership every month? When you can identify problem areas in your spending and make some changes, you may find that you’re left with some extra money that can go towards paying off your student loans.

Need some more tips to help you save money? Take a look at this savings guide.

2. Get a Part-Time Job and Start Saving

The mountain of student debt waiting for you can be an ominous shadow cast over your graduation experience, so it might be a good idea to get a head start on paying it off. Look for a job you can work part time throughout your time at school and put a good chunk of this money towards paying off student loans. This can give you a head start on the process and give you some peace of mind in knowing that when graduation day comes, you won’t be starting from ground zero.

3. Set Up a College Fund for Yourself

A big part of understanding how to pay off student loans is knowing what to do with the money that you’re saving to help yourself lower student loan payments down the road. After all, the money that you worked so hard to save throughout your college years won’t do you much good as far as your student loans go if you blow it all on shopping sprees and weekend fun.

So, to avoid falling into this trap, put the money that’s meant to go towards paying off student loans early to a savings account that’s specifically meant for that use. It will also help if the money in this account isn’t something that you can easily access with the swipe of a debit card. You can also consider setting up automatic transfers to this account to make sure you’re saving consistently and diligently.

Piggy bank on white table.

Make sure that you don’t mix your savings meant for student loan payments with other savings, as you want to ensure all of your money is being used for its intended purpose. Take a look at this article on different types of savings accounts to get an idea of what might work for your student loan savings.

4. Create a Budget to Help you Lower Student Loan Payments

At this point, you should have some ideas of where you can cut back your spending, but that’s only one piece of the puzzle. To get a holistic view of your finances, you’ll want to start working within the confines of a budget.

One of the main purposes of your budget will be to compare your income to your expenses. You’ll want to include things like your rent, subscription services, your phone bill, utility bills, grocery bills, payments made on your line of credit and other loan accounts, and more. If your aim is to start paying off student loans, you’ll need to include these payments in your budget and make sure you prioritize all your essential expenses.

There are all sorts of budgeting techniques and frameworks out there, some of which you may be better suited to than others. You’ll need to do some research and find a method that you feel will suit your financial situation. If you need some help getting started, here are a list of budgeting guides for you to check out:

5. Make Larger Payments When You Can

If you’re living on a tight budget and are just barely able to squeeze in your regular payments as it is, we’d understand if this option may be a little out of reach. But if your goal is to start paying off student loans early, you should aim to pay off larger chunks of your loans whenever you’re able to. This should help to cut down your principal balance ahead of schedule. By lowering this number, you’ll essentially be shortening the length of your loan and you’ll put a stop to the build up of interest sooner than you would have otherwise.

By attempting to lower student loan payments and paying off what you owe ahead of schedule, you can give yourself an opportunity to get started on saving for other big investments in your life. This could include things like buying a home, sending your kids to college, or saving up for retirement.

6. Take Advantage of Credit Card Rewards

One of the best ways to start paying off your student loans early is to find creative ways to save money in other areas of your life. For example, if you saved up points on your credit cards, some companies will allow you to use them for cash back rewards. If you’re a student or have recently graduated, look for credit cards that don’t come with any annual fees, or come with only minimal fees. Assuming they also come with some sort of rewards program, using this card smartly could help you save money.

Person typing in credit card info into their smartphone.

For example, let’s say your credit card bill for each month totals $1,200 and you’re receiving 2.5 percent cash back on everything you buy on that card. This means that after a year, you’ll have gotten $360 in cash back savings. This is money that you can use to start to put towards your financial goals.

Keep in mind that this will only work if you’re making your credit card payments on time. If you’re not, interest will start to build on your credit card, and you could find yourself with more debt than you already had. You should also make sure to avoid spending frivolously on your credit card just for the sake of earning rewards.

Stay Diligent to Start Paying Off Student Loans

If you’re having problems paying off student loans, you’re not alone. We understand it can be a tough feat to manage, as millions of Americans continue to struggle with this very task. If you’re going to successfully work your way through this process, you’ll need to manage your money carefully, follow a budget closely, and find ways to save money. But as hard as it may be, it’s far from impossible.

Start by assessing your current financial standing. Look at how you spend your money, how much you have coming in, where you may be able to cut back, and how much you’ll need to make moving forward to pay off your debt and still live a relatively comfortable life. From there, you can make a plan of attack and do your best to execute it over the coming years. And remember, the earlier you start saving, the better!

We hope the tips we’ve given in this article can give you a push in the right direction, and if you’re looking for more general information on how to save money or how to pay off debt, visit our blog for some practical tips and information on how to keep up with your financial responsibilities.

Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see CreditFresh’s Terms of Use.


[1] https://studentloanhero.com/student-loan-debt-statistics/