The resumption of student loan payments in October 2023, after a three-year hiatus following the Supreme Court’s striking down of President Joe Biden’s forgiveness program in June, has affected millions of borrowers.
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Indeed, the total amount of student loan debt, currently at $1.76 trillion, continues to climb as many borrowers lack access to debt relief, according to the Education Data Initiative. And 47.9 million borrowers have student loan debt.
While paying back student debt can be daunting — especially if it reaches $100,000 — there are steps borrowers can take that may alleviate stress and help repay it faster.
According to Joe Camberato, CEO of National Business Capital, you should start by thoroughly evaluating your financial situation.
“Take stock of all your income sources, expenses, and their timing to understand your cash flow,” he explained. “Document these details so that you have a clear reference point for your financial planning moving forward.”
Camberato went on to say that “while it’s tempting to seek quick fixes or shortcuts, it’s better to embrace a patient and diligent approach to loan repayment. Remember, the responsibility to repay your loan is a commitment you made, and honoring that commitment is a valuable lesson in financial responsibility that can shape your future financial decisions positively.”
Here are some steps to take when your student debt hits $100,000, according to experts.
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Live Below Your Means While Keeping a Job
Dror Liebenthal, CEO and co-founder of scholarship platform Bold.org, said that first, you should make sure you’re working, even if it’s part-time while you’re still in school.
“$100k is a lot to pay off, and you’ll need to make sure you always have a stream of income to cover your monthly loan payments,” he said.
In addition, Liebenthal said you should “live minimally.” By this, he meant, “You need your expenses to be lower than your income so that you can pay off your loans as aggressively as possible. Loan interest can accrue quickly, so this is the time to keep your expenses as low as you can.”
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Create a Strict Budget
Another one of the first steps toward paying off student loans faster is to create a budget that keeps your debt repayment goals top of mind.
Erika Kullberg, attorney, personal finance expert and founder of Erika.com, said, “To start, you need to add only your minimum monthly required payments as a fixed expense in your budget, as well as set aside some extra money to put towards the principal balance.
“Every month that you pay off more principal than is required, the less interest you will pay in the long run and the easier it will be to pay off your loan ahead of schedule — while saving money,” she continued.
Kullberg also emphasized the importance of telling your lender to put any extra payments toward your principal balance, not interest, “to make sure your money is helping you pay off your balance.”
Be Proactive and Increase Your Payments
In addition to a budget, Camberato stressed the importance of having an active repayment approach. Instead of passively relying on automatic payments, he recommended actively manage your repayment process.
“Regularly assess your financial situation to identify opportunities to increase your repayment amounts,” said Camberato. “By being proactive, you can minimize the duration of your debt.”
And as Liebenthal noted, you should also try to increase your monthly payments.
“Paying the minimum payment means you’ll be paying off that $100k for an awfully long time — and paying a considerable sum of interest over the course of the loan,” he said.
Some experts, such as Natalie Daniels, the regional director of the AccessLex Center for Education and Financial Capability, said you should consider trying one of the two most popular repayment methods.
If you’re able to make accelerated payments and work directly with your servicer on your plan, you can try the debt avalanche method, where you target the extra funds toward the loan with the highest interest rate, or the debt snowball method, where you target the extra funds toward the loan with the smallest balance first.
Ask Your Employer About the CARES Act
Patricia Roberts, COO of Gift of College, said that in addition to examining every available option for cancellation, forgiveness and/or reduced payments, be sure to see if your current employer — or a prospective one — would be willing to lend a hand.
“Thanks to a provision in the CARES Act, employers have the opportunity to make student loan payments of up to $5,250 per year per employee — through 1/1/2026 unless extended — and for these payments to be tax-free to the employee,” she said.
“What’s great from employers’ perspective is that they can differentiate themselves by offering a benefit like this and can also take a business tax deduction for these payments.”
Consolidate Your Loans
Another option worth looking at is to consolidate multiple loans and/or refinance them.
As Todd Stearn, CEO and founder of The Money Manual, explained, in addition to simplifying your repayment process, this can lower your rate and your monthly payments and — in the case of federal loans — give you access to federal forgiveness programs.
“Take steps to improve your credit before applying, and recruit a co-signer with good credit if needed to ensure the best possible rate,” he added.
Other experts echoed the sentiment, agreeing that this can lead to significant savings over the lifetime of your loan.
“However, be aware that if you’re refinancing a federal student loan into a private student loan, you can lose the additional borrower protections that come with federal loans,” Bold.org’s Liebenthal noted.
Review Your Repayment Options
Another important step is to make sure you’re on the right repayment plan. According to AccessLex Center’s Daniels, if you have federal student loans, the 10-year Standard repayment plan is often the plan borrowers will choose to pay down their debt quickly.
“However, the 10-year Standard monthly payment on 100k would probably result in a minimum monthly payment over $1,100, with the exact amount depending on the interest rate of your loans,” Daniels explained. “But, if the 10-year Standard repayment plan doesn’t fit within your budget, consider an income-driven repayment plan.”
As she noted, the new Saving on a Valuable Education (SAVE) repayment plan bases your monthly payment on your income, household size and state of residence and can lower your monthly payment, in comparison with other income-driven repayment plans, because the payments are based on a smaller portion of your adjusted gross income.
“It also offers an interest subsidy so that any unpaid interest that isn’t covered by your monthly payment is covered by the government,” added Daniels.
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This article originally appeared on GOBankingRates.com: What To Do When Your Student Loans Reach $100,000, According to Experts