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How to Pay Off $200,000 of Student Loans
Updated On August 29, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
If you have $200,000 of student loans, you might be unsure how to pay off your student loan debt. According to the latest student loan debt statistics, there are nearly one million student loan borrowers who owe at least $200,000 in student loan debt. If you want to know how to pay off $200,000 of student loans, the good news is that there are several ways to pay off student loans and get out of debt.
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Here’s how to pay off $200,000 of student loans:
- Refinance student loans
- Get a qualified cosigner
- Sign up for an income-driven repayment plan
- Apply for student loan forgiveness
- Use the avalanche method
- Use the snowball method
Refinance student loans
To pay off $200,000 of student loans, you can refinance your student loans to get a lower interest rate and save money.
When you refinance your student loans, you combine your current student loans into a new student loan with a lower interest rate, lower student loan payment or both. Student loan refinancing can help you save up to thousands, or even tens of thousands of dollars, in interest over the life of your student loan.
Student loan refinancing is best for student loan borrowers with a high interest rate on their student loan debt, a high monthly student loan payment, and good to excellent credit. If you have good to excellent credit, you could qualify for a lower interest rate. You can refinance federal student loans, private student loans or both.
When you refinance student loans, you can choose a fixed interest rate or variable interest rate. You can also choose a student loan repayment term from five to 20 years. A shorter student loan term means you will have a higher monthly student loan payment, but you can save money and pay off your student loans faster. In contrast, a longer student loan repayment means lower student loan payments, but you will pay more money in total interest.
Compare the latest rates for student loan refinancing. Make sure to find the right lender and best interest rates for your specific situation. You can apply to multiple lenders to find the best student loan refinancing rates for you.
This student loan refinancing calculator shows you how much you can save when you refinance student loans.
For example, let’s assume that you have $200,000 of student loans at an 8% interest rate and a 10-year repayment term. Let’s assume you refinance student loans at a 3% interest rate and a 10-year repayment term. You would save $495 each month and $59,440 overall.
Here are helpful resources for student loan refinancing:
- Why refinance student loans
- 7 reasons why you should refinance student loans now
- Is student loan refinancing worth it?
- How to refinance federal student loans
- How to refinance student loans
Get a qualified cosigner
Getting a qualified cosigner to help refinance student loans is a smart way how to pay off $200,000 of student loans. If you want to pay off $200,000 of student loans, but have bad credit or average credit, a qualified cosigner such as a parent or spouse could help you get approved for student loan refinancing and get a lower interest rate.
Read: Top 30 questions about student loan refinancing.
Who is the best cosigner? Choose a cosigner with good income and excellent credit. Lenders want to lend to student loan borrowers who are currently employed with steady income and credit. Your cosigner will assume equal financial responsibility for your student loans, so make sure they are comfortable doing so. Several lenders offer a cosigner release option, which allows your cosigner to be released from financial responsibility for your student loans after you make a minimum number of monthly student loan payments.
Explore the latest rates for student loan refinancing.
Read about the top lenders to refinance student loans.
Learn the difference between student loan refinancing and student loan consolidation.
Sign up an income-driven repayment plan
If you need to pay off $200,000 of student loans, you can sign up for an income-driven repayment plan. An income-driven repayment plan is available for federal student loans only and bases your student loan payments on your income and family size. Under an income-driven repayment, you can pay 10% to 20% of your monthly discretionary income toward your federal student loans.
There are four income-driven repayment plans:
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Contingent Repayment (ICR)
You can also get student loan forgiveness through an income-driven repayment plan:
- Undergraduate student loans: 20 years of monthly student loan payments
- Graduate student loans: 25 years of monthly student loan payments
Apply for student loan forgiveness
If you want to know how to pay off $200,000 of student loans, you can apply for student loan forgiveness.
(Here’s how to get student loan forgiveness and cancel student loan debt).
There are different programs available to get student loan forgiveness. Most student loan forgiveness applies only to federal student loans and is made available through the federal government. Two popular programs for student loan forgiveness are the Public Service Loan Forgiveness program and Teacher Loan Forgiveness.
(Learn more in our student loan forgiveness guide).
Public Service Loan Forgiveness
- The Public Service Loan Forgiveness program is available to federal student loan borrowers who work full-time (at least 30 hours a week) for a public service or non-profit employer and make 120 monthly student loan payments.
- Student loan borrowers must make at least a majority of their federal student loan payments while enrolled in an income-driven repayment plan such as IBR, PAYE, REPAYE or ICR.
This public service loan forgiveness calculator shows you your monthly student loan payment and how much student loan forgiveness you can get when you enroll in public service loan forgiveness.
Teacher Student Loan Forgiveness
- The Teacher Loan Forgiveness program grants up to $17,500 of federal student loan forgiveness.
- To qualify, you must be employed full-time for five complete and consecutive academic years at an elementary school, secondary school or educational service agency that serves low-income students.
Use the avalanche method
To pay off $200,000 of student loans, another option is to pay off student loans with the highest interest rate first. This is called the avalanche method.
Here’s how the avalanche method works:
- Pay the minimum payment on your student loans every month.
- Identify your student loan with the highest interest rate.
- Pay off the student loan with the highest interest rate.
- Then, pay the student loan with the next highest interest rate.
- Repeat this process until you have paid off all your student loans.
This student loan payoff calculator shows you how much money you can save when you pay off your student loans faster.
Let’s assume that you have $200,000 of student loans and an 8% interest rate. Let’s also assume that your monthly student loan payment is $2,427. If you pay an extra $300 per month (for a total of $2,727 per month), you could pay off your student loans 1.5 years earlier and save $15,672.
The avalanche method is smart to pay off $200,000 of student loans because it helps you pay off your most expensive student loans first.
Use the snowball method
To pay off $200,000 of student loans, you could pay off your lowest balance student loan first. This is called the snowball method. Here’s how it works.
- Pay your minimum monthly student loan payment.
- Pay off your lowest balance student loan.
- Repeat each month until you have paid off your lowest balance student loan
- Start paying off your student loan with the next lowest balance.
- Repeat this process until you pay off your student loans.
The snowball method focuses on the student loan balance, regardless of interest rate. In comparison, the avalanche method focuses on the interest rates, regardless of interest rate. The snowball method is effective to pay off $200,000 of student loans because it helps you build small psychological wins each time you pay off student loans.
Learn more:
Compare the latest rates for student loan refinancing
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Compare the latest rates for pharmacy school student loan refinancing
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