How to Pay Off $50,000 in Student Loan Debt
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Are your student loans so large that you feel like they’ll never go away? If you’re the average student loan borrower, you have around $35,100 in loans. You’re probably worried about how to pay off your student loan debt. You’re not alone. More than 11 million Americans have more than $40,000, according to statistics from the College Board.
Politicians try to forgive student loans altogether, but it’s not something that you can rely on, and it’s unlikely they’ll just wipe out the debt in one fell swoop. The Biden administration has successfully canceled billions in student loan debt for 700,000 Americans, but that’s a drop in the bucket when you consider the total amount of debt. According to the Federal Reserve, Americans have a whopping $1.74 trillion in student loans.
If you want to make traction on paying off your student loan debt and creating a solid financial foundation for your future, you need to look to the person who can make it happen: you. I encourage you to hold onto the hope that you might receive student loan forgiveness and create an action plan to become debt-free by following the strategies discussed below.
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Strategies to pay off $50,000 in student loan debt
For the average student loan borrower, having $50,000 in student loan debt is not uncommon. Especially if you’ve gone on to get a master's or doctorate, or enroll in medical or law school. It can seem downright impossible when your debt is in the six-figure range.
Rather than throw up your hands and let the loans go into forbearance out of frustration, consider this a challenge. There are some really simple things you may be able to do (depending on your loan servicer) that could reduce your interest rate today.
You can take control of your repayment plan and work the debt snowball, paying extra money on your loan and paying it off months or years earlier. Or opt to work with a lender to consolidate or refinance your student loans to make them more manageable by having just one loan to pay off.
Keep reading for details on all the strategies you can use to pay off $50,000 in student loan debt. Use just one or several and you’ll soon have the confidence that you can indeed pay them off. And probably sooner than you think!
5.54% - 15.86% VARIABLE rate APRs 3.54% - 14.83% FIXED rate APRs
- Easy online application!
- No origination fees, late fees, and no insufficient fund fees
- Flexible repayment options to help you find the right loan for you
- Student loans for college, graduate, law, MBA, Health Professionals, and Parent loans
- Students are 5x more likely to be approved with a cosigner
- 0.25% discount when you set up autopay
Stop deferring your student loan payments if you can
For over two years, student loan payments have been deferred and not accrued interest. This is great news for those who really cannot afford to make payments, but it’s a lost opportunity for those who are able to pay.
Since no interest is accruing on your loans until December 31, 2022, every dollar that you pay until then is going towards paying down the principal. A loan with a 6% interest rate is similar to getting a 6% discount because you do not have to pay interest on top of the principal amount.
Enroll in auto-pay
Signing up for your student loan’s auto-repayment service helps you save money in a few ways. Enrolling in the service is easy. All you need are your bank account details and about 10 minutes.
Many student loan servicers offer a small discount, usually around 0.25%, if you set up an auto-draft from your bank account. This might not seem like much, but on a $50,000 starting balance, that’s $125 you’ll save in the first year. It will take less than ten minutes to set up and unless you switch banks, you’ll never have to do anything again. Hundreds of dollars in savings for a one-time 10-minute task? Yes, please!
Another benefit you’ll get from having your payments undrafted is that you’ll never miss a payment. Late or missed payments are subject to late fees and interest charges. They can also negatively impact your credit score if the payment is reported as late to the credit bureaus.
Some loan servicers also offer a cash incentive for making on-time payments. One of my lenders offered a $300 credit after making 36 on-time payments. I didn’t know about this until I was planning to make a lump sum payment of the final $1,500. It was perfect timing because it turned out that I had made 34 payments. So I did the math, paid down my loan to all but what was needed to make two more payments, plus leave a balance of just over $300. When that credit came through, my balance was just a few dollars.
There is one caveat to autopay. You need to be sure that the money will be in the account, or else you’ll get hit with overdraft charges by your bank. Create a separate checking account for student loan payments only to set yourself up for success. Fund the account with your budgeted amount every time you get paid. This way, you know there’s money in the account and won’t be tempted by the high bank account balance when you want to do a bit of retail therapy.
Put extra cash towards your student loan debt
Student loans can seem daunting, but right after college is the best time to attack them with a vengeance. You’re used to living life as a poor college student. You know two dozen ways to make Ramen noodles taste good and know how to stretch a bottle of laundry detergent for months on end.
The year or two post-college is a great time to continue these habits and work not only your new job but also a side hustle or two in your off hours. Not sure you want to spend nights doing DoorDash or weekends waiting tables? I’ll let the numbers speak for themselves.
How much can you save if you make extra monthly payments on a $50,000 student loan at 6% interest?
Extra monthly payments | Amount of money saved on interest | Years to pay off |
$50 | $1,948 | 8.9 years |
$100 | $3,480 | 8 years |
$200 | $5,736 | 6.7 years |
$300 | $7,322 | 5.8 years |
$400 | $8,497 | 5.1 years |
$500 | $9,405 | 4.5 years |
5.54% - 15.86% VARIABLE rate APRs 3.54% - 14.83% FIXED rate APRs
- Easy online application!
- No origination fees, late fees, and no insufficient fund fees
- Flexible repayment options to help you find the right loan for you
- Student loans for college, graduate, law, MBA, Health Professionals, and Parent loans
- Students are 5x more likely to be approved with a cosigner
- 0.25% discount when you set up autopay
Take a job that qualifies for student loan forgiveness
Public service loan forgiveness (PSLF) programs allow you to receive student loan forgiveness after completing the requirements. Typically these jobs are in the fields of education, nursing, and public safety but also include jobs in areas that are underserved in a particular area.
Many teachers in low-income, inner-city schools can sign up to qualify for loan forgiveness. It’s important that you know what’s required of you and any documentation of your work. After your service, you’ll complete the final paperwork and receive the agreed-upon amount of debt forgiveness.
To qualify for PSLF you must:
- Be employed by a qualified government or non-profit organization
- Work full-time
- Have Direct Loans (or refinance to a Direct Loan)
- Use an income-driven repayment plan
- Make 120 monthly payments on time
Use the free PSLF tool to determine if you qualify for public service loan forgiveness.
Refinance your student loans
You might remember your parents talking about refinancing their mortgage or maybe even a vehicle. Did you know that it’s possible to refinance your student loans? When you refinance a student loan, you’re doing so to get a lower interest rate while extending the loan's life.
To use student loan refinancing to your advantage, you want not only the lowest interest rate possible, but also a repayment plan that’s the same as, or shorter than, your current one. You can always pay off the loan balance sooner if you're able. Just remember that the longer the loan term, the more interest you will pay.
To qualify for refinancing your student loan, you will need a good credit score or a cosigner. Shop around for rates and choose one that’s a fixed interest rate. You want to avoid variable rates because they could adjust to a higher interest rate when they adjust.
Consolidate your student loans
Consolidating loans is a good idea if you have multiple loans and would like the simplicity of just one monthly payment. With a consolidation loan, your existing federal student loans, including parent PLUS loans, are paid off by the consolidation loan lender, and you now have a new loan with them.
Also, note that you can only consolidate your federal student loans once. However, you retain many consumer protections like income-driven repayment plans or public service student loan forgiveness plans.
Your interest rate will be the weighted average of your current loans, so you may not save money on interest, but you will get a longer term. Terms range from 10 to 30 years, so this is a good option if you have a large amount of student loan debt.
5.54% - 15.86% VARIABLE rate APRs 3.54% - 14.83% FIXED rate APRs
- Easy online application!
- No origination fees, late fees, and no insufficient fund fees
- Flexible repayment options to help you find the right loan for you
- Student loans for college, graduate, law, MBA, Health Professionals, and Parent loans
- Students are 5x more likely to be approved with a cosigner
- 0.25% discount when you set up autopay
Start a debt snowball or debt avalanche
You can create your own payment plan with your student loans by doing a debt snowball or debt avalanche. These plans are great if you have multiple student loans and aren’t interested in student loan refinancing or consolidation.
With these methods, you list your loans in a specific order. You make minimum payments on all of them, and then any extra money you have goes towards the one debt you’re focusing on.
With the debt snowball, a method taught by financial guru Dave Ramsey, you list your debts from smallest to largest. This is because, Ramsey says, debt isn’t just about numbers. By focusing on paying off your smallest debt first, you’ll have a quick win, then another, and another. Just like a snowball starts small and gets bigger and bigger. Your financial wins get larger and larger. The feeling of success will motivate you to keep going. If you have debts of equal amounts, start with the one that has the higher interest rate.
On the other side of the spectrum is the debt avalanche. You list your debts by interest rate, highest to lowest. For this, you attack the debt that has the highest interest rate as a way to save money. Mathematically, this will save you the most money, but you may not have any quick wins.
Loan | Debt Avalanche Pay Order | Debt Snowball Pay Order |
$25,000 at 9%, $440 monthly payment | 1 | 5 |
$10,000 at 7%, $160 monthly payment | 3 | 4 |
$5,000 at 8.5%, $90 monthly payment | 2 | 6 |
$4,000 at 6.5%, $75 monthly payment | 4 | 3 |
$3,000 at 6.5%, $50 monthly payment | 5 | 2 |
$3,000 at 5%, $50 monthly payment | 6 | 1 |
Both methods work and have their merits; you have to use the one that appeals to you. According to an online calculator, the above scenario would have a difference of just one month and only $231.
With the debt avalanche, you would pay $63,146 and be out of debt in 75 months. You’d pay $63,377 over 74 months with the debt snowball method. The snowball method is a bit faster, but you save money with the avalanche method.
While you’d be crazy to turn down $231 over several years, you might feel differently. Choose the method that makes the most sense to you. Are you more of a numbers person? Go with the debt avalanche. If you like the idea of getting rid of the smaller debts first and getting some small wins under your financial belt, you’ll do well with the debt snowball
Start a side hustle
You’ve refinanced your loan, set it on auto-pay, and put every extra cent towards it. But you wish you had more money, especially with a car payment in your debt mix. Assuming you’re working a 40-hour week at your full-time job, you likely have more time in your week to put towards a side hustle or two.
It’s never been easier to find a part-time gig. Even better is that you can do it mostly on your terms and without much, or any, prior experience. Of course, the downside is that the pay may not be that great if anyone can do it. For better pay, opt for something more specialized, like offering freelance services in your field of specialty, or do something very niche, like calligraphy for wedding and party invitations.
Need some ideas for a side hustle? Try these:
- Waiting table
- Bartending
- Babysitting
- Uber
- Landscape
- Instacart
- Housecleaning
- Freelancing
- Tutoring
- Retail arbitrage
- Reselling thrift store deals on eBay
5.54% - 15.86% VARIABLE rate APRs 3.54% - 14.83% FIXED rate APRs
- Easy online application!
- No origination fees, late fees, and no insufficient fund fees
- Flexible repayment options to help you find the right loan for you
- Student loans for college, graduate, law, MBA, Health Professionals, and Parent loans
- Students are 5x more likely to be approved with a cosigner
- 0.25% discount when you set up autopay
The bottom line
Perhaps the biggest hurdle for paying off $50,000 in student loan debt is believing that you can actually do it. At one point, you probably thought you couldn’t get into college. Maybe you even wonder if you’d be able to graduate from college. Paying off debt is similar. It’s a big mountain, but it becomes more manageable when you attack it like it’s your number-one priority.
Once you take stock of your various student loans, the remaining balance, and their types, decide what makes the most sense to you. Do you want just to start paying them off with a debt snowball or debt avalanche method? Or can you enroll in a student loan forgiveness plan? Would you like to get a lower interest rate by refinancing them, or would consolidation be a better option?
Now that you know what options are available to make student loan repayment easier, you’ll feel empowered to decide which repayment options are best for you and your financial situation. Once you decide, feel free to accelerate your progress by starting a side hustle so you can make extra monthly payments. Most of all, remember that personal finance is personal. What works for your sister, best friend, or colleague may not be right for you. And that’s perfectly fine.
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Writer
Charlotte Edwards is an educator-turned-freelance writer based in Beijing, China. She writes personal finance and parenting content for both digital and print publications around the world.
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