How To Manage $200,000 in Student Loan Debt: Strategies for Repayment

Repaying $200,000 in student loan debt can feel like an impossible undertaking. If you’re grappling with how to pay back your six-figure debt, you’re not alone. As of the third quarter of 2024, about 900,000 federal student loan borrowers have racked up $200,000 or more in federal Direct Loan debt alone.

There are a number of strategies you can use to help you stay above water with your loan payments. From income-driven repayment plans to loan forgiveness programs and more, here’s what to know.

How to repay $200K in student loans

Depending on your loan type, you can opt for a new repayment plan that’s a better financial fit, work toward loan forgiveness or consider loan consolidation or refinancing to repay $200,000 in student loans.

The way you budget and plan out your payments also has a significant impact on your repayment experience. Each borrower has a unique financial situation, so take stock of your current and future financial goals, and consider practicing one or more repayment strategies to lower your debt.

Get on an income-driven repayment plan

Income-driven repayment (IDR) plans are only available for federal student loans, and every plan has its own qualifying federal loan types. Each plan calculates your monthly payment based on your income and family size. Depending on your circumstances, your payment might be as low as $0 per month.

Below are the four IDR plans:

• Saving on a Valuable Education (SAVE) Plan: The SAVE Plan replaced the Revised Pay As You Earn (REPAYE) Plan. For undergraduate loan borrowers, your payment is 5% of your discretionary income with a 20-year repayment term. Graduate loan borrowers pay a weighted average between 5% and 10% of their discretionary income for 25 years under this plan. Note that due to a federal injunction, the SAVE Plan is currently on hold, and all SAVE Plan borrowers are in a temporary forbearance.
• Income-Based Repayment (IBR) Plan: The IBR Plan is another IDR option that caps your payments, so they’re never more than what you’d pay on the Standard Repayment Plan. Borrowers who took out their loan before July 1, 2014, will pay 15% of their discretionary income for 25 years. If you borrowed after this date, your IBR payment is 10% of your discretionary income over 20 years.
• Income-Contingent Repayment (ICR) Plan: Payments are the lesser of 20% of your discretionary income, divided by 12, or the fixed payment amount you’d pay over a 12-year term, based on your income. ICR is the only IDR plan available for parents who borrowed federal loans for their child’s education, though parents must consolidate with a Direct Consolidation Loan to become eligible. The Department of Education is not currently accepting new enrollments for the ICR Plan.
• Pay As You Earn (PAYE) Plan: Under the PAYE Plan, payments are capped at 10% of your discretionary income across 20 years. Your payment amount is guaranteed to never exceed what you’d pay on the default 10-year Standard Repayment Plan. The Department of Education is not currently accepting new enrollments for the PAYE Plan.

Apply for student loan forgiveness

Student loan forgiveness programs offer federal student loan borrowers the opportunity to have some or all of their unpaid federal loan balance canceled. You must have eligible unpaid federal loans and make qualifying payments. For some programs, you’ll also need to meet other criteria, like working for a qualifying employer or signing a service agreement for a specified period.

The main loan forgiveness programs from the federal government include:

• Income-driven repayment forgiveness: Enrolling your federal loans in an income-driven repayment plan grants you access to loan forgiveness that’s built into the plan. After making payments for the duration of your repayment term, your leftover qualifying loan balance is forgiven. This forgiveness route can take up to 20 or 25 years depending on your plan, but can be worthwhile if you’re facing $200,000 in student loan debt. 
• Public Service Loan Forgiveness (PSLF): If you work for the government at any level — federal, state, local, or tribal — or if you work for a not-for-profit organization, you might qualify for loan forgiveness. You must work full-time for your eligible employer and make 120 qualifying payments on an IDR plan. After you’ve completed your required payments, your remaining federal loan debt is forgiven. 
• Teacher Loan Forgiveness (TLF): Highly qualified teachers who teach math, science or special education can receive $17,500 in loan forgiveness after serving for five, consecutive full-time years at a low-income secondary school or educational service agency. Highly qualified teachers who teach other subjects at the elementary or secondary school level can access $5,000 in loan forgiveness through TLF.

Although private student loans aren’t eligible for federal loan forgiveness programs, borrowers with private loans might have access to state-sponsored loan repayment assistance programs instead. These programs offer loan repayment support, typically for skilled professionals in high-need areas of the state. For example, health care workers might qualify for the California State Loan Repayment Program. Private student loan borrowers may also qualify for student loan repayment assistance from their employer.

Consolidate federal student loans

A Direct Consolidation Loan lets you convert a non-Direct Loan into a Direct Loan, or combine multiple federal student loans into one. Consolidation offers benefits like helping borrowers qualify for loan forgiveness programs or income-driven repayment plans if their original loan didn’t qualify. It also simplifies your monthly loan payments since you’ll only have one payment and one due date to remember.

The downside is consolidation doesn’t technically lower your interest rate; instead, the new loan rate is the weighted average rate of all consolidated loans, rounded up to the nearest one-eighth of a percent. Consolidation can get you a lower monthly payment, but you’ll have to prolong your repayment term, which will result in paying more interest over the life of the loan.

Refinance private student loans

Student loan refinancing is similar to consolidation, but it’s only available through private lenders. A refinance loan is a new loan that pays off your old loans, and it comes with a new interest rate and repayment terms. The new rate you’ll receive is based on your credit and other factors, and can be fixed or variable.

Refinancing can be advantageous if you qualify for a competitive interest rate or want to release a cosigner from your original loan. However, refinancing federal student loans will cause you to lose access to federal benefits and protections, so it’s typically best to only refinance private loans.

Budget for student loan repayment

Repaying $200,000 of student loan debt as soon as possible requires a budget that prioritizes student debt each month. Two popular budgeting options that can help are the debt avalanche and debt snowball methods.

The debt avalanche prioritizes the student loan with the highest interest rate. You put extra money toward that loan and make the minimum payments on all other education loans. After that loan is paid off, you’ll move on to the loan with the next-highest rate and follow the same process, until you work your way through all of your loans.

The debt snowball is designed to keep you motivated in your debt payoff journey with small wins. You’ll make larger payments toward the loan with the smallest balance, and make minimum payments on your other student loans. After the first loan is paid off, continue with the next-smallest loan, until you’ve paid off all your student loans.

Combine repayment strategies

When repaying a large student loan balance, combining repayment strategies can be powerful. For example, if you have a combination of federal and private loans, you might enroll in an IDR plan for your federal loans and refinance your private debt to lock in a lower rate.

Adding other strategies to the mix can also make a big impact. Consider the following methods:

• Sign up for autopay: Some lenders offer a rate discount when you enroll in automatic payments, and having your loan payments automatically debited each month can ensure you never miss a due date.
• Make in-school interest payments: If you’re still in school and can financially manage it, consider making monthly interest payments to avoid interest capitalization. For unsubsidized loans, unpaid interest is added to your loan balance after you graduate, resulting in paying interest on a higher principal.
• Put one-off income toward loans: Whether it’s money from a freelance project, a birthday gift or a tax refund, using extra funds for your loans can help you pay off your $200,000 debt faster.
• Make biweekly payments: When you make biweekly student loan payments, you end up making 13 payments a year instead of 12. This may not sound like much, but it can really add up over time.

FAQ

How long will it take to pay off $200,000 in student loans?

The timeline for repaying $200K in student loans depends on multiple factors, like your financial situation, loan type, monthly payment and repayment term. The fastest way to repay federal student loans is under the default 10-year Standard Repayment Plan with equal fixed monthly installments over 10 years.

Should I refinance my student loans if I owe $200,000?

It depends. Refinancing $200,000 in private student loans might be worthwhile if refinancing offers better repayment options and a lower interest rate. Refinancing federal student loans makes the debt ineligible for benefits like income-driven repayment plans and loan forgiveness programs, so it’s generally best not to refinance those loans.

What is the best repayment plan for high student loan debt?

The best repayment plan for high student loan debt varies by borrower. For example, for federal borrowers who work for an eligible employer, enrolling in an income-driven repayment plan and pursuing Public Service Loan Forgiveness are two viable ways to cancel a portion of their debt.

Can student loan forgiveness help with $200,000 in debt?

Yes, student loan forgiveness programs can help with $200,000 in debt. While income-driven forgiveness is available to nearly all federal loan borrowers, other loan forgiveness programs require you to meet eligibility criteria.