15 Signs You’re on the Brink of Finally Paying Off Your Student Loan

Are you on the verge of breaking free from student loan shackles?

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Updated May 28, 2024
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The resumption of student loan payments after years of being paused amid the COVID-19 pandemic is causing stress for many Americans. 

With the average student borrower owing more than $37,000 in federal loans, according to the Education Data Initiative, the prospect of paying off debt can seem daunting.

Yet, many Americans are in a better position to pay back their loans than they were before the pause. Here are 15 signs you may have an easier time paying loans this time.

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The SAVE Plan offers new perks

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The newest income-driven repayment (IDR) plan the government is offering is the Saving on a Valuable Education (or SAVE) Plan. It has a unique set of benefits borrowers haven’t seen before.

Like other IDR plans, the SAVE Plan is based on how much money you make and your family size. However, the new plan is based on a smaller portion of your income than previous plans.

The SAVE Plan also has an interest benefit. If your monthly payment doesn't cover accrued monthly interest, the government will pay the rest of that interest.

You put money aside during the pause

KMPZZZ/Adobe girl putting stack of coins on table

Having student loan payments paused for more than three years allowed many borrowers to put some money into savings. This can provide a sense of security as you begin paying back loans.

Ideally, you won’t have to dip into your rainy-day funds to make monthly payments, but it is certainly comforting to know it’s there.

You paid down loan balance during the pause

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Starting with a lower balance will put you at a significant advantage as monthly payments begin again, even if you only paid off a small percentage of your loans.

A lower balance can mean lower monthly payments, less interest accruing, and, hopefully, a quicker pay-off date.

Resolve $10,000 or more of your debt

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You’re making more money

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A lot can happen in three-plus years, and if you are making more money than you were before the pandemic, the burden of student loans can feel a lot less heavy.

If you are making significantly more than you were, it may be wise to consider making additional payments beyond what is required monthly to get that balance down to $0 faster.

You paid off other debts

Dragana Gordic/Adobe african american couple reviewing bills together

Part of the beauty of the student loan pause was that it allowed many Americans to focus on repaying other debts, like car payments or credit card bills.

If you were able to get rid of some other debts, the monthly commitment to student loan payments will feel like much less of a drain on your bank account.

You're eligible for discounts with autopay

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Some loan servicers offer a slight discount if you sign up for autopay. This could mean reducing your interest rate by something like .5%, which may not seem like a lot, but every little discount means more money in your pocket.

If you know you can afford your monthly payments, enrolling in autopay is a great way to reduce how much you pay overall — and to ensure you never miss a payment.

You’re taking advantage of government tools

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In addition to the new SAVE Plan, there are many other repayment plans that may work better for your situation and could save you money in the long run.

The Department of Education even has a handy “Loan Simulator” that can help you determine the best plan for you, estimate the impact of requesting to pause payments, or help you figure out if it’s possible to borrow more.

You have a better snapshot of what you owe

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Years of payment relief allowed many borrowers to get their finances in better shape by paying off other debts, building savings, or figuring out a better, more realistic budget. 

Getting your financial house in order may not have seemed possible while loans were accruing interest.

This also means you may be in a much better position to begin paying loans and to work with your loan servicer to select the best repayment plan.

If you're unsure who your loan servicer is, you should be able to find details about your loans on StudentAid.gov.

Forgiveness plans are available

WavebreakmediaMicro/Adobe Student in wheelchair talking with classmate

Certain borrowers may be eligible for loan forgiveness after a set amount of time or number of payments. There are forgiveness programs for public service employees, teachers, some borrowers on IDR plans, and those with certain disabilities.

To qualify for forgiveness, borrowers need to meet strict guidelines, which can be found on the Federal Student Aid website.

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You're working with your loan servicer

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Your loan servicer is the company the government assigns to handle your loans. While the government giving your debt to a third-party servicer may seem like something to stress about, this is normal.

Your servicer can help guide you toward the best repayment plan for your situation. They're meant to be a resource, and borrowers should feel entitled to contact them with any questions or concerns.

You’re making side income

wichayada/Adobe fashion vlogger

Many Americans used downtime during the pandemic to get involved in a side hustle. Business-savvy side hustlers can make hundreds in extra income per month.

From food delivery to freelancing to renting out your space, there are all sorts of side gigs that can create quite a lucrative income stream and help pay resumed student loan bills.

Consolidation plans are available, too

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Consolidating federal loans is a great option for some borrowers as it may reduce your monthly payment and interest rate. However, in certain situations, such as if you have unpaid interest, your principal balance may go up when you consolidate.

If you’re working toward forgiveness, this may also not be the best option. Interested borrowers can check out the federal student aid website to see if consolidation suits them.

You’ve gotten better at budgeting

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It’s no secret that many young Americans graduate college and are absolutely perplexed by what seems like massive student loan balances. But with time comes wisdom and hopefully better budgeting habits.

Consider contacting your student loan servicer to discuss the best repayment option and then run the numbers to see how each may fit into your budget.

You're eligible for tax deductions

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When tax time comes around, you may be able to deduct the interest you paid on student loans. This benefit can be used for all types of loans (not just federal) that were used to pay for higher education.

Since interest has been paused for much of the last three years, this may mean a significantly bigger tax deduction to kick off 2024.

Your job offers repayment assistance

Liubomir/Adobe auditor analyzes documents

Under a relatively new law, the government now allows employers to offer student loan repayment assistance to their employees as a benefit. 

Check with your employer to see what sort of higher education assistance they offer. The law is set to expire in 2025, but it may be extended.

Bottom line

Delmaine Donson/peopleimages.com/Adobe couple worry about savings

Even if you don’t fit into many of the categories on this list, paying back student loans can be made a bit less stressful with careful budgeting.

That includes weighing each repayment option available and determining which government or work benefits you are eligible for.

And if you’re still having trouble paying your loans, maybe it’s time to look into getting a side gig to earn extra money.

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Author Details

Laura Gesualdi-Gilmore

Laura Gesualdi-Gilmore is a seasoned freelance writer who also teaches writing courses at Rutgers University. She's based in Jersey City and enjoys travel, live music and, of course, spending quality time with her pup.