The Complete Student Loan Repayment Guide for University Grads

Written by: Kristyn Pilgrim
Updated: 6/16/20

If you’ve graduated from college and are trying to figure out how to pay back your loans, you’re in the right place. At College Finance, we’re the experts when it comes to helping former students become debt-free. Whether you have a small loan from a community college or six figures of debt from multiple schools, we’re here to help you take control of your student loans. 

Here, you’ll learn everything you need to know about paying back your student loans. We’ll cover government-sponsored loan repayment programs, refinancing, and organizations dedicated to helping students become debt-free. Let’s get started. 

Government-Sponsored Loan Repayment Programs

If you have government-sponsored student loans, you may be able to take advantage of various options designed to help graduates pay off their loans. While these programs are fantastic, they only apply to publicly issued student debt. If you took out private loans, you won’t be able to use these opportunities. 

Public Service Loan Forgiveness

One of the highest-profile programs for eliminating student debt is Public Service Loan Forgiveness (PSLF). You can only take advantage of PSLF if you work for the government or a nonprofit organization. 

After working for 10 years in the public sector (or a nonprofit) and making 120 payments on an income-driven repayment plan, you can apply for the government to forgive the rest of your student debt. If the government approves your request, your outstanding student debt will disappear. Plus, the IRS won’t tax you for the forgiven loans, making PSLF an attractive option for those who qualify. 

While PSLF sounds ideal in theory, many students have had trouble getting the government to cooperate. As of June 2019, less than 1% of people who applied for PSLF have had their loans forgiven. Additionally, President Trump has suggested ending the PSLF program, adding to the uncertainty. Therefore, you might want to have a few backup options in case the government eliminates PSLF in the future.

Federal Student Loan Repayment Program

Another federally sponsored option is the Federal Student Loan Repayment Program (FSLRP). Under the FSLRP, federal government agencies agree to repay students’ federally issued student loans. These government agencies use loan repayment as an incentive to attract top talent, similar to benefits like health insurance, retirement plans, and paid vacation. 

To qualify for the FSLRP, you need to work for a participating agency – not all federal agencies are part of the program. Plus, you’ll need to sign a service agreement and stay employed with the agency for the “service period” defined in your contract. If the agency fires you or you voluntarily quit before you finish your service period, you might have to pay the agency back for the loans it paid on your behalf. 

If you’re part of the FSLRP, your employing agency will send checks directly to your lender. However, unlike with the PSLF, the IRS taxes the amounts the agency repays. Each individual can receive up to $10,000 per year, up to a total maximum of $60,000. 

State-Sponsored Loan Repayment Programs

Many states offer programs designed to help residents repay their federal student loans. For example, the Louisiana State Loan Repayment Program helps repay student loan debt of medical professionals working in the inner city and other underserved areas. Additionally, New York offers loan repayment programs for social workers, farmers, nurses, teachers, and more. 

Industry-Specific Loan Repayment Programs

In addition to the repayment programs listed above, the government also sponsors various industry-specific repayment programs for individuals in the military, teachers, and more. In many cases, individuals might be able to simultaneously take advantage of industry-specific options and the FSLRP or PSLF. Let’s take a look at some examples.

Military Student Loan Forgiveness

Joining the military is a popular way to get a strong education at a low cost. For example, every student who attends West Point Academy receives a full-tuition scholarship

Members of the military also have branch-specific loan repayment programs to help former students pay back their debt. 

In addition, the federal government forgives student loans of veterans who become disabled in active duty. The government automatically forgives the debt, so the soldiers don’t need to go through a complicated process to take advantage of the program. However, veterans have the option to decline debt forgiveness if they want to avoid state tax liability. (Veterans who have their loans forgiven by this option don’t have to pay a federal tax liability.) 

Because working for the military counts as being employed by the public sector, individuals in uniform can also use programs like the FSLRP and PSLF to help pay off their student debt. 

Scientist and Researcher Loan Forgiveness

The National Institute of Health (NIH) offers up to $50,000 in loan repayments to professionals with advanced degrees in the biomedical and behavioral research industries. Over 1,600 individuals working for programs funded by nonprofit and government organizations take advantage of the NIH repayment program each year. 

Teacher Loan Forgiveness

Full-time teachers working for at least five consecutive years in low-income public schools may qualify for Teacher Loan Forgiveness. Each teacher may receive up to $17,500 under this program. However, teachers who took out loans several decades ago don’t qualify – only federal Direct or Stafford Loans received after Oct. 1, 1998, are eligible for forgiveness. 

Lawyer Student Loan Forgiveness

Lawyers across the country have access to state-based programs designed to help them pay back their debt. Attorneys should contact the American Bar Association for more information. 

Nurse Loan Forgiveness 

If you’re a nurse, you may qualify for a variety of repayment programs, including the NURSE Corps Loan Repayment Program.

Refinancing Your Student Loans 

If you aren’t able to take advantage of the loan forgiveness programs mentioned above, you might want to consider refinancing your student loans with a private lender. Refinancing your existing debt is a process where you take out a new loan to pay off your student loans. Then, you start making monthly payments to the new lender.

Refinancing is an attractive option if you’re able to find a private loan at a lower interest rate than you’re currently paying to your existing lender. Plus, if you have loans from multiple lenders (such as debt from both undergraduate and graduate school), refinancing your debt can make monthly payments much more manageable. 

How Refinancing Student Loans Can Save You Money 

Refinancing can often save students a significant amount of money. Let’s take a look at an example to illustrate. 

Suppose you have eight years left on a student loan with a 7% interest rate and a remaining balance of $42,000. In this situation, you’d have monthly payments of $572.62, and you’d end up paying a total of $12,971.15 in interest over the next eight years. 

However, if you refinance your loans at a 5% interest rate – just 2 percentage points lower – you’d only have to pay $531.72 each month. Plus, your total interest expense over the loan’s term would drop to $9,044.80. In this example, refinancing would save you almost $4,000 in interest. 

If you want to see how much money you can save by refinancing, use a loan calculator to test out different scenarios. 

Comparing Refinancing Options 

When deciding between different refinancing options, you’ll want to consider the following: 

  • Interest rates
  • Annual percentage rates (APRs)
  • Repayment terms

Interest Rates

We covered interest rates above. All else being equal, a lower interest rate is better than a higher interest rate. However, when refinancing your student loans, you’ll also need to choose between fixed- and variable-rate debt. 

Fixed-rate loans have the same interest rate year after year, making them predictable. With a fixed-rate student loan, you can plan ahead and stick to a consistent budget. 

On the other hand, variable interest rates change based on the market. Usually, variable interest rates are tied to an index like the Wall Street Journal Prime Rate or the London Interbank Offered Rate (LIBOR). For example, your interest rate could be LIBOR plus 2.5%. 

Variable interest rates have a higher risk but higher reward. You could save money if interest rates decline after you take out your loan. However, you might end up paying substantially more if interest rates rise. For example, LIBOR exceeded 10% in 1989.


A loan’s annual percentage rate is calculated by combining the interest rate with origination fees. In many cases, comparing APRs is more helpful than merely looking at interest rates. 

Origination Fees

Origination fees are one-time expenses lenders charge to set up your loan. Usually, lenders deduct the origination fee when you take out your loan. 

For example, if you wanted to borrow $5,000 to refinance your outstanding student debt, and the bank charges a 10% origination fee, you’d only receive $4,500 in loan proceeds. Unfortunately, you’re still on the hook for paying back the whole $5,000. 

If you need the full $5,000 to refinance your existing student loans, you’d need to borrow $5,555.55. Then, after the lender takes the 10% origination fee, you’d have exactly $5,000 to pay off your old debt. 

How to Compare Student Loan Refinancing Options Using APRs 

In some cases, a loan with a high interest rate might actually be a better option than another loan with a lower interest rate and a large origination fee. Let’s illustrate with an example. 

Let’s say you want to refinance $30,000 of student debt and repay the loan within five years. After shopping around, you find the following options: 

  • Option 1: The interest rate is 6%, and the origination fee is $1,200. 
  • Option 2: The interest rate is 7%, and the origination fee is $300. 

If you only look at interest rates, you might automatically choose Option 1. However, when you consider origination fees, Option 1’s APR is 7.711%. Option 2, which appeared worse based on interest rates alone, has an APR of 7.422%, making it the less expensive refinancing option. 

How Repayment Terms Affect the Cost of Refinancing Student Loans

When refinancing your student debt, don’t forget to consider the loan’s repayment term. In general, shorter-term loans are cheaper than longer-term loans.  

Suppose you want to refinance $20,000 of existing student loans. You find the following options:  

  • Option A: A 10-year loan with an interest rate of 6% and a $2,500 origination fee. 
  • Option B: A 5-year loan with an interest rate of 7% and a $3,200 origination fee. 

With Option B, you’ll have a high APR of 14.586% and a monthly payment of $396.02. On the other hand, Option A has a much lower APR of 9.037% and a monthly payment of just $222.04. You might be tempted to choose Option A. 

However, because of the longer loan term, Option A will end up costing you a total of $6,644.92 in interest, while Option B’s total interest is only $3,761.44. 

Consider using a simple APR calculator to determine your APR, monthly payments, and overall cost. Armed with the knowledge in this article, you’ll be educated and informed when deciding whether to refinance your student loans. 

Other Resources That Help Students Pay Off Loans 

Finally, let’s take a look at a few options you might not have considered. These organizations may be useful resources if you need help paying back your student loans. 

Credit Counseling Agencies 

Nonprofit credit counseling agencies like the National Foundation for Credit Counseling (NFCC) help students make a plan to get out of debt. After you give the organization a list of your obligations, they’ll work with you to develop a strategy to pay back your loans.

Some organizations may negotiate with lenders on your behalf. If they’re successful, they may be able to reduce interest rates or waive penalties. Other organizations help you decide which lenders to pay first. Often, you’ll receive expert guidance on how to tackle your student loans and avoid more debt in the future. 

Crowdfunding Platforms 

If you have a compelling story, you may be able to raise money on crowdfunding sites to pay back your student loans. To get started, create a campaign and solicit donations from friends, family, and strangers. Popular crowdfunding platforms for paying off debt include GoFundMe, LoanGifting, and GoGetFunding. 

Before you choose a platform, research the pros and cons of each option. Try to choose a program with low (or no) costs, an intuitive interface, and a track record of successful campaigns. 

Rolling Jubilee 

Finally, it’s time for you to meet the Robin Hood of student debt. Rolling Jubilee is kind of like a debt collector. They pay lenders pennies on the dollar to buy debt that the borrower is unlikely to pay back. However, instead of making countless phone calls and harassing holders of student debt, they forgive the loan altogether. 

Rolling Jubilee takes on mortgage debt, medical bills, student debt, and more. They’ve paid off tens of millions of dollars of debt, helping to free Americans from stress and anxiety. Rolling Jubilee pays off debt randomly, so you can’t apply directly to ask for loan forgiveness. However, you might end up being one of the lucky few who get their debt paid off. Keep your fingers crossed. 

Get Help Paying Off Student Loans 

If you or someone you know is trying to pay off student loans, College Finance has in-depth resources. With articles on planning, borrowing, and repayment, the experts at College Finance can help you plan for a debt-free future.