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How To Pay Off $200,000 in Student Loans

If you have $200,000 in student loan debt, there are several potential ways to pay off your loans faster, such as refinancing or pursuing loan forgiveness.

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By Emily Guy Birken

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Emily Guy Birken

Writer

Emily Guy Birken is a Credible authority on student loans and personal finance. Her work has been featured by Forbes, Kiplinger's, Huffington Post, MSN Money, and The Washington Post online.

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Edited by Jared Hughes

Written by

Jared Hughes

Editor

Jared Hughes is a personal loan editor for Credible and Fox Money, and has been producing digital content for more than six years.

Updated September 18, 2023

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances.

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The majority of student loan borrowers owe less than $25,000. This can leave borrowers with six figures in education debt worried that typical student loan advice may not apply to their situation. And the number of borrowers with high education debt is growing. As of 2023, there are one million federal student loan borrowers who owe $200,000 or more, according to StudentAid.gov.

The good news is that even though paying off such a large balance can be difficult, it’s not impossible. You can refinance your loans or add a cosigner to improve or lower your interest rate. Here are some strategies that can help.

1. Refinance your loans

Student loan refinancing is a tried-and-true method of reducing the total lifetime cost of your student loans. With refinancing, a borrower takes out a new loan to pay off their existing student loans. The new loan typically has different terms, including interest rate and length of repayment.

Borrowers carrying high-interest student loans can benefit from refinancing to a loan with a lower interest rate, since it will lower the cost of borrowing. With a lower interest rate, less interest accrues on your debt each month. Borrowers with $200,000 in student loans can benefit from even a small interest rate reduction, since large balances accrue interest so quickly.

Good to know: Refinancing could also extend your repayment term, which can lower your monthly payment and make it easier for you to balance your monthly budget. Just remember that a longer term typically means you’ll pay more in interest over the life of the loan.

Before you look into refinancing your $200,000 in student loans, make sure you understand exactly what this process will mean for your student debt.

Types of loans you can refinance

Both private and federal student loans are eligible for refinancing. However, it’s important to understand that refinancing federal student loans means losing out on guaranteed federal student loan protections. These protections include:

  • Deferment and forbearance options
  • Multiple repayment plans, including Income-Based Repayment
  • Paths to loan forgiveness

Learn More: How to Consolidate Your Student Loans

Interest rates and terms

The interest rate of your loan is one of the biggest determinants in how much your student loans will cost you over time.

If you have federal student loans, your interest rate is fixed and set by Congress for each academic year. You will have the same interest rate as every other borrower taking out federal loans at the same time.

For private student loans, your interest rate is generally set based on your credit profile. Refinancing your student loans to reduce your interest rate can save you a lot of money over time.

Check Out: Student Loan Refinance Calculator: Should I Refinance?

For example, let’s say you have $210,000 in student loans with an interest rate of 7.5% and a 10-year repayment term. Here’s how much you can save if you refinance the loan to one with a 4.25% interest rate and a 15-year repayment term:

 Interest rateRepayment termMonthly paymentTotal cost of loan
Original loan

7.5%

10 years

$2,493

$299,128

Refinanced loan

4.25%

15 years

$1,580

$268,446

In this case, the lower interest rate on the refinanced loan will save you money monthly and over the life of the loan, even with an extended repayment term.

If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for your situation.

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4.44.4

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5.48% -

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$10,000 up to total refinance amount

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680

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680

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670

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$7,500 - $200,000

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6.20% -

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$10,000 up to the total amount

Min. Credit Score

670