4 Options That Could Shrink Your Student Loan Debt
4 Options That Could Shrink Your Student Loan Debt
John CsiszarThu, April 23, 2026 at 12:00 PM UTC
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Getting out of student loan debt, especially when it comes to income-driven repayment (IDR) plans, can be quite a burden. The Department of Education makes sure you have enough credits as an undergraduate student, but they don't tend to look out for your credit score after you graduate.
You'll likely be earning the lowest pay of your career in your first job. For this reason alone, any way you can reduce monthly student loan payments will be a welcome relief.
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While the federal government has offered some public service loan forgiveness for students, there's no guarantee this policy will continue or your specific loan will qualify. That's why it's a good idea to be proactive and do whatever you can to reduce your student loan debt interest rate. Here are four ways to potentially lower your rates.
1. Check for Discounts
Most federal loans and many private loans offer some type of discount, so the loan interest might also have some negotiable wiggle room. Just like many auto or personal loans, for example, many student loans offer a 0.25% discount or more for setting up automatic payments.
Some banks may offer discounts for making a certain number of on-time payments, while others offer a discounted rate of 0.25% off your loan if you have an existing banking relationship. Any time you can shave a small percentage off of your loan interest, you should do it. It will add up to big savings in the long run.
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2. Refinance
Though it is dependent on your loan type, one of the best ways to get a lower rate is to refinance, especially if you have private student loans or no longer need federal loan protections. As lending is a competitive business, you may be able to shop around to snag a significantly lower interest rate significantly lower than your current loan, particularly those with good credit and stable income.
That said, refinancing federal student loans comes with an important trade‑off: You permanently lose access to federal benefits, including IDR plans, deferment and potential loan forgiveness. Fortunately, even a modest rate reduction can equal big savings over time.
3. Team Up With a Co-Signer With Better Credit
When it comes to loans, borrowers with better credit always get lower rates. If the interest rate on your student loan is high because you have bad credit, one way to get around this is to ask a willing co-signer with good credit to help you out.
Your co-signer will be fully responsible for making payments on the loan if you fail. This reduces the risk the lender takes, resulting in a much lower interest rate.
4. Pick an Income-Driven Repayment (IDR) Plan
Income‑driven repayment plans don’t lower your interest rate, but can significantly reduce your monthly payment -- typically between 10% and 20% of your discretionary income. If you aren't earning that much, your payment might be lowered by a considerable amount.
IDR plans also extend repayment terms to 20 or 25 years. Some borrowers may qualify for loan forgiveness after completing the full term, though rules and tax treatment can change. While these plans may increase total interest paid over time, the flexibility they offer borrowers can alleviate some of the struggle to keep up.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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