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Bottom Line Up Front

  • Making extra student loan payments or paying more toward the principal can help you pay less in the long run. 
  • It's totally possible to meet savings goals while you're paying down student debt—by refinancing, for example!

Time to Read

4 minutes

April 1, 2022

The facts: 43.6 million Americans carry over $1.766 trillion in student loan debt with an average of over $40,000 per borrower, according to Education Data Initiative. That can feel like a lot of debt to carry, but there are strategies student loan borrowers can use to manage their money while making regular payments.

Loan Repayment Basics

While the federal student loan freeze is still active, pay down what you can on the principal of your federal student loans so that when the freeze lifts, the principal will be lower, as will the interest applied to the principal. 

If you have more than one loan or a high-interest rate, consolidating or refinancing student debt may help you manage what you owe more easily. Choosing a loan with a longer loan term means you’ll likely have lower payments. Choosing a loan with a shorter term may mean you have a higher monthly payment, but you'll pay your loan off faster and may save money on interest.

  • Tip: If you have any extra money available, pay a little more than the minimum monthly payment amount. You’ll reduce the total accrued interest. Also, comparison shop. If your rates are already lower than what’s available, or your loan has perks you’d lose (discounts, principal refunds or student loan forgiveness), factor that into your decision about refinancing.

Federal and Private Loan Consolidation 

Consolidating your student loans is a great way to free up cash, lower your monthly payment and simplify the payment process. 

While both federal and private student loans can be consolidated, federal loans offer unique income-based repayments and forgiveness that aren't typically offered through private lenders. 

  • Tip: Navy Federal allows you to refinance federal and private student loans into a single new loan. 

Student Loans as Part of Financial Planning

Many people wonder if their student loans should take a higher priority than other financial goals, such as saving for the future. How much you're able to save depends on many factors like age, income, expenses and other debt. If it's important to you to pay off student loans and save at the same time, you could consider refinancing your student loans to reduce monthly payments and interest rates. Then use that extra money for saving. However, doing so could mean that you end up paying more interest on the student loan in the long run. 

Because many student loan servicers report student debt to credit bureaus, your student loans will likely affect your credit score. This can be very helpful! If you make payments by their due date, that could help build your credit history. But if you’ve missed payments or paid late, it may harm your credit, which may make taking on other debt more difficult. For example, if you were to apply for a mortgage, lenders may consider how much of your monthly income goes to paying debts, like student loans, and how consistent you've been in paying them down. 

Buying a home is a high priority for many people, which usually requires taking out a home loan. Your student loans will impact this process because lenders consider not just your down payment, but also how much you owe overall compared to your income. If you don’t qualify for a loan because of student loan debt, you should wait until you’ve reduced the amount due.

Now, you're not alone. Personal finance counselors at Navy Federal Credit Union are available for free consultations to help you develop a financial plan that best suits your life and goals. 

  • Tip: Depending on your student loan type, you may reduce payments if you qualify for an income-based repayment plan or refinancing at a lower interest rate. 

Married With Student Debt

Student loan debt may be one thing you have in common with your spouse. It’s important for couples to discuss financial goals, including handling debts and making major purchases. If homeownership is a priority, couples should meet with a lender to find out where they stand and how factors like credit scores and debts will impact them.

  • Tip: You may get a student loan interest deduction on taxes, depending on income and other factors. To see if you qualify, visit the IRS website. Also visit the Federal Student Aid website to learn what payment options are available now and when you get married. Then, look into private student loan refinancing–you may qualify for a better rate or terms.

Student debt is a part of life for many people. Meet with a personal finance management counselor to help you develop a personalized financial plan.

Next Steps Next Steps

  1. Navy Federal offers free, personalized financial counseling to help you get your finances on track. Connect with a financial counselor today.
  2. If refinancing is right for you, follow Navy Federal's step-by-step process to begin refinancing your private and federal student loans today.


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.