How to Pay Off Student Loans: 7 Strategies for Military Families

Managing student loan debt can seem daunting, but with the right strategies, it’s possible to stay on top of payments and even pay off loans ahead of schedule. And for military families, there are additional options available that can make a real difference in tackling student debt.

Keep reading to learn some of the best strategies for paying off student loans and how they can be adapted to fit the unique needs of service members and their families.

1. Take Advantage of Military Student Loan Relief

Military families should consider the types of student loan relief options available to them, such as Public Service Loan Forgiveness (PSLF). Service members, as well as those working in qualifying public service roles, can benefit from this program, which forgives remaining student loan balances after 120 qualifying payments.

To qualify, borrowers must work full-time for a government or nonprofit organization and make payments under a qualifying repayment plan, typically an income-driven repayment (IDR) plan.

Active-duty military personnel and Veterans are eligible for PSLF, meaning if you serve for 10 years and make payments during that time, you could have your remaining student loans forgiven. This can be an incredibly powerful tool for military families, offering significant relief from student debt after years of service.

Additionally, under the Servicemembers Civil Relief Act (SCRA), you could be eligible to have all interest rates lowered to 6% on loans taken out before your military service began.

2. Know Your Loan Terms and Repayment Options

It’s essential to understand the specific terms of your student loans. Review the details of each loan, including interest rates, loan type (federal or private), and repayment schedule. This knowledge is key to making informed choices about how to handle your debt.

Federal student loans often come with several repayment options, including income-driven repayment plans that adjust your monthly payments based on your earnings. This can be helpful for military families with fluctuating incomes, as payments can be more manageable during times of lower earnings.

Private loans, on the other hand, typically have fewer options, so if you have loans with high interest rates, paying those off first may be a priority.

3. Make Extra Payments Whenever You Can

One of the best ways to reduce the overall cost of student loans is by making extra payments whenever possible. Any additional payment you make goes directly toward the loan principal, which lowers the total interest you’ll pay over time and helps pay off the loan faster.

To find extra money for your loans, consider putting tax refunds or military bonuses toward your balance. You could also use any additional income from a part-time job, small business, or side hustle.

Another idea is to cut back on non-essential expenses, like eating out or subscriptions, and redirect that savings toward your student debt. Even small contributions add up, and making an extra payment each month can significantly reduce your repayment timeline. For example, you would be surprised how much money you can save by bringing your own lunch to work; use a Lunch Savings Calculator to find out).

4. Refinance Your Loans to Lower Interest Rates

Refinancing your student loans can be a smart move, particularly if you can qualify for a lower interest rate. When you refinance, a private lender pays off your existing loans, and you take out a new loan at a hopefully better rate. This could reduce your monthly payments and the total amount you pay in interest, allowing you to pay off your debt faster. And don’t forget about the SCRA option for active-duty military.

However, military families with federal student loans should consider carefully before refinancing with a private lender. Refinancing may eliminate the borrower’s access to federal benefits, such as income-driven repayment plans and PSLF.

If these options are important to your financial plan, refinancing may not be the best choice. For private loans, though, refinancing could be an effective way to save money in the long run.

5. Enroll in an Income-Driven Repayment Plan (IDR)

If you're finding it hard to make ends meet, an income-driven repayment plan can help. Federal student loan borrowers can apply for one of several IDR plans that adjust your payments based on your income and family size, which is particularly helpful if you're early in your career or between deployments.

The four main types of IDR plans are Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). These plans extend the repayment term to 20 or 25 years, and any remaining balance is forgiven at the end of that period. While this means paying more in interest over time, it can provide some relief for military families who may have fluctuating incomes.

6. Utilize Employer Assistance Programs

Some employers, especially those in public service, education, and healthcare, offer student loan repayment assistance as part of their benefits package. If your employer provides this benefit, they will make payments directly toward your loan balance, helping you pay off your loans faster without any additional effort on your part.

This is a growing trend, and more companies are recognizing the burden of student loans on their employees. Military spouses should check with their employers to see if this type of assistance is available. Even a modest contribution from your employer can make a big difference in reducing your loan balance over time.

7. Choose a Student Loan Repayment Strategy: Snowball or Avalanche

To streamline your loan payments, a structured repayment strategy can be very effective. Two of the most popular methods are the debt snowball and the debt avalanche.

With the debt snowball method, you focus on paying off the smallest loan first while making minimum payments on the rest. Once the smallest loan is paid off, you move on to the next one. This method gives a mental boost by eliminating smaller debts quickly, which can be encouraging for many borrowers.

On the other hand, the debt avalanche method focuses on paying off the loans with the highest interest rates first. While it may take longer to see results, this strategy saves you the most money on interest in the long run, making it a great option for those looking to minimize total costs.

Both methods have their benefits, so choose the one that aligns best with your goals and financial situation.

Set Yourself on the Path to Financial Freedom

Paying off student loans can feel like an uphill battle, but with the right approach, you can make steady progress toward financial freedom. Whether it’s through extra payments, loan forgiveness, or employer assistance programs, every step brings you closer to eliminating your student debt. Military families have access to unique benefits, like PSLF and SCRA, that can ease the burden and help you reach your goals faster.

Remember, Armed Forces Bank is here to support you in your financial journey. Together, we can create a plan that helps you get ahead and achieve the financial security you deserve. We offer tools and products to help you strategize student loan repayment.

Student debt calculators can be a great resource for anyone wanting to quickly pay off their student loans and debts. Specifically, the Student Loan Consolidation and Debt Payoff Calculator simplifies the process by showing you how to consolidate your existing student loans into one single loan. This lowers your monthly payments, freeing up extra cash to tackle other high-interest debts. It’s a useful calculator that offers a clear path to becoming debt-free.

And if you need a military personal loan to consolidate or refinance your student debt, consider the Access Loan from Armed Forces Bank. These special loans can function as “debt loans,” helping you speed up your journey toward becoming debt free.

Start today and take control of your financial future with the right tools and guidance!

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