5 Ways To Lower Your Grad School Student Loan Bill

Grad school can boost your career, but it comes at a price. Those who completed a graduate-level degree in 2020 left school with about $88,220 in student debt, on average, according to the latest data from the National Center of Education Statistics.

Even grad school loans offered by the government can be tough to repay. Federal grad PLUS loans, available to graduate and professional students for education expenses not covered by other financial aid, have a 9.08% interest rate in 2024-25, compared to 6.53% for direct loans for undergraduates.

Bills can quickly become unmanageable. A hypothetical borrower who has $88,220 in grad school debt with a 9.08% interest rate would owe more than $1,100 each month on the standard 10-year repayment plan.

Luckily, you still have loan relief and forgiveness options, especially if you work in certain professions. And with interest rates poised to fall, refinancing with a private lender may help you pay off your debt faster or lower monthly payments. If you’re struggling to pay your monthly grad school loan bill, consider these five key strategies.

Borrowers with federal loans are automatically placed on the standard 10-year repayment plan, which splits all of your debt — undergraduate and graduate — into 120 equal payments, plus interest.

Alternate repayment plans may lower your payments, especially if you have a lot of debt relative to your earnings. Income-driven repayment (IDR) plans cap your monthly bills at 10% to 20% of your income if you have graduate loans. After 20 or 25 years, the government forgives your remaining grad school debt. There are two key IDR plans currently available to most grad school borrowers:

Outside of the IDR program, the government offers two other alternative repayment plans that may lower your bills:

• Extended repayment. If you owe at least $30,000, you can extend your repayment period up to 25 years on this plan. Payments can be fixed or they can increase gradually. You’ll likely pay more in total interest, but monthly bills may be smaller.

• Graduated repayment. Your monthly payments will start relatively small and increase every two years over a 10-year period.

If you’re not sure which plan to choose, call your federal student loan servicer. Your servicer can walk you through the available options and help you choose a plan that lowers your monthly bills. To get a general idea of your repayment options, you can also use the loan simulator on studentaid.gov.

Private lenders offer fewer flexible repayment plans than the government. To explore your options for private grad school debt, refer to your loan origination documents and contact your lender with questions.

Here’s an easy way to lower your monthly bill: set up automatic student loan payments. If you have federal student loans, autopay will result in a 0.25 percentage point interest rate deduction. For example, a 9.08% interest rate would become 8.83%. Over a 10-year repayment period on $88,220 worth of loans at the 9.08% rate, you’d save about $1,430 by simply enrolling in autopay.

Log into your online federal student loan servicer account to set up autopay.

Some private lenders also offer autopay discounts. Refer to your loan origination documents for details.

IDR isn’t the only path to debt relief — there are more than a dozen student loan forgiveness programs available to borrowers. If you have graduate debt, consider these options:

• Public Service Loan Forgiveness. Consider working for the government or a nonprofit organization to get loan forgiveness after 10 years. Teachers, firefighters, nurses, humanitarian aid workers, social workers and those in related professions may qualify. During the Biden administration, the average PSLF recipient has gotten $73,150 worth of student debt forgiven, according to a NerdWallet analysis of Education Department data from August 2024. 

• State and local student loan forgiveness programs. Depending on where you live and your profession, your state or community could forgive a certain amount of your student loan debt. For example, Vermont offers up to $5,000 in student loan repayment assistance if you recently graduated from a Vermont college or university and stay to work for an employer based in the state for at least two years. Many states also offer student loan repayment benefits for medical practitioners, ranging from therapists and social workers to dentists and surgeons. 

An increasing number of companies offer student loan benefits to employees. Nearly half of all organizations offer tuition assistance, and 9% offer student loan repayment benefits, according to the Society of Human Resource Management’s 2024 Employee Benefits Survey.

Student loan benefits vary by company. Reach out to the HR department of your current or prospective employer to learn about your options.

If you’re earning a decent income and have a credit score at least in the high 600s, refinancing could get you a lower interest rate on your grad school loans. A lower rate can decrease both your monthly bills and the amount you’ll pay overall.

However, refinancing federal student loans is risky, because you’ll forfeit flexible repayment options, possible loan forgiveness and key borrower protections, like generous forbearance policies.

Only refinance your federal grad loans if you’re sure you won’t ever need these repayment features. For example, let’s say you have a steady, well-paying consulting career in the private sector. You won’t qualify for PSLF. Since you’re a high earner, an IDR plan may not lower your bill relative to the standard 10-year plan, and you may pay off your debt before reaching the IDR forgiveness threshold. In this case, refinancing to get a lower interest rate could be the best route toward managing your monthly bills and paying off your debt completely.

If you have private grad school loans, you won’t risk losing any federal protections by refinancing, because you didn’t have them in the first place. In this case, refinancing if you can get a lower rate is an easier decision.

The Federal Reserve recently cut interest rates, which could prompt lenders to lower their student loan refinance rates further. There’s no limit to the amount of times you can refinance; if you already have private student loans, consider doing so whenever you can lock in a lower rate.