How to Pay Off $400,000 of Student Loans

If you want to know how to pay off $400,000 of student loans, the good news is that you have several options. In particular, if you’re a doctor, dentist, or lawyer, then you may have borrowed significant student loans to earn your degree. From student loan refinancing to income-driven repayment, let’s explore the best ways how to pay off $400,000 of student loans.

Here’s how to pay off $400,000 of student loans:

1. Refinance student loans
2. Get a cosigner for student loan refinancing
3. Use income-driven repayment
4. Sign up for student loan forgiveness
5. Consider the avalanche and snowball method
6. Frequently Asked Questions

Refinance student loans

If you want to know how to pay off $400,000 of student loans, a good place to start is student loan refinancing. For example, when you refinance student loans, you can get a lower interest rate, lower student loan payment or both. This not only helps you save money, but also helps you pay off student loans faster.

Student loan refinancing is best for you if:

• you have a high interest rate on your student loan debt,
• a high monthly student loan payment, and
• good to excellent credit.

With student loan refinancing, you will get a new private student loan that will be used to pay off your current student loans. You can refinance both federal and private student loans, choose a variable or fixed interest rate, and a student loan repayment term of 5 to 20 years.

Compare the latest rates for student loan refinancing.

This student loan refinancing calculator shows you how much you can save when you refinance student loans.

For example, let’s assume that you have $400,000 of student loans at a 7.0% interest rate and a 10-year repayment term. Next, let’s assume you refinance student loans at a 3% interest rate and a 10-year repayment term. Then, you would save $782 each month and $93,829 overall.

Learn more about how to refinance student loans:

• 7 reasons why you should refinance student loans now
• How to refinance student loans
• Why refinance student loans
• Is student loan refinancing worth it?
• Top 30 questions about student loan refinancing

Get a cosigner for student loan refinancing

How to pay off $400,000 of student loans is no easy task. Therefore, you may need to get a cosigner for student loan refinancing, particularly if you have bad credit or average credit. If you don’t refinance student loans, your student loan payments could become expensive.

This monthly student loan payment calculator shows you your monthly and total student loan payments.

Let’s assume you don’t refinance student loans. For student loans with a balance of $400,000 with a 7% average interest rate and a loan term of 10 years, your total monthly payment would be $4,644. The total repayment amount would be $557,321 (which includes $157,321 in interest).

Based on the student loan refinance example, student loan refinancing with a cosigner could save you $782 each month and $93,829 overall.

Compare: the top lenders to refinance student loans.

View: the latest rates for student loan refinancing.

Know: the difference between student loan refinancing and student loan consolidation.

Use income-driven repayment

If you want to know how to pay off $400,000 of student loans, an income-driven repayment plan may help. An income-driven repayment plan sets your monthly federal student loan payment based on your discretionary income and family size. You can pay as low as $0 each month for your federal student loans. However, most borrowers will pay 10% to 20% of your discretionary income for your federal student loans.

There are four income-driven repayment plans:

• Income-Based Repayment (IBR)
• Pay As You Earn (PAYE)
• Revised Pay As You Earn (REPAYE)
• Income-Contingent Repayment (ICR)

Compare each plan to determine which income-driven repayment plan is best for your financial situation. For example, your student loan payments may be different depending upon which income-driven repayment plan you choose.

Importantly, income-driven repayment plans offer student loan forgiveness too. For example, you can have your federal student loans forgiven after 20 years (undergraduate student loans) or 25 years (graduate student loans).

Sign up for student loan forgiveness

To pay off $400,000 of student loans, you could sign up for student loan forgiveness.

The federal government offers various program for student loan forgiveness. For example, some programs offer partial student loan forgiveness, while most programs provide total student loan cancellation.

(Learn more in our student loan forgiveness guide).

For example, the Public Service Loan Forgiveness program is available to federal student loan borrowers who work full-time (at least 30 hours a week) for a public service or non-profit employer and make 120 monthly student loan payments. Student loan borrowers should enroll in an income-driven repayment plan and make at least a majority of their student loan payments while enrolled. If you have FFELP Loans or Perkins Loans, you should do a federal student loan consolidation to get a Direct Consolidation Loan. Then, pay off your Direct Consolidation Loan with an income-driven repayment plan. For public service loan forgiveness, you should submit an Employer Certification Form to the U.S. Department of Education each year and whenever you change jobs.

Student loan forgiveness is available for student loan borrowers such as:

• Military
• Law enforcement
• First responders
• Doctors
• Nurses
• Teachers
• Public servants

This public service loan forgiveness calculator helps you decide which income-driven repayment plan is best for you to save more money for public service loan forgiveness.

Teacher Loan Forgiveness is another example of student loan forgiveness that is available for teachers. For example, this program grants up to $17,500 of federal student loan forgiveness for teachers who are employed full-time for five complete and consecutive academic years at an elementary school, secondary school or educational service agency that serves low-income students.

Consider the avalanche and snowball method

The avalanche method and the snowball method are two strategies to help you pay off $400,000 of student loans.

Here’s how each method works:

The avalanche method

To pay off $400,000 of student loans with the avalanche method, you pay off your most expensive student loans first.

The avalanche method works like this:

1. Make the minimum payment on your student loans.
2. Identify the student loan with the highest interest rate.
3. Keep paying the student loan with the highest interest rate until it’s paid off.
4. Pay off the student loan with the next highest interest rate.
5. Repeat until you have pay off all your student loans.

This student loan payoff calculator shows you how much money you can save when you pay off your student loans faster.

Let’s assume that you have $400,000 of student loans and a 7% interest rate. Next, let’s assume that your monthly student loan payment is $4,644. So, if you pay an extra $400 per month (for a total of $5,044 per month), you could pay off your student loans 1.08 years earlier and save $18,785.

The snowball method:

Alternatively, you can pay off $400,000 of student loans with the snowball method. With the snowball method, you pay off your lowest balance student loan first.

The snowball method works like this:

1. Always make your minimum monthly student loan payment.
2. Pay off your lowest balance student loan.
3. Repeat until you pay off your lowest balance student loan
4. Focus on paying your student loan with the next lowest balance.
5. Follow this process until your student loans are paid off.

Frequently Asked Questions

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