Can you beat the average American? Race to $0.
On the standard 10-year repayment plan, federal loans take 10 years. But with income-driven repayment (IDR) plans, repayment can stretch to 20-25 years. The faster you can pay above the minimum, the more you save on interest.
Avalanche: pay minimum on all loans, put extra toward the highest interest rate loan first. Saves the most money. Snowball: pay minimums, put extra toward the smallest balance first. Psychologically motivating but costs more in interest. Avalanche is mathematically optimal.
After 120 qualifying payments (10 years) while working for a qualifying employer (government, nonprofit), your remaining federal loan balance is forgiven tax-free. You must be on an IDR plan and have Direct loans.
You can deduct up to $2,500 in student loan interest per year if your income is under $90,000 (single) or $185,000 (married filing jointly). The deduction phases out above these limits. This is an 'above-the-line' deduction — you don't need to itemize.
Refinancing can lower your interest rate, especially for private loans. However, refinancing federal loans into private loans means losing access to IDR plans, PSLF, and forbearance protections. Only refinance federal loans if you're certain you won't need these benefits.