7 smart steps to pay off student loans without hurting your budget

For millions of Americans, student loan repayment is one of their biggest monthly expenses. According to the Education Data Initiative, the average borrower carries $38,375 in interest-bearing loans, with an average monthly payment of $536.

That’s roughly the same as a car payment on a reliable SUV, two family grocery runs or a weekend getaway every few months.

More importantly, it’s money that could be working toward your financial goals. Redirect $500 a month into a high-yield savings account, and you’d build a $6,000 emergency fund in just one year. Put that same amount toward retirement, and with steady contributions, it could grow to over $80,000 in 10 years.

Having a plan for student loan repayment can improve your financial future.

This guide walks you through seven smart steps to manage your student loans, while keeping your budget balanced and your savings growing.

Step 1: Get Clear on Your Financial Picture
Start by reviewing your full financial situation. Look at how much money you bring home each month after taxes, insurance and other deductions. This is your “take-home pay,” the number that matters for planning your student loan payments.

Then take stock of your regular expenses. Look at essentials like housing, groceries, utilities, insurance and transportation. After that, consider flexible spending categories, like dining out, streaming services, shopping or travel. These are the areas where small adjustments can free up extra room in your budget.

Then ask yourself: Can I comfortably fit student loan payments into my current budget?

For some borrowers, the answer is yes with only minor adjustments. For others, paying off student loans may mean looking more closely at spending patterns or exploring repayment plans that better align with their income. Either way, this step is about getting honest with your numbers, so you can move forward with clarity.

Action Items:

• Review your income and all current expenses.
• Update your budget to include your monthly student loan payment.
• Look for gaps or areas where you can adjust spending if needed.

Step 2: Gather Your Loan Details
Log in to your loan portal. For federal loans, go to studentaid.gov and use your FSA ID to access a full loan summary. Keep in mind, federal loans may have different "servicers" – they don't provide the loans, but they help manage them. For private loans, you’ll need to log into each lender’s website or check recent statements to verify your balance and terms.

Review every loan in detail. Look at your balances, interest rates, minimum payment amounts and payment due dates.

It’s common for loan details to change over time. If you borrowed across multiple years, you likely have more than one loan, each with its own balance and terms. You may also notice that your loan servicer has changed since you last reviewed your account, which is typical.

Check the repayment options, interest rates and protections tied to each loan. These will vary depending on whether your loans are federal, private or a mix of both.

The goal with this step is simple. Know exactly what you owe, who you owe it to, how much each loan costs you in interest and when payments are due. This will help you make smart repayment decisions.

Action Items:

• Log in to your loan portal to review all current loans.
• Confirm your loan servicer, balances, interest rates and payment amounts.
• Organize your loan details in one place so you can easily reference them later.

Step 3: Review Your Repayment Options
Federal loans offer several repayment options, including standard, graduated, extended and income-driven repayment (IDR) plans. Each option comes with different monthly payment amounts, payoff timelines and long-term costs.

The standard plan spreads payments evenly over 10 years and typically costs less in total interest. Graduated and extended plans lower your monthly payments at first but often result in more interest over time.

Importantly, under the One Big Beautiful Bill Act (OBBBA), major changes are coming to income-driven repayment. Starting July 1, 2026, the SAVE, PAYE and ICR plans will be eliminated, and the only IDR plan available will be Income-Based Repayment (IBR).

Eligibility rules for IBR have also changed under OBBBA. You no longer need to show “partial financial hardship” to qualify. Additionally, Parent PLUS borrowers can access IBR only if they consolidate their loans into a Direct Consolidation Loan and make at least one payment under ICR first. Borrowers with Perkins or other smaller loans must also consolidate to qualify.

If you need to consolidate, keep a close eye on deadlines. Your new Direct Consolidation Loan must be disbursed by June 30, 2026. After July 1, 2026, any new loan disbursement will not be eligible for IBR, ICR, or PAYE.

And for loans you haven’t yet taken out, be aware: Any new federal loans disbursed on or after July 1, 2026, will not be eligible for IBR, ICR, or PAYE.

Private loans work differently. Repayment options depend on your lender’s terms and flexibility. Some private lenders offer interest-only payments for a set period or extended terms, while others have fewer options. Check directly with each lender to confirm what is available.

The goal with this step is simple: Balance affordability with long-term cost. A lower monthly payment may offer immediate relief but can lead to paying more over time. A higher payment could save money on interest, but it requires more room in your monthly budget. Understanding this tradeoff helps you choose the right plan for your needs.

Action Items:

• Review federal repayment options, including standard, graduated, extended and income-driven plans. Pay special attention to the upcoming changes under OBBBA.
• Check private loan repayment terms directly with each lender.
• Compare monthly payment amounts, payoff timelines, and total interest costs for each option.   

Step 4: Communicate With Your Loan Servicer
Clear communication with your loan servicer keeps things simple. You will always know your payment amount, due date and where your loan stands. It is also the best way to catch any errors early and avoid missed payments or surprises.

Start by confirming that your mailing address, phone number and email are all current in your loan portal. Then, set up online access if you have not already. Most loan servicers offer an online dashboard where you can check your payment schedule, view your balance and track payment history.

Turn on account alerts so you get notified about upcoming payments or any issues that need attention. This is one of the easiest ways to avoid surprises.

If anything about your repayment plan feels unclear, reach out to your loan servicer directly and immediately. They can confirm your payment amount, due date, repayment plan details and help resolve questions along the way.

Action Items:

• Confirm that your contact information is current with your loan servicer.
• Set up online access and turn on account alerts.
• Contact your servicer with any questions about payments, due dates or your plan.  

Step 5: Decide if Refinancing Makes Sense
Refinancing — replacing one or more existing loans with a new loan, ideally at a lower interest rate or shorter payoff horizon — can be a useful way to adjust the terms of your repayment.

Refinancing is done through private lenders. You can refinance private loans, federal loans or both into a new private loan. But once a federal loan is refinanced into a private loan, it permanently loses federal benefits like income-driven repayment, deferment, forbearance and loan forgiveness options. 

This tradeoff is important to consider, especially if you rely on payment flexibility or expect to qualify for any forgiveness programs in the future.

Refinancing typically works best for borrowers with a stable income, strong credit and little need for federal protections. In exchange, you may qualify for a lower interest rate, which reduces the total amount you pay over the life of the loan. You can also choose a shorter repayment term to pay the loan off faster or a longer term to lower your monthly payment.

If you are considering refinancing, compare offers from multiple lenders. Look closely at the offer details before making a decision.

Action Items:

• Decide if giving up federal loan benefits makes sense for your situation.
• Compare rates, terms and total costs from multiple private lenders.
• Choose the option that best balances savings with flexibility.

Step 6: Choose How You’ll Make Payments
It’s time to decide how you want to handle your student loan payments day-to-day. Setting up automatic payments is one of the easiest ways to stay on track, and there’s a financial benefit. Most lenders offer an interest rate discount, typically 0.25%, for enrolling in autopay. This small saving adds up over time and helps you avoid missed payments or late fees.

Next, decide whether you will stick with the minimum payment or pay extra when you can. Paying more than the minimum reduces the total interest you pay and helps you pay off loans faster. But it is also smart to balance loan repayment with building financial security. For example, if you do not yet have an emergency fund, you might focus first on setting aside a few months of expenses in a high-yield savings account, where your money earns more while staying easily accessible. Once that is in place, you can shift focus to making extra payments toward your loans.

If you have multiple loans, strategize about where to apply extra payments. Targeting loans with higher interest rates first saves the most money in the long run. But some borrowers prefer to focus on the smallest balance for a quick win, which can help build momentum.

Ultimately, making steady student loan payments is like climbing a hill one step at a time. You do not have to sprint, but you do have to keep moving. Consistency gets you to the top.

Action Items:

• Consider setting up automatic payments to avoid late fees and possibly lower your interest rate.
• Decide whether to pay just the minimum or make extra payments when possible.
• Choose how to apply any extra payments based on your financial priorities.  

Step 7: Adjust as Needed
Your finances, goals and life circumstances will change over time. A quick check-in every few months helps you stay on track and adjust your plan as needed.

A good rule of thumb is to review your loans and budget about once every three to six months. Look at whether your payment amounts still fit your income and expenses. If things are going well, this might be a chance to increase your payments and save on interest. If money feels tighter, it is worth checking whether a different repayment plan or temporary adjustment could help.

Check-ins are also helpful whenever something changes in your life, like a new job, a move or a major expense. Now that you have notifications set up, you may also hear from your loan servicer about updates to your account. It’s important to review updates quickly to make sure everything is correct.

Regular reviews help you make consistent progress. By adjusting your payments when your finances change, you stay flexible and keep moving forward.

Action Items:

• Review your loans and budget every three to six months to make sure payments still fit your financial situation.
• Look for chances to pay extra when possible, or adjust your plan if needed.
• Watch for updates from your loan servicer that could affect your payments or terms.

Want to talk with a financial professional about your student loans?

Work with our trusted team at Comerica. Our bankers have experience helping individuals and families navigate student loan repayment. We can help you think through your options, build a budget and tackle your loans in a financially smart way.

Stop by your local Comerica banking center to discuss your financial goals.