Tens of millions of Americans have borrowed money to pay for college. If you are one of those borrowers, chipping away at student loan debt might be one of your big financial goals.

If you’re trying to pay down private student loan debt, a good place to start is to see if you can lower your interest rate, especially with interest rates rising due to the Federal Reserve’s recent rate hikes. Financial experts have a number of tips in their toolkit that could help you here — from automating your payments to refinancing. Below are three ways to lower the interest rate on your student loans and trim your student loan payments in general.

3 ways to lower your student loan interest rate

The best method for lowering your student loan interest depends on your overall financial picture.

1. Refinance your student loans

Best for: Those who have a solid credit score and want to pay off their loan quickly

If you have a solid credit foundation, are employed and plan to pay off your loan quickly, you may want to consider refinancing your private student loans. Well-qualified applicants may be able to take advantage of lower interest rates that could save money on monthly loan payments and overall interest fees.

You may be able to refinance a student loan if you have bad credit, but your rates will likely be higher. A good credit score, by comparison, might improve your odds of qualifying for a lower interest rate. To improve your credit score, be sure to follow good credit habits, like paying on time and reducing the balance on your credit cards (and thereby lowering your credit utilization ratio).

It’s also okay to be strategic and refinance multiple times, since there are no prepayment penalties on federal or private loans, and most loans don’t charge origination fees.

However, if you have federal student loan debt, be sure to weigh the pros and cons of refinancing into a private loan. Refinancing will cause you to lose federal borrower protections, like the automatic forbearance period and interest waiver through Dec. 31, 2022. Private student loans are also not eligible for the broad student loan forgiveness measures announced by the Biden administration. That trade-off may not be worth it.

Loan Student
Key takeaway
With a good credit score, it’s possible to save money on student loans by refinancing. But weigh your options carefully before proceeding, particularly if you have federal student loans.

2. Take advantage of discounts

Best for: Borrowers with predictable income or those who have multiple accounts with the same company

One of the simplest ways to lower your interest rate is by automating your payments. Many lenders offer discounts of 0.25 percent to 0.5 percent if you set up autopay from a checking or savings account. It might not sound like much, but it can add up over time. For example, you could save around $25 a year on a balance of $10,000.

“This may be the simplest and quickest way to realize a reduction in interest and requires little effort on the borrower’s part,” says Jon Long, an attorney with Long, Burnett, and Johnson who specializes in student loan debt.

With some lenders, you might be able to qualify for loyalty discounts as well. Loyalty discounts, if you can find them, reward borrowers (and co-borrowers) who have other accounts with the lender or bank— like a savings account or another loan. SoFi, for example, offers a “member discount” if you take out a student loan after taking out a personal loan or an investment account. Check with your lender to learn what’s available.

Loan Student
Key takeaway
Enrolling in autopay is a straightforward option for borrowers that can save them money.

3. Negotiate with your lender

Best for: Those who got their student loans during high-interest-rate environments

If you borrowed at the private level or if you have already refinanced, you might consider shopping around for a more competitive student loan rate and presenting it to your current lender. Although it’s a long shot, the lender might be willing to match that rate to keep your business.

Adding a co-signer might help you if you need to show better credit or more income to qualify for a lower interest rate. However, be aware that your co-signer will be equally responsible for the loan, which can pose a financial risk to the co-signer.

If you fail to make timely payments, both of your credit ratings could suffer damage and you both could be financially liable for the debt, so make sure you’re making your payments in full and on time.

Loan Student
Key takeaway
Compare interest rates and see if your current lender is willing to negotiate or enlist the help of a co-signer to score a lower rate.

What to do if you can’t get a lower rate

Not every method will be the right fit for every student loan borrower. The good news is that there are other ways to trim your student loan costs, even if your interest rate remains the same.

Deduct interest payments from your taxes

You may be able to deduct a portion of your student loan interest payments from your topline earnings. If you’re eligible, the deduction could offset the amount of income you have to claim and reduce your tax obligation.

Here’s how it works for the 2021 tax year:

  • Individuals with an adjusted gross income (AGI) of less than $70,000 (or married filers whose income is less than $140,000) can deduct up to $2,500 worth of interest payments.
  • Phaseouts occur for single filers who make between $70,000 and $85,000 and joint filers earning $175,000 or more.

The student loan interest deduction is also an above-the-line exclusion from income, so you can claim the deduction even if you don’t itemize on your tax return.

Check for cash back specials or rebates

Though it’s not a lower interest rate, some private student loan lenders do offer cash back specials and refinancing rebates. Credible, for instance, offers a “best rate guarantee” which entails a $200 gift card if you’re able to find another lender that offers you lower APR on a refinance loan.

Adjust your payment plan

Experimenting with different payment plans might also help you maximize your money and pay less in interest over time (even at the same interest rate). There are multiple strategies you can try with this approach, such as:

Select a shorter repayment plan

A shorter timeline will increase your monthly payment and won’t lower your interest rate, but it will reduce the total amount of interest you pay over the life of your loan. If future interest accrual is one of your top concerns – and you know you can swing a higher monthly payment –  then you may want to contact your lender to see if it offers a shorter repayment plan.

Keep in mind that if you are unable to make the monthly payments, it could derail the entire payoff strategy and will likely leave you saddled with more high-interest debt. Conduct a financial audit before committing to a new repayment plan to see if you can make the payments without dipping into your emergency or savings accounts.

Make multiple payments a month

Making a payment once every two weeks instead of once a month is good psychological motivation to keep rapidly paying down your student loans and will save you in interest charges down the road. When it comes to making multiple payments, Micheal Micheletti of the Freedom Financial Network encourages borrowers to take on a side-hustle to afford that second payment per month.

“Many people find a way to bring in extra income, anything from online tutoring or yard work to a traditional part-time job to put toward student loan debt,” says Micheletti. However, he does add that borrowers need to specify to their lender where the extra cash is going.

“If you can pay more, make sure to contact your lender or servicer and request that your extra payments go toward the outstanding balance, versus your next payment.” Many lenders offer borrowers the option to manually select which loan their payment is going towards on their online portal, which makes it easier to track your balances and progress.

You can also use the debt avalanche method, which will help you save money in interest by focusing on your loans with the highest interest rate first while making the minimum payments on the rest of your loans. Once you pay down the highest-rate debt, you’ll then move on to the next loan with the highest interest rate until you’ve paid off your student loans.

Regardless of the method that works best for you, just remember to make your payments in full and on time. As long as you focus on reducing your loan amount in regular monthly increments, you could save thousands of dollars in interest over the life of your loan.

Final considerations

Lowering your interest rate is one approach that could help you pay less overall on your student loans. But it’s not the only strategy that works. Being financially savvy  and knowing all of your repayment options is the best way to save money in the long run.

If you can’t qualify for a lower interest rate, try to find out why. If your credit score is what’s holding you back, prioritize improving your creditworthiness as you look into alternative repayment methods or enlist the help of a co-signer. Making your student loan payments on time will help improve your credit score, so regardless of whether or not you qualify for a lower rate, always prioritize making your monthly payment to save money in the long-run.