As of September 2025, U.S. student loan debt reached approximately $1.81 trillion, with the average federal borrower owing nearly $40,000. If you’re feeling stressed about repayment, you’re not alone. The good news? There are practical steps you can take to make things easier and save money. 

Here are four strategies to help you stay on track. 

1. Consolidate for simplicity 

If you have multiple federal student loans, a Direct Consolidation Loan can combine them into one new loan with a single servicer and a fixed interest rate. The rate is calculated as the weighted average of your existing rates, rounded up to the nearest one-eighth of a percent. 

Why consider consolidation? 

• Simplifies repayment with one monthly payment
• May provide access to income-driven repayment plans or forgiveness programs that require Direct Loans
• Converts variable-rate loans to a fixed rate 

It’s important to note that consolidation makes things simpler, but it doesn’t lower your interest rate. 

2. Adjust payments when income drops 

If your income drops or you lose your job, you have options to reduce or pause payments without falling behind. 

• Income-Driven Repayment (IDR): Payments adjust based on income and family size and can be as low as $0 during hardship. You can update income with recent pay stubs.
• Unemployment Deferment: Pauses payments if you’re job-seeking or receiving unemployment benefits. Interest does not accrue on subsidized loans during deferment.
• Forbearance: A short-term pause when deferment isn’t available. Interest accrues on all loans and may capitalize later. 

Contact your servicer and explore IDR first to keep your loans in good standing. 

3. Cut interest costs 

High interest rates make loans expensive. Here’s what you can do: 

• Federal consolidation: Combines multiple federal loans into one with a fixed rate (weighted average of your current rates, rounded up). This simplifies repayment but does not lower your rate.
• Private refinancing: Available through private lenders in 2026. It can reduce your rate if you have strong credit and stable income, but you’ll lose federal protections like IDR and forgiveness.
• Extra payments: Direct extra funds to the highest-rate loan first to cut interest costs over time. 

4. Don’t let interest sneak up on you 

Federal rates for new loans (2026) 

 Interest can add up quickly if you pause payments. Here’s what to know: 

• Deferment: No interest on subsidized loans, but it grows on unsubsidized loans.
• Forbearance: Interest grows on all loans and may be added to your balance later. 

If possible, pay monthly interest, even small amounts, while loans are paused to prevent capitalization and keep costs down. 

The bottom line 

Managing student loans is about making informed choices that align with your current financial situation and your future goals. Whether you consolidate for simplicity, adjust payments during hardship, explore lower interest options, use income-driven plans wisely, or stay ahead of interest accrual, each step helps you stay organized and reduce long-term costs. 

Not sure what’s best for you? Talk to a financial advisor. 

Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group®.  
This information is not intended to provide individualized tax or legal advice. Discuss your specific situation with a qualified tax or legal professional.  
Wealth Enhancement Group® is not affiliated with and does not endorse any third-party websites referenced.  
Refinancing federal loans with a private lender will result in loss of federal protections such as income-driven repayment and forgiveness programs. 

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