Student loan borrowers have many options to align their repayment plan with their financial goals. Depending on whether they've prioritized lowering monthly payments or paying off loans quickly, borrowers have an array of choices available to help manage both private and federal student loans. 

Here are some ways borrowers can align their student loan payments more closely with their overall financial goals:

Lowering monthly payments

Borrowers can have many reasons for needing to lower their payments: financial difficulties, job loss, or simply saving for other goals. For these borrowers, two main options exist to lower monthly payments: Income-Driven Repayment Plans and student loan refinancing.

Income-Driven Repayment Plans are only available to borrowers with federal student loans. Private loans don't qualify. These plans allow borrowers to reduce student loan payments to an affordable amount based on their income and family size. The payment amount and the length of the repayment period vary based on which plan they choose. While borrowers who choose this option may end up paying more overall due to interest, this may be worth the breathing room that lower payments can provide.

For borrowers who don't choose an Income-Driven Repayment Plan, or don't qualify for one, they can lower monthly payments by refinancing their loans. Student loan refinancing may allow borrowers to lengthen the term of their loan, which can lower the monthly payment amount. Refinancing can also help borrowers take advantage of lower interest rates or consolidate multiple loans into a single loan with a single payment. Borrowers with federal loans who refinance through a private lender should be aware that they may lose the protections that federal loans provide, such as deferment, forbearance, and Income-Driven Repayment Plans.

Paying loans off quickly

Paying off loans sooner can reduce the amount of interest borrowers pay overall and provide the psychological benefit of progressing more quickly toward their repayment goals. One option is simply to make a higher payment than the minimum every month. Borrowers who choose this option should be sure to tell their loan servicer to apply the extra payment toward the principal rather than to next month's payment.

Refinancing can make sense for borrowers who qualify for a lower interest rate than their current one. Good credit and high income can both help a borrower qualify for a lower rate. However, for those with less-than-stellar credit or low income, they may be able to refinance with a better interest rate if they apply with a co-signer. Many borrowers also qualify for a loyalty discount if they already hold an account with their lender.

Loan forgiveness programs

Some borrowers, such as teachers, nurses, and nonprofit professionals, may qualify for loan forgiveness programs that can reduce or eliminate student debt after a certain amount of time, such as Public Service Loan Forgiveness or Teacher Loan Forgiveness. These programs come with restrictions on who can qualify, how much debt can be forgiven, and how many years or payments it takes for loans to be forgiven. Income-Driven Repayment Plans also come with loan forgiveness at the end of the repayment period, which varies by plan type.

Other ways to optimize payments

Regardless of whether a borrower is focused on lowering monthly payments or paying off loans quickly, one of the most important things to do for financial health is to make loan payments on time. Using automatic withdrawals to pay every month can be an easy way to ensure that payments are not missed, which can come with late fees and negative impacts to credit score. Most lenders offer discounts for borrowers who set up automatic payments, giving an extra financial incentive to use this option.

Another easy way to get the most out of student loan payments is to take advantage of the student loan interest tax deduction. Both federal and private student loans are eligible for this annual tax deduction, which allows borrowers to deduct up to $2,500 in student loan interest toward their own loans, their spouse's, or a dependent's every year.