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How to Lower Your Student Loan Payments

How to Lower Your Student Loan Payments

March 13, 2019

I am sure you have heard of the adage "pay yourself first."

No? Well, it's good advice, as you should always take a specified amount of money from your paycheck and route it to a savings investment account. 

But what if by "paying yourself first" you could also lower your student loan payments?

It's true. You can lower your monthly payments on your student loans by putting money into your 401k or HSA, if you are on a payment plan like Pay As You Earn, RePAYE or Income-Based Repayment just to name a few.

Your monthly payment is based on your discretionary income, which is the money left over after you pay for necessities. This number is based on your adjusted gross income (AGI), the government poverty rate and your household size. To see what your payment would be you can use the calculator found here on the Federal Student Aid website.

By putting money in your 401k pre-tax, you will be lowering your AGI. So, if you were making $60,000 and deferred $5000 into your 410k plan you would reduce your AGI to $55,000. If you additionally place the maximum annual HSA contribution (currently $3,500), your AGI drops to $51,500.

You can learn more about programs like Pay As You Earn at