How to save on total loan cost for student loans | Earnest

Reducing your total student loan cost: What works & what doesn’t

By Sasha Bulatskaya | Published on October 21, 2025

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If you’re thinking of refinancing¹ your student loans, there are a few things you should keep in mind. First, lowering your monthly payments might give you much-needed breathing room but it could also increase your total loan cost². But, that doesn’t mean lowering your monthly payments is a bad option. It all depends on what’s important to you – a more manageable payment or paying less over the life of the loan.

Your total loan cost depends on your terms such as monthly payment, repayment period, and interest rate. If your goal is to pay less over the life of your loan, some repayment strategies may be a better fit than others. Everyone’s financial goals are different, which is why at Earnest we offer lots of payment options and share educational resources.

In this guide post, we’ll explore seven ways to lower your total student loan cost so you can make the best choice for you.

What is total loan cost?

Total loan cost is the amount you’ll end up paying over the life of the loan, including the amount you borrowed (the principal), added interest, and fees. In short, it’s the total price of the loan once you pay it off.

What is accrued interest?

A guide for student loan borrowers What is accrued interest? A guide for student loan borrowers | Earnest

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What makes total loan cost go up?

There are a number of things that can contribute to a rising total loan cost. Let’s take a look at what they are before diving into reduction strategies:

  1. Accrued interest on your loan. Accrued interest is how much interest is collected on your loan over a period of time. For example: You take out a $10,000 student loan and defer payments until graduation. But, interest on your loan starts to collect (accrue), so when you graduate, you’ll be paying off the original amount ($10,000) plus the interest that’s been accruing while you were in school*.

  2. Not making payments while in school. If you have a student loan that starts to collect interest right away, and you don’t make any payments while you’re in school, your total loan cost will go up. But, if you make payments (even small ones) while in school, you could reduce your total loan cost.

  3. Putting your loans in deferment or forbearance. If you use either of these programs to pause your payments, student loan interest will continue to accrue on most loan types.

How do you reduce your total loan cost?

There are seven strategies for keeping your loan cost down. They include:

1. Pay more than the minimum payment

One of the most effective ways to lower your total loan cost and pay off your loans faster is to pay more than the minimum payment. More of your money will go toward paying the principal balance. Another benefit of this approach is that you’ll pay off your student loan debt faster.

2. Focus on lowering your interest rate

Since interest rates play an important role in total loan cost, lowering your rate could help you save a lot of money. The most reliable way to lower your interest rate is to refinance your student loans. Refinancing means you’ll be taking out a new loan to pay off your old one. However, that new loan should have a lower rate. Refinancing also allows you to change your loan servicer if you’re unhappy with your current one and combine multiple loans into one payment.

Here’s how it works:

What to look for when refinancing your student loans

You’ll want to find a lender that will give you a good interest rate, better terms than what you currently have, and a good reputation in the industry. Here’s what to look for:

At Earnest, we’re one of the World’s Top Fintech’s in 2024 by CNBC. Most clients never have to wait longer than 2 minutes to talk to a real person and over 90% say they had a positive experience. We don’t charge any kind of fees, like origination fees or late fees. Our loans are fully customizable, so you can pick a payment, rate, and repayment term that would help you save on loan costs. You can check your rate in minutes to see if refinancing with Earnest makes sense for you.

Remember that refinancing your federal student loans will convert them to private loans. Once your loans become private, you won’t be eligible for any federal relief programs such as student loan forgiveness or income-driven repayment.

3. Consider consolidating your federal loans

Federal student loan consolidation is another tool you can use to reduce rates, but it doesn’t always work. Consolidation combines all of your federal loans into a single payment and takes the aggregate average of all of your interest rates to give you a new rate. The rate could lower your total loan cost, but there’s no guarantee.

4. Prioritize paying off high-interest loans first

Since high rates can have a big impact on your total loan costs, find out which of your loans have the higher rate and focus on paying those first. Then move on to paying off loans that have a lower interest rate. By strategically putting extra payments towards these loans, you can save money on accrued interest and reduce your repayment timeline.

5. Put any windfalls toward your loan

When extra money comes your way, like tax refunds or bonuses, consider putting a portion of it towards your student loans. While it may be tempting to spend it on other things, making an additional lump sum payment can help you lower your total loan cost. Even adding smaller amounts can make a difference in your loan balance over time.

6. Make biweekly payments

Instead of making one monthly payment, consider switching to bi-weekly payments. By doing so, you’ll end up making an extra month’s payment each year. This additional payment can have a significant impact, reducing your principal balance faster and lowering your total interest costs over the life of the loan. If you’re an Earnest client, you can sign up for biweekly payments and use Autopay to get a 0.25% ³ automatic payment discount.

7. Talk to a financial counselor

If you’re not sure what to do in your specific situation, a financial advisor could help. If you can’t afford one, nonprofits such as The Institute for Student Loan Advisors (TISLA), or Student Loan Borrower Assistance could help. Many work with low-income professionals to help them navigate their loan options.

There’s no one-size-fits-all solution

Reducing your total student loan costs doesn’t happen overnight, and not all of these strategies are right for everyone. The important thing is to understand your options and take the steps available to you. Find ways to lower your interest rates, whether through refinancing or federal consolidation. Make extra payments when you can, and don’t hesitate to ask for help. You don’t have to overpay for your loans if you know what to do.

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About the Author

Sasha Bulatskaya

Sasha is the Senior Manager of Brand and Content at Earnest. She has been writing for ten years and has been focused on educational finance and financial aid for over three. Her passion for mission-driven companies brought her to Earnest in 2020, and she's been helping make student finance more accessible ever since. She strives to demystify personal finance and student loans to help borrowers make the best decisions for their financial situation.