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If you feel that, despite your best intentions, your hard-earned money gets frittered away, you may need to curb your spending.

Sure, shopping and dining out are part of life, but the convenience of tapping and swiping can make it easy to overdo it. And all the tempting things you see on social media can lead to less than mindful buying, not to mention credit card debt. In fact, the average American currently has $6,730 in high-interest credit card debt, according to Experian®’s latest research, and some of that could be due to overspending.

Read on to learn more about what can cause you to overspend, plus tactics that can help you better control your spending.

12 Ways to Stop Overspending

If you find yourself being a bit too freewheeling with your spending, try some tactics to help you cut back.

1. Mapping Out a Budget

Without a budget, you can spend money mindlessly, without thinking much about it. To create a budget and learn how to be better with money, check your income and track your current spending patterns from bank and credit card statements. You can also use a free tool to track your spending, which makes the process even easier. You can start by seeing what your financial institution offers.

Identify essential expenses vs. non-essential ones. Necessary spending includes such items as housing, groceries, utilities, health care costs, and transportation. Non-essential costs are things like eating out, leisure travel, and entertainment — and they can add up to a lot of money over a month.

Once you see how much you spend in each expense category, it may be easier to reduce spending. Experiment with different budget methods to find the right fit.

Recommended: 50/30/20 Budget Calculator

2. Calculating Hourly Earnings

A night out may not seem like a huge splurge in the moment — especially when compared to your total earnings for the month. But, that same expense can quickly appear more significant when you tabulate how many hours of work are needed to pay for it.

To try this approach, figure out your hourly pay: Divide your after-tax pay by the number of hours worked. If you get paid twice a month and work a 40-hour week, divide your total earnings by 80 (two weeks times 40 hours). Then use that insight:

•   For instance, a birthday dinner and drinks with friends that costs $200 would translate to four hours of work if you earn $50 per hour.

Whether that spend feels worth it is a personal decision, but this process can nudge you to consider carefully to make sure the expense feels worth it.

3. Understanding What Triggers Spending

Whether it’s the gourmet food section at the grocery store, the Instagram influencer with the covetable closet of clothes, or that friend who drops big bucks on concert tickets, for all of us, the urge to spend can be triggered by emotions and outside influences.

Even the physical shopping environment — in-store displays, prominent markdown messaging, and subtler cues like store layout — can trigger people to overspend. When figuring out how to stop spending money, it can be key to understand which emotional or psychological cues make you take out your wallet and short-circuit their impact on you.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

4. Shopping with a Plan

Of course you can’t always avoid spending triggers. We all have to shop sometimes. But here’s how to stop overspending: Create a shopping list, and stick to it. That’s one way to spend wisely.

For example, going grocery shopping may be easiest to do right after work. But that time of day may also coincide with when you’re ravenous. Hungry shoppers, research shows, tend to buy more non-essential items.

5. Finding It Cheaper

There are times when you’ll choose to spend money on specific purchases. Comparison shopping may help you cut back on expenses since you may be able to find the item cheaper elsewhere. Try these tips, too:

•   Try couponing and discount codes. There are many sites that can help, such as Coupons.com and Retailmenot.com.

•   Join a warehouse or wholesale club. These stores can be cheaper than your local supermarket. Are the quantities too big for your household? Share them with friends and split the cost.

•   Shop where you get rewards that lower your costs. Loyalty can pay off.

6. The 30 Day Rule

Want another way to avoid overspending? Before you purchase something, take some time to think it over, rather than giving in to impulse buying.

Studies show that activities that provide instant gratification, such as impulse shopping, activate feel-good chemicals in the brain, according to the Cleveland Clinic. But that purchase could come at the expense of your financial standing. How to avoid that:

•   If you see an item of significant expense that triggers a “gotta have it” feeling, put a note in your calendar for 30 days later. Write down the item, the price, and where you saw it.

•   When that date rolls around, if you still feel you must have the object of your affection, you can decide to get it. But there’s a very good chance that your sense of urgency will have passed. That can be a way to stop spending money.

7. A No-Spend Challenge

You can gamify your spending to help you save. Try a no-spend challenge; you may want to have a friend or family member join you to make it more fun and help you stay accountable.

In a no-spend challenge, you typically pick a period of time during which you will only buy essentials. One popular option is a No-Spend September. Or you might declare that you won’t buy any fancy coffees for a week and put the money saved toward debt. Then, the next month, you could not buy any personal care items that are luxuries rather than necessities.

Recommended: 15 Creative Ways to Save Money

8. Using Cash Instead of Credit

When you swipe or tap a credit card, it can feel almost as if you aren’t spending money at all. But of course you are, and what you spend will accrue high interest if you don’t pay it off promptly and in full.

However, if you instead commit to using cash or a debit card to pay for purchases as often as possible, you can only really spend what you have. This can help you be more in touch with your money and avoid splashing out on random unplanned purchases, whether that’s a daily fancy iced coffee or a new wristwatch you stumble upon at the mall. (Of course, sometimes life happens, you make an error, and spend more than you have. That’s where overdraft protection can come in handy.)

9. Setting Up Automatic Savings Transfers

Many people overspend because they see money in their checking account, feel flush, and go shopping. But then, when it’s time to fund your savings (whether for summer vacation or the down payment on the house), you don’t have enough cash.

That’s why the habit of paying yourself first is a good one, and automating savings by setting up recurring transfers from your checking account to savings can be valuable. It can be wise to have an amount (20% of your paycheck is recommended by many financial experts, but even $25 is a start) whisked out right after your paycheck hits.

This can help you save regularly and fund your financial goals; you can even set up separate savings vaults for different goals.

10. Focus on Value vs Price

Here’s a smart way to think about your spending: Price is what you pay, and value is what you get. So if you spend $300 on a pair of shoes but you don’t wear them often or they fall apart quickly, you haven’t gotten good value for the price.

This is not to say that higher-priced items are never worth the cost. If you pay $300 for a pair of shoes that are top quality, last for years, and can be worn often, you’ve gotten great value. By thinking of value instead of price, you can avoid overspending, whether that means paying too much for an item that isn’t worth it or else buying a bargain-priced product that doesn’t deliver.

11. Reduce Dining Out

Dining out can be a fun way to socialize and enjoy food you couldn’t (or wouldn’t) make at home. But the cost can really add up and empty out your checking account. The average monthly spend dining at restaurants in 2024 was $191 vs. $166 in 2023, according to data from US Foods.

To save some cash, consider meeting friends for, say, a walk in the park or a free day at a local museum instead of a pricey brunch out. Or you might create a recipe club with friends in which you try cooking new dishes together. To save money when dining out, try tricks like skipping high-priced cocktails or splitting a few appetizers instead of ordering main courses.

12. Cancel Unnecessary Subscriptions

Comb through your credit card charges carefully, and you may discover that you are paying every month for subscriptions that you’ve forgotten about or aren’t getting good value from. That language app you signed up for before last year’s trip to Spain may still be charging you even though you haven’t opened it in months. You could live without it and keep that money. Or you might save on streaming services because you realize you actually aren’t watching one or two and can cancel them.

Recommended: How to Make Money Fast

5 Factors That Contribute to Your Spending Problem

As you work to stop overspending money, you may want to consider and avoid some of the things that can trigger you to dole out too much cash.

1. Social Media

As you scroll on Instagram, TikTok, and other platforms, you are likely to be exposed to dozens of influencers and offers that can encourage you to buy things you never previously knew about or wanted. Recognize that social media can encourage you to buy items (from kitchen gadgets to gummy candy) that you would never otherwise buy just because you’re a captive audience for clever marketing.

One way to fight back? It may be helpful not to link your credit card to your social media accounts to minimize the possibility of overspending.

2. Emails and Text Messages

Here’s another way your digital life can contribute to overspending: If you get emails or text messages heralding new products, sales, and other offers, it can trigger you to buy.

For example, if your favorite home design retailer sends you a message saying their most popular throw pillows are almost sold out, that may get you to buy. Unsubscribing from these marketing messages can be a budget-wise move.

3. Retail Therapy

Many of us shop as a pick-me-up. If you’re having a bad day at work, had a fight with your significant other, or are stressed about almost anything, hitting some stores can be a welcome distraction. However, this can also lead you to buy things that you neither need nor craved before you set foot inside the shop.

Recognizing what triggers retail therapy can help you break a bad spending habit. Or you can try the tactic of leaving your credit cards at home when you go browsing at boutiques.

4. FOMO

FOMO stands for “fear of missing out,” and it can drive a lot of impulse purchases. If your friend says you must try a pricey new restaurant in your neighborhood or your coworker suggests a life-changing hairstylist, you might feel as if, yes, you must spend money on these things. It can make you feel as if you are part of the in-crowd or “keeping up with the Joneses.”

Understanding this FOMO spending dynamic can be a major step toward stopping this kind of overspending.

5. Lifestyle Creep

Lifestyle creep occurs when, as you earn more, you spend more. Many people think that getting, say, a 10% raise is license to go spend 10% more. However, this can just keep your finances at a baseline level rather than helping you build wealth and reach longer-term goals.

As your income climbs, it can be wiser to raise your debt payments or put more in a high-yield online savings account rather than heading to the mall to celebrate.

The Takeaway

While it’s not possible to stop spending money altogether, adopting a few smart habits — such as budgeting, understanding your spending triggers, and shopping with a list — could help you take control of your money and spend less.

The right banking partner can help with budgeting, tracking your spending, and putting your money to work for you.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What is it called when you can’t stop spending money?

There are various terms used to describe the issue of spending too much, such as compulsive shopping, impulsive shopping, shopping addiction, and pathological buying.

Is overspending a mental disorder?

Sometimes called money dysmorphia or money disorder, overspending may be considered a psychological disorder. It involves a person being preoccupied with money, spending it, and financial status. It can trigger feelings of anxiety and inadequacy. In addition, compulsive shopping can be considered a form of obsessive-compulsive or impulse-control disorder. Working with a qualified therapist can be helpful in managing the psychological reasons for overspending.

How much is too much spending?

There is no set amount that equals too much spending. Rather, it occurs when spending negatively impacts your financial and personal life. If you can’t stick to a budget, are burdened by debt, or find that your preoccupation with shopping interferes with your work or relationships, then your spending could be excessive.

How do I stop the cycle of overspending?

You can stop the cycle of overspending in a variety of ways, including creating and sticking to a budget, planning your purchases (whether a big-ticket item or just weekly groceries), using cash, and going on a spending freeze.

What is the root cause of overspending?

Overspending has various causes. It could be due to boredom, lifestyle creep, FOMO (fear of missing out), and wanting to reward oneself or boost one’s mood, among other reasons.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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SOBNK-Q225-109

Financial discipline means making wise, consistent decisions about how to manage your money and achieve your goals. It may come naturally to some people, but many others need to learn and then practice it. Doing so can help you better understand and track your earnings, spending, and savings and make your money work harder for you. Financial discipline can help you on the path to buying a home, saving for your child’s education, or retiring early. And it can pay off by minimizing your money stress and enhancing your confidence.

This guide shares 10 essential ways to achieve financial discipline and enjoy its rewards.

What Does Financial Discipline Mean?

Financial discipline is the act of making smart decisions about your money so that you can achieve your financial goals and a sense of well-being. This can involve setting specific monetary (spending and saving) goals and tracking your progress.

Some aspects of financial discipline include:

•   Budgeting

•   Managing debt responsibly

•   Saving and investing

•   Setting and achieving financial goals

10 Steps For Achieving Financial Discipline

There are many paths to financial discipline, but these 10 steps can help you take control of your money and your financial destiny.

1. Getting Clear About Financial Goals

A vital step toward getting disciplined about money is setting financial goals. Writing down specific short-term, mid-term, and long-term financial goals can help illuminate a plan for how to proceed.

Here are some common examples of financial goals. They range from short-term money goals to longer-term ones:

Short-term Financial Goals

These are typically goals that you hope to achieve within a year or less.

•   Paying off credit cards and charge cards

•   Saving money for summer vacation

•   Setting and sticking to a spending limit for the month

•   Establishing an emergency fund

•   Saving a certain amount each month

Mid-term Financial Goals

Mid-term goals tend to have a longer horizon. Perhaps you work to achieve them in one to five years.

•   Paying off student loan debt

•   Setting aside funds for a wedding

•   Putting away money to buy a big-ticket item like a car

•   Saving up for an important home renovation

Long-term Financial Goals

These are aspirations that will likely take longer than five years to accomplish.

•   Saving for your child’s future college tuition

•   Putting away money for a down payment on a house

•   Investing in stocks and bonds for future returns

•   Setting aside money for retirement

2. Creating a Convenient Budget

Building a monthly budget isn’t necessarily at the top of everyone’s bucket list, but analyzing and tracking your expenses, spending habits, and savings can make it easier to get a handle on overall finances. Whether you use a cool journal, an online spreadsheet, or an app, there are many ways to manage a budget.

It can be worthwhile to try different types of budgets until you find one that is a good fit. Many people like the 50/30/20 budget rule, which says to dedicate 50% of your take-home pay to necessities, 30% to wants, and 20% to savings and/or additional debt payments above required minimums. Creating a budget can be a key aspect of becoming financially disciplined.

Recommended: 50/30/20 Budget Calculator

3. Paying Down Existing Debt

Debt comes in many forms — from student loan debt to car loans, medical bills to mortgages, and of course credit card debt. By getting rid of debt, you can save on interest and might positively impact your credit score by lowering your credit utilization ratio.

Paying down debt can be a critical facet of financial discipline, making it easier to save money, invest, and plan for a brighter financial future. Adding the debt paydown amount to your budget ensures it’s covered each month.

4. Opening a High-Yield Savings Account

There’s no specific answer to how much money you should have in savings. However, it is important to get started and contribute regularly. Even if it’s as little as $20 a month, setting something aside for savings ensures that funds will start to add up. By opening up a savings account and setting up a recurring deposit, you’ll be putting a pivotal piece of financial discipline on autopilot.

Of the different types of savings accounts, the specific kind you choose can make a big difference. According to the FDIC, the national average interest rate on savings accounts was 0.42% APY as of December 16, 2024.

By choosing a high-yield savings account (typically found at online banks), however, interest rates can reach 3.00% APY. This can help you build your financial position.

5. Establishing an Emergency Fund

Approximately 42% of Americans have no emergency savings, according to recent surveys. That means these individuals would likely have to take on credit card debt, secure a personal loan, or ask family or friends for financial help if they, say, lost their job or had unexpected bills to pay.

Establishing an emergency fund is an important step in gaining financial discipline. Most money experts advise socking away enough over time to cover three to six months’ worth of living expenses.

6. Cutting Back on Spending

Despite the best of intentions, overspending happens. Whether it’s a pileup of holiday gift purchases or too much shopping on social media, spending more than what you earn is bound to occur from time to time. Making sure it’s not a regular occurrence is a sign of good financial discipline.

Cutting down on spending can be guided by a good budget. Habits like shopping with a list to avoid impulse purchases, hunting for bargains, and using promo codes can help you make sure that you don’t overdo it with your credit and debit cards.

7. Seeking Sound Investment Strategies

Familiarizing yourself with a wide variety of investment accounts and strategies can help educate you and enhance your financial discipline. By weighing the risks and benefits of certain account types, penalties, fees, and the ability to access funds, you can select the right investment strategy. This in turn may help you achieve some of your longer-term money goals.

8. Automating Savings and Payments

A solid tool for achieving financial discipline can be to tap tech and automate your savings and payments. If you set up recurring transfers from your checking account to your savings right around payday, you can seamlessly build your savings instead of spending that cash.

By automating payments (say, to your utility companies or car loan lender), you help ensure that your bills get paid on time. This helps you avoid late fees and maintain your credit score.

9. Tracking Expenses Regularly

Tracking your expenses is something typically done when setting up a budget, but to achieve financial discipline, it’s important to check in regularly with your money. For example, inflation can take a toll on your expenses. Insurance premiums, rent, heating costs, and other regular payments can creep up and threaten your financial stability.

It’s wise to take a closer look if not monthly, then every few months. There are tools that can help you with this, too. See what your financial institution offers. They may offer a good money tracker to make this task extra easy. If not, third-party products are available.

10. Be Flexible and Patient

Last but not least is the fact that cultivating financial discipline is a process. Sometimes it will be harder than others. Perhaps you have a period in which you’re out of work and your credit card balance creeps up. Or maybe you have a baby or buy a home and are having trouble contributing to your retirement account. These curves along the road to financial discipline are part of life. Roll with them and adjust your plans, seeking help from a qualified financial planner if you like.

Don’t feel that just because you’re not where you want to be means all is lost. Financial discipline is a long haul, so go easy on yourself and keep pushing ahead, one step at a time.

Focusing on Financial Planning

The term “financial planning” might feel more like a unicorn you only get to meet when you’re floating high on a cloud of financial independence, but it’s actually another sound step along the way. These days, financial planning isn’t designated for the already wealthy, it’s becoming accessible and essential for people at every stage of life. In fact, in the age of digital transformation, financial planning can even be automated. This can be another way to optimize the long-term view of your money and your goals.

The Takeaway

Financial discipline revolves around setting specific financial goals and adopting habits that help you achieve them. By practicing financial discipline, you can create a budget, build up savings and an emergency fund, hit your money goals, and make progress toward a more stable financial future.

Finding the right financial institution to suit your needs can be another important step. Doing so can help you manage your money more easily, minimize fees, and earn interest on the money you stash away.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How long does it take to develop financial discipline?

Financial discipline is at its best when it’s a lifelong habit that provides money guidance and guardrails. That said, the habits that create financial discipline can be adopted in minutes. Establishing recurring transfers from your checking account into an emergency fund, for instance, is a “set it and forget” move that can be quickly accomplished.

What are the most common financial mistakes people make?

Common financial mistakes include not budgeting, not automating finances, and not prioritizing saving. Other issues can be overspending, relying too heavily on credit cards, and not setting short- through long-term goals.

How does financial discipline impact long-term wealth building?

Financial discipline can help you build long-term wealth. It’s a path to funding your financial aspirations, such as automating deposits into a savings account that’s earmarked for the down payment on a house. Also, by adopting and following a budget, you can keep your spending and saving in line with your earnings throughout your life.

What are some tools that can help with budgeting and saving?

There are many tools available to help with budgeting and saving. A good place to start can be with your financial institution. They likely have tools for automating transfers from checking into savings, tracking your spending, and budgeting wisely. If what they offer isn’t what you’re looking for, there are an array of third-party apps, both free and paid, that can help you.

Is it ever too late to start practicing financial discipline?

It’s never too late to start practicing financial discipline. Whether you’re just starting your independent financial life or are much further along, there’s likely a way to make managing your money more effective and easier. That could mean building a better budget, paying down debt, earmarking more funds for retirement, or figuring out the best way to start saving for your child’s education.

Photo credit: iStock/shih-wei

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOBNK-Q225-110

It’s never too early to think about student loan repayment. Whether you’re still in college, or you recently graduated and are in the grace period before repayment begins, strategizing now can help you weigh the options.

If you’ve graduated and are already working and making payments, it can be a good idea to re-evaluate your repayment plan over time. As your financial circumstances change, the way you’d like to manage your student loans may also shift.

Before considering your options, take inventory of all your student loans. Be sure to list the principal, the interest rate, the repayment period, and the servicer for each loan.

All federal student loans issued in recent years have fixed interest rates, but private student loans or older federal student loans may have variable rates. If the rate is variable, be sure to note that as well.

Different Student Loan Repayment Options

Once you understand the details of your student loans, it’s time to think about your repayment options. The simple choice if you have federal student loans is the Standard Repayment Plan. It’s the “default” repayment plan, so unless you sign up for another option, this is the plan you’ll have. Under the Standard plan, you typically pay a fixed amount every month for up to 10 years.

There is no “standard repayment plan” for private student loans; the interest rate may vary based on market factors, and your repayment term might be shorter or longer.

The federal government also offers graduated and extended repayment plans for borrowers. With the Graduated Repayment Plan, payments start smaller and grow over time, while the Extended Repayment Plan stretches repayment over a period of up to 25 years and payments may be either fixed or graduated.

Opting for the Standard Repayment Plan may work for you, but for some borrowers, it’s not the most cost-effective choice. These borrowers may be eligible for special federal programs that can reduce the amount they owe monthly based on financial circumstances, and in some cases, forgive balances if they meet certain requirements.

Or some borrowers might be able to find a more competitive interest rate by refinancing their loans through private lenders.

💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing may make sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections, since refinancing federal loans makes them ineligible for federal benefits.

Here’s an overview of some student loan repayment options that may help if you are choosing a repayment plan:

1. Student Loan Consolidation

Federal student loan consolidation allows you to combine multiple federal student loans into a single new loan. You can’t consolidate private student loans using this federal program.

When you consolidate your federal student loans into a Direct Consolidation Loan, your new loan’s interest rate will be the weighted average of all your old student loans’ interest rates, rounded up to the nearest one-eighth of a percent. This means your interest rate won’t necessarily be lower than the rate you were paying before consolidation on some of your student loans — in fact, it could be slightly higher.

When you consolidate, you’ll also have the option to select a new repayment plan. The standard plan would still be available, but consolidation can also be a first step toward other plans of action, like student loan forgiveness or income-driven repayment.

2. Student Loan Forgiveness

Federal student loans are eligible for student loan forgiveness programs, and private student loans may qualify for some loan repayment assistance programs. For instance, some federal student loans and Direct Consolidation Loans are eligible for modified payment plans that forgive outstanding student loan balances.

Health care professionals, teachers, military service members, and those employed full-time by qualifying nonprofit or public service organizations may be eligible for certain federal student loan forgiveness programs. Some states and employers offer loan repayment assistance toward both federal and private loans for eligible workers.

Under the Public Service Loan Forgiveness (PSLF) program, those who have worked for qualified employers, such as the government or some nonprofit agencies, and have made 10 years of payments on a qualified income-driven repayment plan, can apply for forgiveness of all of their remaining federal student loan balances. That forgiveness is not considered taxable income.

The Federal Student Aid website has additional information on which federal student loans qualify for which types of forgiveness, cancellation, and/or discharge.

3. Income-Based Repayment

If the payments under the Standard Repayment Plan seem too high, federal student loans offer income-driven repayment plans, which tie the amount you pay to your discretionary income. The currently available options are Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn.

Income-driven repayment plans may help lower your monthly payments. In some cases, however, you might end up paying more over the life of the loan than you would have on the Standard Repayment Plan. That’s because with low monthly payments that stretch out over more years, you could be paying more in interest over time.

Additionally, with income-driven repayment plans, you may be eligible for student loan forgiveness if the remainder of your student loans aren’t paid off after 20 to 25 years of consistent, on-time payments.

4. Student Loan Refinancing

Refinancing student loans through a private lender offers the opportunity to consolidate multiple student loans into a single payment and potentially decrease your interest rate or lower your monthly payment.

Loan repayment terms vary based on the lender, and borrowers with better credit and earning potential (among other financial factors that vary by lender) may qualify for better terms and interest rates.

One important thing to know about refinancing, however, is that once you refinance a federal student loan into a private loan, you can’t undo that transaction and later consolidate back into a federal Direct Consolidation Loan.

This can be relevant for professionals in health care or education where federal student loan forgiveness plans are offered, or for those considering long-term employment in the public sector.

In addition, refinancing federal student loans with a private lender renders them ineligible for important borrower benefits and protections, like income-driven repayment and deferment.

💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

Can You Change Your Student Loan Repayment Plan?

If you have federal student loans, it is possible to change your repayment plan at any time, without any fees. You’ll have the option to choose from any of the federal repayment plan options, including income-driven repayment plans.

There is less flexibility to change the terms of a private student loan. Some private lenders may offer alternative payment plans for borrowers. Check with your lender directly to see what options may be available to you.

Recommended: Student Loan Calculator

SoFi Student Loan Refinancing

Refinancing is another avenue that can result in a new repayment plan. An important consideration, however, is that refinancing federal student loans will remove them from any federal programs or protections, so this won’t be the right choice for everyone.

The Takeaway

Federal student loan borrowers have the ability to change their repayment plan at any time, without being charged any fees. There are different plans to choose from, and you can look for one that suits your situation and needs.

Changing your repayment plan is a bit more challenging for private student loans, though some private lenders may offer alternative options for borrowers. Refinancing is another option that could allow some borrowers to adjust their repayment terms.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What student loan repayment options are available to me?

Borrowers with federal student loans can choose from various federal repayment plans, including the standard 10-year repayment plan and income-driven repayment options. The SAVE plan, which was introduced by the Biden Administration at the end of June 2023, is no longer available. For private student loans, repayment options will be determined by the lender.

What is a standard repayment plan for student loans?

The Standard Repayment Plan for federal student loans involves fixed monthly payments over a period of 10 years. For consolidation loans, repayment may extend up to 30 years, depending on the loan amount.

How long is a typical student loan repayment?

The typical student loan repayment period may vary from individual to individual. The Standard Repayment Plan for federal loans is 10 years, but income-driven repayment plans or Direct Consolidation loans may have a term of up to 25 to 30 years. The repayment terms for private student loans vary by lender.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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