My monthly student loan payment went from $800 to $285. Here’s how.

I am one of hundreds of thousands of Philadelphians with student loans. According to one 2020 report by the Federal Reserve Bank of Philadelphia, one-quarter of adults in Philadelphia have student loan debt — more than in Pennsylvania (21%) and the nation as a whole (17%).

The average amount a Philly resident owes? $37,468.

So I suspect a lot of people in our area listened with interest as President Joe Biden announced a new plan to reduce student debt that would shrink payments and even erase debt for millions of people carrying burdensome student loans.

Biden will likely have a long fight ahead of him to make this plan a reality, but I am optimistic. Because thanks to his administration’s previous efforts to curb student loan debt, I’ve already been able to slash my monthly payment — on loans that originally totaled more than $70,000 — from $800 to $285.

Though Biden’s original loan forgiveness plan was blocked by the U.S. Supreme Court in 2023, the administration employed some creative workarounds, such as Fresh Start, a temporary program for borrowers who defaulted on federal loans before the pandemic struck. That, plus a revamped federal program — SAVE (Saving On A Valuable Education), which enables borrowers to reduce their monthly payments based on their annual salaries — have given me, and millions of other borrowers, a new lease on our financial lives.

Recently, the Biden administration announced that 7.5 million borrowers are now enrolled in the SAVE income-driven repayment program, of whom 4.3 million have a $0 monthly payment. The program also cancels student debt for some borrowers who have made payments for at least 10 years and has already discharged loans for nearly 153,000 borrowers.

To take advantage of these benefits, I first applied for Fresh Start benefits in the spring of 2023. I qualified because, like 7.5 million other borrowers, I defaulted on my federal loans after graduating from college in 2018.

As a financially illiterate 22-year-old, I didn’t even realize I had federal loans until I received a notice of default in the mail. (Maybe I should have paid closer attention in loan exit counseling. Whoops!)

» READ MORE: Biden couldn’t wave away student loan debt. He should do the hard work and fix the system. | Kyle Sammin

I forfeited hundreds of dollars every month to Sallie Mae alone. In July, the interest rates on my four private loans — at that point totaling $29,818.29 — were 11% (fixed), 13.250% (variable), 13.875% (variable), and 13.875% (variable). And home buyers lament when mortgage interest rates go higher than 7%.

From 2019 until 2021, I worked in the dismal world of customer service, earning just $12 an hour. This meant the bulk of my income bled straight into Sallie Mae’s coffers. Though I wanted to refinance my loans with more favorable interest rates, I was barred from doing so due to the default on my credit report.

The bulk of my income bled straight into Sallie Mae’s coffers.

Luckily, I had compassionate parents who let me live with them; not everyone is so privileged.

Eventually, the government provided a financial lifeline in 2022 with Fresh Start, and it approved my application last summer. The program allowed me to get my loans back in good financial standing and wiped the default and missed payments from my credit history.

While enrolling in Fresh Start required me to start making payments toward my federal loans, this didn’t begin until after the COVID-19 pause.

At that point, I had launched a freelance career as an SEO writer, which had raised my income from the $12 per hour I was making before. Still, Fresh Start payments are income-driven, which allowed me to decrease my payment on one consolidated federal loan of nearly $30,000 to $257.72 a month in October.

In the meantime, Fresh Start benefits kicked in, giving me a clean credit history and allowing me to refinance my private loans at an interest rate of 6.5%, halving the rate of most of my original loans. The monthly payment dropped from over $800 to just $270.82.

However, a few weeks later, the federal loan payment pause ended, bringing my monthly student loan bill back up to a not-so-ideal $528.54 a month.

» READ MORE: Canceling student debt would help level the educational playing field. That’s why some people hate it. | Solomon Jones

Finally, after saving money from my freelancing work, I took a hiatus and laid the groundwork for my own project in 2023. This meant I made less money. So, about five minutes after completing my 2023 taxes, I requested that my federal income-driven payment be recalculated using my new income. The company that handles my student loans then informed me of my enrollment in the SAVE plan, dropping my monthly payment on federal loans from $257.72 to just $14.62 per month.

This brings my total monthly student loan bill to an affordable $285.44.

I never expected a free ride for college — just manageable payments. Fortunately, these new programs have reduced the burden of my education costs and revolutionized my budget. (Yes, that financially incompetent 22-year-old eventually learned to budget.)

In order to get my payments down to that lower level each month, I had to extend the terms of some of my loans, adding several years to the time it would take me to pay them back. But it’s worth it to not have to struggle to make huge payments now when I’m trying to build up my career. I trust that the more experience I get with my work, and the more money I make, I can perhaps pay off my loans early.

I’m not the only one who benefits from reducing my monthly payments — because now I have more money to add to the economy, by spending more on housing, my business, and other goods and services, all of which would have otherwise ended up in the government’s and loan companies’ already deep pockets.

To me, reducing student loan payments is a win-win: a win for the borrower, and a win for the U.S. economy.

Kirby Sibiski is a writer, editor, and SEO professional based in Southeastern Pennsylvania.