How To Pay Off Student Loans Fast

Last Updated on January 2, 2023

Student loan debt is a big problem, but it’s also one you can solve.

Here are some ways to pay off your student loans faster:

How To Pay Off Student Loans Fast

How to pay down your student loans faster

If you want to get out of student loan debt but aren’t ready to fully pay off your loan, you can do it by paying a little extra each month. Making extra payments, along with your regular monthly payments, may reduce the total amount you pay for your loan or help pay your student loan off faster.

You don’t need to make an extra payment every single month to pay down your student loan faster—do it whenever your budget allows. The easiest way to do this is to make a one-time payment online, by phone, or by mail.

Paying extra will also reduce the Current Amount Due shown on your next billing statement(s). Even if there’s no required amount due on the billing statement, continuing to make payments will reduce your Total Loan Cost.

Note: If you’re enrolled in auto debit or have requested the pay-ahead feature for your loans to be turned off, the Current Amount Due will not be reduced in the following billing period(s).

Examples of paying more every month

Assume you have a student loan with a Current Balance of $10,000, at an interest rate of 8.0%, and a repayment term of 10 years.

If you pay your amount due every month

  • You’ll make 119 monthly payments of $121.32, with a final payment of $119.89.
  • You’ll pay off your student loan in 10 years and you’ll pay a total of $14,556.97.

If you pay an extra $20 a month

  • You’ll make 96 monthly payments of $141.32 with a final payment of $7.10.
  •  You’ll pay off your student loan in 8 years and one month—almost 2 years earlier than with the standard repayment term and you’ll save $983.15.

Paying off your student loan

Ready to pay off your student loan completely? Congratulations! To do this, you’ll need your final payoff amount.

Interest accrues daily, so today’s Current Balance won’t include all of the interest or fees through the payoff date.

When you’re ready to pay off your student loan in full, call us at 800-472-5543 (800-4-SALLIE), and we’ll give you your final payoff amount.

paying off student loans in full

How to Pay Off Student Loans Fast

1. Make extra payments the right way

There’s never any penalty for paying student loans early or paying more than the minimum. But there is a caveat with prepayment: Student loan servicers, which collect your bill, may apply the extra amount to the next month’s payment.

That advances your due date, but it won’t help you pay off student loans faster. Instead, instruct your servicer — either online, by phone or by mail — to apply overpayments to your current balance, and to keep next month’s due date as planned.

You can make an additional payment at any point in the month, or you can make a lump-sum student loan payment on the due date. Either can save you a lot of money.

For example, let’s say you owe $10,000 with a 4.5% interest rate. By paying an extra $100 every month, you’d be debt-free more than five years ahead of schedule, if you were on a 10-year repayment plan.

2. Refinance if you have good credit and a steady job

Refinancing student loans can help you pay off student loans fast without making extra payments.

Refinancing replaces multiple student loans with a single private loan, ideally at a lower interest rate. To speed up repayment, choose a new loan term that’s less than what’s left on your current loans.

Opting for a shorter term may increase your monthly payment. But it will help you pay the debt faster and save money on interest.

For example, refinancing $50,000 from 8.5% interest to 4.5% could let you pay off your student loan debt nearly two years faster. It would also save you about $13,000 in interest, even with payments that stay about the same.

You’re a good candidate for refinancing if you have a credit score in at least the high 600s, a solid income and a  debt-to-income ratio below 50%. You shouldn’t refinance federal student loans if you want or need programs like income-driven repayment and Public Service Loan Forgiveness.

3. Enroll in autopay

If you don’t want to refinance your loans, signing up for autopay is another potential way to lower your student loan’s interest rate.

Federal student loan servicers offer a quarter-point interest rate discount if you let them automatically deduct payments from your bank account. Many private lenders offer an auto-pay deduction as well.

The savings from this discount will likely be minimal — dropping a $10,000 loan’s interest rate from 4.5% to 4.25% would save you about $144 overall, based on a 10-year repayment plan. But that’s still extra money to help pay off student loans fast.

Contact your servicer to enroll or find out if an autopay discount is available.

4. Make biweekly payments

This simple strategy is a way to trick yourself into paying extra on debt: Pay half of your payment every two weeks instead of making one full payment monthly.

You’ll end up making an extra payment each year, shaving time off your repayment schedule and dollars off your interest costs. Use a biweekly student loan payment calculator to see how much time and money you can save.Frequently asked questionsWhat is the fastest way to pay off student loans?Are there loans to pay off student loans?When do you pay back a student loan?

5. Pay off capitalized interest

Unless your loans are subsidized by the federal government, interest will accrue while you’re in school, your grace period and periods of deferment and forbearance. That interest capitalizes when repayment begins, which means your balance grows, and you’ll pay interest on a larger amount.

Consider making monthly interest payments while it’s accruing to avoid capitalization. Or make a lump-sum interest payment before your grace period or postponement ends. That won’t immediately speed up the payoff process, but it will mean a smaller balance to get rid of.

6. Stick to the standard repayment plan

The government automatically puts federal student loans on a 10-year repayment timeline, unless you choose differently. If you can’t make big extra payments, the fastest way to pay off federal loans is to stay on that standard repayment plan.

Federal loans offer income-driven repayment plans, which can extend the payoff timeline to 20 or 25 years. You can also consolidate student loans, which stretches repayment to a maximum of 30 years, depending on your balance.

If you don’t truly need these options and can afford to stick with the standard plan, it will mean a quicker road to being debt-free.

7. Use ‘found’ money

If you get a raise, a student loan refinance bonus or another financial windfall, allocate at least a portion of it to your loans. Consider using this breakdown: 50% of the extra income can go toward debt, 30% to savings and 20% to fun, discretionary spending.

Some companies pay off student loans as an employee benefit. Find out if your company offers an employer student loan repayment program, and be sure to enroll.

You can also start a side hustle to pay off student loans fast. Sell items like clothing, unused gift cards or photos; rent out your spare room, parking spot or car; or use your skills to freelance or consult on the side.v

Consider setting up rules for yourself, like putting any $5 or $10 bills you receive toward your loans. Some money-saving apps, like Digit and Qapital, will help you set savings goals and rules as well.

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