Last Updated on July 29, 2023
If you’re a student, chances are you’re going to have to take out a student loan. And if you’re like most students, your loans probably won’t be paid off even after you’ve graduated.
The good news is that there are lots of ways to pay off student loans faster. The bad news is that it’s not easy—there are no shortcuts or magic tricks that will get you out of debt faster.
But the good news is that there are lots of ways to pay off student loans faster. The bad news is that it’s not easy—there are no shortcuts or magic tricks that will get you out of debt faster.
In this guide, we’ll walk through all the different ways to pay down student loans faster and how much they’ll save you in interest payments over time!
How To Pay Off Student Loans Quicker
5 Ways to Pay Off Your Student Loans Faster
There are manageable ways to pay off your student loans more efficiently and ensure you are getting the most out of each payment.
Here are five ways to pay off your student loans faster and save money:
1. Pay Right Away
Consider making student loan payments during your grace period or while you’re still in school, even if you’re not required to do so. If you can, try to pay at least enough to cover the amount of interest you’re accruing each month. That way less interest will capitalize and get added to your principal balance when you enter repayment.
2. Sign up for Automatic Debit
If you sign up for automatic debit, your student loan servicer will automatically deduct your student loan payment from your bank account each month. Not only does this help ensure that you make payments on time, but you may also be able to get an interest rate deduction for enrolling. Contact your loan servicer to see if your loan is eligible for this interest rate reduction.
3. Pay More than Your Minimum Payment
Paying a little extra each month can reduce the interest you pay and reduce your total cost of your loan over time. Continue to make monthly payments even if you’ve satisfied future payments, and you’ll pay off your loan faster. Ask your servicer if the additional payment amount can be allocated to your higher interest loans first.
4. Use Your Tax Refund
One easy way to pay off your loan faster is to dedicate your tax refund to paying off some of your student loan debt. Part of the reason you may have received a refund in the first place is because you get a tax deduction for paying student loan interest.
5. Seek Out Loan Forgiveness and Repayment Options
There are a number of situations in which you can have your federal student loan balance forgiven. There are loan forgiveness and repayment programs for teachers, public servants, members of the United States Armed Forces, and more.
Most of these programs have specific eligibility requirements, but if you think you might qualify, you should definitely do some research. Also, research whether your employer offers repayment assistance for employees with student loans. There are many who do!
paying off student loans in full
How to Pay Off Student Loans Fast
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- 1. Make extra payments the right way
- 2. Refinance if you have good credit and a steady job
- 3. Enroll in autopay
- 4. Make biweekly payments
- 5. Pay off capitalized interest
- 6. Stick to the standard repayment plan
- 7. Use ‘found’ money
Use a student loan payoff calculator to see how fast you could get rid of your loans and how much money in interest you’d save. Here are seven strategies to help you pay off student loans even faster.
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.
