Have you ever dreamt about paying off your student loans fast? By paying more than the minimum payment and taking advantage of interest rate deductions like autopay, you can pay down your student debt quickly.
Student loan debt has become a normal part of attending college. For many graduates, it can be shocking to realize just how much they owe when they graduate.
Your student loan payment can hold you back from doing the things you love, and it takes a portion of your income that you could use to reach other financial goals.
Your student loan payment can also make it harder to take risks when it comes to your career or other options.
How to Pay Off Student Loans Fast
1. Paying down student debt strategically begins by knowing details about each loan
The first step to building a strategy to paying down student loan debt is knowing how much you owe across all your different loans.
To track your private student loans, check your credit reports to ensure you know each of your lenders.
Remember, student loans are reported on credit reports so ensure you pay all loan bills on time to avoid hurting your credit scores. As you collect info about each of your student loans, make a list to track:
Type of Loan (Federal or Private)
Fixed-Rate or Variable-Rate
Total Due (w/ Interest)
Grace Period (Interest Accrues)
Knowing these details can help you figure out what loans are costing you the most — and how to approach which loan you want to focus on paying off first.
The Office of the U.S. Department of Education provides some helpful calculators to help you understand your loan terms and repayment estimation.
2. Know the pros and cons of refinancing (or consolidating) student loans to lower your monthly payment
After knowing details about each of your loans, you might be tempted to consolidate (or refinance high-interest rate student loans) into another loan program.
Refinancing can help you lower your monthly payments, but can also increase the term length and interest rates. You will also lose your federal borrower benefits (e.g. grace period, Perkins loan forgiveness, federal loan protections, etc).
Consolidation or refinancing your student loans can be a great option for you — just know how it will impact you financially.
3. Make bi-weekly student loan payments to save money on interest
“Paying half your student loan payment every two weeks works out to a full extra payment a year,” says Betsy Mayotte at the American Student Assistance(ASA).
And you’ll also save money on the total interest you’d be paying. Check out this helpful calculator to see how much you can save by making bi-weekly payments. The key is to ensure you’re making both payments before the due date.
4. Sign-up for automatic payments to earn an interest rate reduction by around 25%
Many lenders are offering a small reduction in interest rates simply by signing up for automatic payments. Typically, a lender will discount your interest rate by .25%.
Signing up for direct deposit not only lowers the cost of your total loan but also ensures you won’t miss a payment (which is key for improving your credit scores).
5. Ensure that any overpayments you make are used to cut down your principal
The swiftest way to cut down your student loan debt is to make payments against your principal balance. If you want to make bigger payments on your loan, just make sure your lender is informed to use that payment to your principal. Sometimes lenders need to be instructed to do this.
6. Stay motivated to pay off student loans by focusing on eliminating one loan at a time
When you have several student loans to pay off, it’s easy to get overwhelmed and stressed out. This is why it’s important to get hyper-focused on eliminating one loan at a time.
This means making minimum payments on all your student loans — but making additional payments on one particular loan. As you begin cutting down the principal balance, celebrate every win (e.g. each time you knock of $1,000).
Take Advantage of Any Loan Forgiveness Programs You Can
There’s no faster way to pay off your student loans than to have them canceled. If you work as a teacher, you can qualify to have your student loan debt forgiven after five years.
You may qualify for a similar program if you work for the government or for a nonprofit, although the length of time is longer. Teach For America and AmeriCorps also offer programs that can help you pay off your student loans.
Some hospitals may offer forgiveness programs if you work in inner cities or rural areas. See if your current job offers any help with student loans as well.
It’s easy to talk about ways to pay off your student loans faster, but actually doing it is the hard part.
Once you decide which loan payoff strategies make sense for your financial situation, put a plan in place that includes regular check-ins to keep you on track.
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