How to Pay Off Student Loans Fast

How to Pay Off Student Loans Fast

Student Loans

When considering the best way to pay off student loans, it may seem obvious that the best strategy would involve math. After all, student loans, money and math all seem to go together. However, researchers at the University of Colorado Boulder have determined the best way to pay off student loans is through a mathematical model.

Set up auto payments for an interest rate reduction

Federal student loan lenders and some private lenders offer a small interest rate reduction if you enroll in automatic payments. With autopay, your lender automatically drafts payments from your account rather than having you manually make payments each month.

This is a good way to ensure you’re never late making a payment, and the interest rate reduction — usually 0.25 percentage points — can add up to hundreds of dollars in savings over the life of your loan.

You can easily compare prequalified student loan refinance rates through Credible.


Lender and Bonus disclosure

Sofi: If you refinance $100,000 or more through this site, $500 of the $1,000 cash bonus is provided directly by Student Loan Planner. Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (). Additional terms and conditions apply; see for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

Rate Match Guarantee Disclosure

Get $100 when you fund a Student Loan Refinance offered by SoFi Lending Corp. or an affiliate. $100 bonus not available to residents of OH. Rate Match valid only for private student loan refi products & will be on the rate, exclusive of all discounts. Eligible documentation of a competitor’s current rate offer, issued within 30 days of your SoFi pre-qualified rate, will be determined at SoFi’s sole discretion and must be for the same loan amount and repayment terms. Lowest rates reserved for the most creditworthy borrowers. Void where prohibited by state law. See full terms & conditions at SoFi reserves the right to modify or discontinue at any time without notice. Additional terms & conditions apply; see CFL#6054612, NMLS#1121636 ()

Student Loan Planner® Bonus Disclosure

Upon disbursement of a qualifying loan, the borrower must notify Student Loan Planner® that a qualifying loan was refinanced through the site, as the lender does not share the names or contact information of borrowers. Borrowers must complete the Refinance Bonus Request form to claim a bonus offer. Student Loan Planner® will confirm loan eligibility and, upon confirmation of a qualifying refinance, will send via email a $500 e-gift card within 14 business days following the last day of the month in which the qualifying loan was confirmed eligible by Student Loan Planner®. If a borrower does not claim the Student Loan Planner® bonus within six months of the loan disbursement, the borrower forfeits their right to claim said bonus. The bonus amount will depend on the total loan amount disbursed. This offer is not valid for borrowers who have previously received a bonus from Student Loan Planner®.

6. Pay Extra and Be Consistent

One thing that can slow down your student loan payoff is paying only the minimum due. Joshua Hastings, the founder of the personal finance blog Money Life Wax, was able to pay off $180,000 in student loans over a three-year period by taking a focused approach, which included paying extra on his loans every month.

If you’re able to pay extra, you may want to target one loan at a time while paying the minimum on everything else. The question is, do you use the debt snowball method or the debt avalanche?

"When deciding which student loan to pay off first, it's best to go with the one that can free up cash flow quickly. That way you can have more money to throw at the next loan," Hastings says. "As you grow your cash flow, it's a good idea to transition to the high-interest loans."

1. Pay More Than the Minimum

Lenders set a minimum monthly repayment amount for student loans. But paying more than the minimum can go a long way toward eliminating student debt fast.

Take these examples from the Federal Student Aid office. A borrower who takes out $15,000 in student loans can pay off that balance a full year earlier by sending in an extra $15 per month. Throw an additional $60 per month at the balance and you’ll pay it off three years earlier.

Make sure to ask your lender to apply extra payments directly to the principal. That can save you a bundle in interest — over a 10-year repayment plan, paying an extra $60 a month could mean saving nearly $1,200.

Pay off student loans: considerations and limitations

There are important considerations regarding this strategy for student loan repayment.

MORE FROMFORBES ADVISOR ByAmy DaniseEditorByAmy DaniseEditor

  1. Federal Student Loans: First, this model only applies to federal student loans. Why? There are no income-driven repayment plans offered through the federal government for student loans that are private.
  2. Income-Driven Repayment Plans: Second, there may be variances among different income-driven repayment plans such as IBR, PAYE, REPAYE and ICR. Your personal financial information may impact the optimal repayment plan.
  3. Student Loan Refinancing: This student loan repayment plan only applies to income-driven repayment plans and doesn’t include student loan refinancing. If you can refinance student loans, you may be able to save more money and pay off student loans faster. Student loan refinancing rates currently are at an all-time low.

Researchers also need to account for specific circumstances unique to each borrower. The borrowers could refine their model in the future to incorporate inputs such as a borrower’s expected income and living expenses and whether they’re married or have children. This could change a borrower’s ability or motivation to pay off student loans at a certain pace, for example, which could impact the mathematical model.

5. Pay Off Loans With Every Paycheck

Most lenders require monthly payments for student loans, but you can pay your loan off in less time by making more frequent payments.

For example, making biweekly payments when your paycheck hits your bank account can mean paying off your debt faster. That’s because making 26 biweekly payments at half the monthly loan amount adds up to one extra full payment each year.

When She Realized She Had to Make a Change

Although she had a large loan balance with some high-interest debt, it wasn’t until Becky sat down and reviewed her loan terms that she became motivated to accelerate her student loan repayment.

“I did some math and said, I want to get this over with,” she said. “I wanted to rip the Band-Aid off and get rid of the bulk of the loans that were going to cost me the most money in the long run.”

When she graduated from college, Becky had decided she planned on retiring early and pursuing financial freedom. But to do that, she realized she had to pay off her debt so she could focus on investing and growing her money.

“And that was why I really decided it was the best time to start, because if I waited, the student loan interest was just going to accrue,” she said. “It would ultimately take me longer to pay off.”

5. Make Payments While in College

If your student loans don’t require you to pay while in college, that doesn’t mean you shouldn’t. Other than Direct Subsidized Loans, you are responsible for the interest that accrues on your loans while in college. You can make interest only payments which will be applied to the interest accruing on your loan.

Here’s Why You Might Want to Do This

Once your loans enter repayment, the interest is capitalized (i.e., added to your loan principal balance and then you pay interest on that new increased balance). If you have paid all of the interest while in college, there is no interest to capitalize and your loan principal will reflect the amount you originally borrowed when your grace period ends.

You’re not limited to interest-only payments while in school. If you are working it is wise to make whatever payments you can toward your student loans to reduce the overall interest you will pay and your balance when your grace period ends.

Use Your Tax Refund

Making extra loan payments lowers your overall cos
Making extra loan payments lowers your overall cost.

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.

2. Make Bi-Weekly Payments

With this strategy you make half of your monthly payment every two weeks. By doing this, you’ll end up making an extra payment each year, because you will make 26 half payments, rather than 12 full payments. Not only will this reduce your loan balance faster, but it can also save you money on interest.

Be sure to request that your lender apply any extra payments to the loan principal, rather than the next month’s payment.

Some lenders may not allow bi-weekly automatic payments, in which case you will have to make your payments manually.

Note: Pay attention to your loan due date when making bi-weekly payments to ensure both of your payments are received on time. You need to make sure you pay your monthly payment amount in full every month.

Now let’s get into the strategies that may require you to make more of a financial sacrifice in order to pay your student loans off faster.

Weird ways to pay off debt

97. Move to a state with no income tax

One way to increase your income and focus on paying off student loans is to move to a state with no income tax.

Consider moving to states like Washington, Texas or Florida to avoid income tax.

98. Go vegetarian

Eating meat can be expensive, so if you want to boost your payments, consider cutting it out for a while.

If you want, you can go even more hardcore and go vegan.

99. Ditch the booze

Alcohol can be a fun social lubricant, but there’s no denying that it’s also empty calories and can cost a ton of money.

If you want to supercharge your student loan payments, ditch the booze and use the money you’re saving to pay down debt.

100. Sell plasma

You can Google your city and plasma donation centers in your area. You may be able to earn some cash.

101. Sell your eggs

Women who meet certain requirements can potentially earn thousands of dollars selling their eggs. Make sure you’re aware of the requirements and risks beforehand.

102. Marry thoughtfully

Deciding to get married is one of the most important financial decisions you’ll ever make. Also, getting a divorce is expensive. Do your best to make sure your future spouse is truly “the one.”

103. Do odd jobs for neighbors

You can earn money doing odd jobs for neighbors like raking leaves, removing snow, helping them move, etc.

104. Participate in medical studies

You can earn extra money by participating in medical studies in your area. Just be sure to look at the requirements, pay and time commitment.

105. Live in a co-living space

Co-living spaces are on the rise. Living in what is essentially shared housing, similar to dorms can help you slash housing costs.

106. Have your parents buy the highest cost loan

We’ve seen some parents buy borrower’s highest cost loan. If that’s possible in your situation, it could help.

How much money do you have saved/invested?

What to include?

Please include the total balance of your checking and savings accounts, retirement accounts, investments, and other cash accounts.

Sign up for Automatic Debit

Did you know you can reduce your interest rate by
Did you know you can reduce your interest rate by 0.25% by signing 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.

4. Consider Consolidating or Refinancing Student Loans

Consolidating and refinancing offer two ways to streamline student loan repayment. With debt consolidation (or student loan consolidation), you combine multiple loans together at an interest rate that reflects the average rate paid across all of your loans. This can be done with federal student loans to merge multiple loans (and monthly loan payments) into one.

Refinancing is a little different. You’re taking out a new loan to pay off the old loans, so you still end up with one monthly payment. But if that new loan has a lower interest rate compared to the average rate you were paying across the old loans, you could save some money—provided you don’t extend the term. One thing to note about refinancing private student loans is that you’ll need good credit to qualify, which may necessitate bringing a cosigner on board.

Be very careful to avoid student loan scams, which are particularly prevalent if you try to refinance your loans or investigate loan forgiveness.

You can refinance federal and private loans together into a new private student loan, but doing so will cause you to lose certain federal loan protections on your federal loans, such as deferment and forbearance periods.

Stick to a budget

If you’re struggling to cover living expenses, student loan payments, and some occasional fun, you might benefit from budgeting with the 50/30/20 rule. Here’s how it works:

  • 50% of your budget goes toward needs: Required expenses such as housing, utilities, insurance, groceries, transportation, and minimum student loan payments
  • 30% of your budget goes toward wants:  Fun stuff such as hobbies, dining out, and other entertainment
  • 20% of your budget goes toward savings: Long-term goals like an emergency fund, retirement savings, additional principal payments on student loans, and investing

If this is your first time preparing a budget, look through your last few months of bank or credit card statements and categorize your transactions into these three buckets. The process might open your eyes to some changes you could make to pay off your student loans faster. 

Increase Income, Cut Expenses

Two things anyone can do to help themselves out of financial stress is to find a second source of income and/or reduce spending in every category in their budget.

There is money to be made taking a second job as a tutor, a coach, a freelance writer or even taking on the traditional side jobs as a waiter, pizza delivery or babysitting. Create a bank account where any money made on the side goes and use that to make payments on student loans.

The added benefit of a second job is that you have less time to spend money on things like dining out, entertainment, clothes, etc. That means you already should be started cutting expenses in the areas where “want” so often supersedes “need.”

Try a few more expense-cutting steps like getting a roommate to share rent/utilities/food expenses; using public transportation or walking instead of having the expense of a car; move home with you parents until you earn enough to afford expenses and student loan debt.

These might feel like drastic steps, but there aren’t nearly as penalizing as defaulting on a loan.

Consolidate Student Loans

If you received student loans for more than one semester of college, you probably have multiple loan servicers requiring multiple paychecks at various times a month, maybe at amounts you can’t afford.

Applying for a Direct Consolidation Loan (DCL) could be answer.  A DCL allows you to roll several student loans into one new loan, with a lower interest rate

It simplifies loan repayment by giving you a single loan with a single check due each month. It is a fixed rate and allows you to stretch your repayment period out to as long as 30 years, which means lower monthly payments.

The DCL only applies to federal loans.  Private student loans can’t be consolidated in a federal Direct Consolidation Loan. To consolidate a private loan, you must consult with your bank or review the terms of the loan.

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