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Published: Jun 28, 2023 14 min read
Graduation Cap Slicing through The Word Loan
Jose Velez / Money

Student debt saddles tens of millions of Americans. Many want to get rid of that debt ASAP.

Though there are many schools of thought regarding the best way to pay down debt quickly, much of what works for knocking out other debts can also work for student loan debt. There are a few nuances with student loans you should know about, but it’s nothing you can’t overcome with some creativity and intention.

Here are nine tips on paying off your student loans fast.

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9 ways to pay off student loans early

Follow these strategies, and you'll be on the path to putting student debt in your rearview mirror.

1. Make more than your minimum payment

If at all possible, throw some extra money toward your monthly payment — even if you start with a small sum. People who put just a little extra may even get more motivated to increase the extra amount with time.

This chart shows how much faster you could pay off your student loans with an extra $50, $100 or $200 a month.

How much can you save by making additional payments on your student debt?
Example: $35,000 loan amount, 10-year loan term, 5% interest rate, $370 monthly payment
No extra payments $50 extra per month $100 extra per month $200 extra per month
Pay-off time 10.1 years 8.7 years 7.6 years 6 years
Total payments $44,591.68 $43,082.79 $41,989.82 $40,509.99
Total interest paid $9,591.68 $8,082.79 (You save $1,508.89.) $6,989.82 (You save $2,601.86.) $5,509.99 (You save $4,081.69.)

If you plan on making extra payments, here are two quick tips:

  1. Tell your lender put your additional payments toward your loan principal balance. Otherwise, the company may just apply it to your interest, which won’t be as helpful.
  2. If you have multiple student loans with different interest rates, focus on paying off the loans with the highest interest rates first. This will save you the most money in the long run and help you get rid of your debt faster.

2. Use your tax refund to your advantage

Every year, the average taxpayer gets about $3,000 back from the IRS.

Although it can be tempting to blow that windfall on a big purchase, one of the smartest things you can do with it is to make additional payments toward your debt.

When your next income tax refund (or any other financial windfall) comes, consider putting some, or even all of it, toward your student debt. Again, don’t forget to apply it to the principal.

3. Check out loan forgiveness programs

Depending on the type of student loan debt you have and your line of work, you may be eligible for a federal student loan forgiveness program, particularly if you’re a federal government employee or a teacher in a low-income school or education service agency. Here are two major options.

Teacher Student Loan Forgiveness

To be eligible for the Teacher Student Loan Forgiveness program, you must teach full time for five complete and consecutive academic years in a low-income school or similar institution. Eligible borrowers can receive up to $17,500 of forgiveness on their subsidized or unsubsidized loans.

Public Service Loan Forgiveness

Another option is the Public Service Loan Forgiveness (PSLF) program. This option is available if you are employed full-time by a U.S. federal, state, local or tribal government or nonprofit organization, military service included. Your loans must be federal Direct loans (you can consolidate other federal loans, such as Parent PLUS loans, into Direct ones), and you must repay your loans through an income-driven repayment plan. After 120 qualifying payments — or about 10 years — your remaining balance can be forgiven.

The eligibility criteria for these programs are extremely specific, so be sure to consult with your loan servicer to find out if you qualify. For additional information and requirements, visit the Federal Student Aid page for student loan forgiveness.

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4. Look for interest rate discounts

Though most student loans have fixed interest rates, you may be able to save some money by setting up automatic payments. This tip applies to both federal student loans and private loans. For many lenders, autopay reduces the risk that you’ll miss payments, so this risk reduction is passed onto you with a discounted interest rate.

Many loan servicers offer an interest rate reduction as long as your autopay plan is active. A reduction of 0.25% is common, though some private student loans may offer up to 0.50%.

5. Consider different repayment plans

One of the great things about federal student loans is the payment flexibility offered through several student loan repayment options. Once it’s time to start repaying your loan, it will default to the standard repayment plan, which means you’ll pay your loan off in 10 years.

Here are a few other options you could be eligible for.

  • Revised Pay As You Earn Plan Repayment Plan (REPAYE)
  • Pay As You Earn (PAYE)
  • Income-Based Repayment Plans (IBR)
  • Income-Contingent Repayment Plan

Income-driven repayment plans may temporarily lower your federal loan payments (and extend the amount of time to pay them off). If you're already in one of these repayment plans, switching back to the standard plan can shorten your payment timeline. (Just beware of interest capitalization, which can happen when you leave an income-driven plan; more on that below.)

Another strategy that could be helpful is using one of these plans to lower your federal loan bill, so that you have more money in your budget to focus on paying off a higher-interest, private loan. When the private student loans are paid offer, you can redirect all that cash into your federal loans to catch up.

Not sure which plan is best for you? Use the U.S. Department of Education's loan simulator tool to find out which repayment plan meets your needs.

6. Avoid capitalized interest

Capitalized interest takes place when unpaid interest is added to the loan principal, which increases your overall student debt. If you have private student loans, interest will accrue while you’re a college student (even part-time), during your grace period, and after a forbearance or deferment period ends. Interest also accrues on most federal loans during these periods. (Subsidized federal loans offer interest-free periods.)

If you’re at all able, it might be a good idea to make monthly interest payments to avoid capitalization, or alternatively, to make a lump-sum payment of that interest before the repayment period begins.

Note that student loan interest won’t capitalize if your federal student loans are in the current COVID-19 forbearance period, scheduled to end on Sept. 1. If they were in a deferment status before March 13, 2020 (when the first payment pause started), then the interest may begin to capitalize after the current forbearance ends.

7. Create a budget

A staple of personal finance tips, budgets are nothing more than a spending plan that directs your money where you need it most. If you want to fast-track your student loan payment, your budget might be lighter on discretionary spending (i.e., entertainment, travel, dining out, etc.) with more allocated toward debt repayment.

Even if you don’t like the idea of a budget, just know that it can be flexible and made to meet your financial goals, as it’s not set in stone.

Don’t know where to start? A plethora of budgeting apps and tools can get you started. Some popular options include Mint, Personal Capital and You Need a Budget (YNAB). For a more DIY approach, read this budgeting 101 guide.

8. Make biweekly payments

A bi-weekly payment schedule can help you pay off your student loans faster without introducing a big shock to your budget.

If you pay your student loan monthly, you’ll make 12 payments per year. But by switching to a bi-weekly payments, you'll be able to squeeze in an extra payment for a total of 13 payments each year.

Doing so is fairly straightforward: Instead of paying your student loan bill once a month, you divide the bill by 2 and pay it every other week. Over the course of the year, you’ll naturally pay one extra time, meaning you’ll pay off your loan quicker — and save money on interest.

9. Refinance your student loans

Unlike federal loan consolidation, which combines your federal loans into a single loan, student loan refinancing can work for both private and federal loans. If you’ve got different types of loans (private and federal) and want a single payment, refinancing might be for you.

This move works best for someone who:

  • Has a good credit score
  • Could get a lower interest rate on a new loan
  • Can get a cosigner on the loan if needed
  • Won’t need to access federal loan benefits like grace periods, forgiveness, forbearance, deferments or repayment plans

The best student refinance loan companies will give you low interest rates, have no prepayment penalties and provide some loan forbearance options.

Make sure you fully understand the implications of refinancing your loans before moving forward — and read all the disclaimers and fine print. It can’t be undone and could take away some of the payment flexibility and protections you might have enjoyed with your federal loans, as well as extend your repayment term over a longer period of time, causing you to pay more interest or even increase your original interest rate. Read more about the pros and cons, plus how to refinance your student loans.

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How do I check my student loan balance?

You can check your federal student loan balance by logging onto the Federal Student Aid website with your FSA ID. Here, you can access information about your loan servicers and how much you owe. If you need to figure out how much you owe in private student loans, check with your lender or look up your credit report.

Should you pay off your student loans early?

There is no single answer to whether you should pay off your student loans early; what's best for you will not only depend on your student debt but also your bigger financial picture. If you’ve got a very low interest rate on your student loans, then it might make sense to tackle other, higher-interest debt you have or even invest your money where it could earn higher returns.

On the other hand, it might be better for some people to pay off their student loans because the debt burden could be hindering their financial growth or other goals like starting a family, buying a home or investing in the stock market.

Earning interest rather than paying interest is ideal, and eliminating student loan debt is a great place to start, particularly if you have private student loan debt, which tends to be more expensive and has fewer borrower protections. However, this comes down to the individual and how paying off student loans will play into their long-term financial plan.

Paying off student loans fast: Summary

These days, paying for college almost always involves taking out student loans. And that debt can loom over borrowers for years after they leave college.

Climbing out of debt is a difficult endeavor that can discourage even the most driven, financially responsible among us. However, the result can be an exhilarating level of financial freedom that makes the grueling process worthwhile. If you want to pay your student loans off fast, here’s a recap of the steps you need to take:

  1. Make more than your minimum payment
  2. Use your tax refund to your advantage
  3. Check out loan forgiveness programs
  4. Look for interest rate discounts
  5. Consider different repayment plans
  6. Avoid capitalized interest
  7. Create a budget
  8. Make biweekly payments
  9. Refinance your student loans

More from Money:

How to Get Student Loan Forgiveness

Should I Refinance My Student Loans?

Everything You Need to Know About Student Loan Interest Rates