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Student loan debt can feel overwhelming and take decades to pay off. The standard federal student loan repayment term is 10 years, but the average student borrower takes 20 years to fully repay their debt. But that doesn’t have to be the case. There are many options to shorten this repayment timeline and get out of debt quicker. Here are some of the best ways to pay off student loans.
1. Make additional payments
If you can afford it, make larger payments to cut the principal more quickly and reduce the total payoff time. By reducing the principal balance, you’re minimizing the duration of the loan period and the interest accrued.
For example, a $25,000 student loan with a 6.8 percent interest rate and a 10-year repayment period would cost $288 monthly. Using a student loan calculator, you can see that paying $400 monthly instead of $288 enables the borrower to repay the loan in less than seven years.
Another strategy is to pay biweekly rather than monthly.
“Just be sure to advise your loan servicer to apply your extra payment to your principal balance, rather than placing your account in a ‘paid ahead’ status,” says Jessica Ferastoaru, student loan counselor at Take Charge America. “This will allow you to pay down your principal balance more quickly and save money on interest.”
If you have multiple loans, there are several strategies for choosing which to pay extra toward. To save the most money, starting with the loan with the highest interest rate is usually best.
2. Set up automatic payments
It may be tempting to apply any money left over at the end of the month to your student loans. But if your budget is tight and you don’t tend to have extra at the end of the month, doing so could mean slowing your payment pace.
If you’re unsure how much more you can devote to your student loans every month, look at your budget to determine the amount you can afford.
Then, set up automatic payments for the beginning of the month. That way, you won’t accidentally spend that money. Take care when setting your payment amount to avoid spreading your budget too thin.
3. Limit your debt with a part-time job in college
Getting a part-time job while attending college is one way to keep college debt in check because you can use those earnings to reduce how much you borrow in the first place and make your repayment plan that much easier. You can earn up to $7,600 for the 2023-2024 school year without affecting your eligibility for need-based financial aid.
Check your school’s resources or career center to see if they’re hiring for any on-campus jobs. On-campus jobs tend to be more understanding of unusual or busy class schedules. Online jobs are more abundant than ever, giving you even more opportunities that work with your schedule and skill set. You can take summer jobs between school years to earn even more.
Yet another option is finding a side hustle to help limit your student loan debt. Side hustle opportunities have multiplied in recent years and can be easier for college students as they can be done in their free time rather than on a fixed schedule set by an employer. You may also be able to set your pay rate with many side hustles. Some of the top side hustles for college students include freelance writer, pet sitter, dog walker, social media manager and online tutor.
4. Stick to a budget
Planning and understanding your monthly cash flow can make it easier to know where to cut back and reallocate those funds toward your student loans.
“If you’re trying to pay down your student loans faster, one of the best ways to reach your goal is to develop a budget,” says Ferastoaru. “If you’re able to meet a savings goal each month by sticking to a budget, you can use that money to pay down your student loans.”
Assess your spending habits and your ability to keep a budget. If you find it hard to maintain a budget, use a student budget calculator to help you get on track and stay there.
5. Consider refinancing
Refinancing your student loans could help you pay down your loans faster by helping you obtain a lower interest rate, a shorter repayment period or both.
Note that this option may not be available right after you graduate unless you’ve managed to build a solid credit history or you have a creditworthy co-signer. If not, it can take some time to establish your credit history and meet the eligibility criteria for refinance lenders. Many lenders also require a stable income or employment history to qualify.
If you refinance federal student loans, you’ll lose access to certain benefits, including student loan forgiveness programs and income-driven repayment plans.
Before refinancing, shop around with a few lenders to see which offers you the best rates. You can also use a student loan refinance calculator to understand the numbers and whether it’s the right move.
6. Apply for loan forgiveness
Forgiveness programs can eliminate all or part of your student loan debt, but each program has unique requirements and strict approval standards:
- Public Service Loan Forgiveness: To be eligible for the PSLF program, you must be employed full time in a public service position by a government or nonprofit organization, have Direct Loans or have consolidated other federal student loans to qualify and make 120 qualifying payments under an income-driven repayment plan. Getting approved for the program is difficult, so read the details carefully to stay on track.
- Teacher Loan Forgiveness: To qualify for the Teacher Loan Forgiveness program, you must have an eligible loan under the direct loan program or FFEL program and teach full-time for five consecutive years in a low-income school or educational service agency. At least one of those years must be after the 1997-98 academic year. Depending on your specialty, the program forgives up to $5,000 or $17,500.
- Income-driven repayment forgiveness: It’s also possible to have a portion of your student loans forgiven if you’re on an income-driven repayment plan. Once the 10-, 20- or 25-year repayment term ends with these programs, any remaining balance is forgiven. The forgiven amount is not taxable if you hit the end of your repayment period before 2026.
7. Lower your interest rate through discounts
Most lenders will offer a 0.25 percent discount if you set up automatic payments on your loan, and some may go as high as 0.50 percent with relationship discounts.
In addition, private lenders may offer interest rate discounts if you meet certain criteria, like making a certain number of on-time payments or taking out another loan with the same company. If you have private student loans, contact your lender and ask about interest rate reductions and discounts.
8. Take advantage of tax deductions
The federal government offers a student loan interest deduction on your taxes for interest paid during the year on qualified loans. The law allows you to deduct up to $2,500, depending on your adjusted gross income. The deduction is available for both federal and private student loans.
You can claim this tax deduction if you’re legally required to pay interest on a qualified student loan and your filing status is not married filing separately. This program also has adjusted gross income limits, which are set annually. You do not need to itemize to claim this deduction.
It can also be a good idea to take some or all of your tax refund every year and put it toward your student loans.
“It’s a good idea to speak with a tax advisor to make sure you’re taking advantage of any relevant tax benefits related to your education,” says Ferastoaru.
9. Ask your employer about repayment assistance
Many employers have begun offering student loan repayment assistance or tuition reimbursement. Some employers, including Starbucks and Walmart, even offer free college for workers who sign up for degree programs within a chosen network of courses and schools.
Employers can contribute up to $5,250 annually toward an employee’s college tuition or student loan repayment assistance through 2025. This benefit is not taxable income for the employee, a major benefit for workers pursuing higher education while continuing to work.
Employers can deduct the expense, too — so everyone benefits. Check your employee manual or speak with your HR department to see what tuition assistance or loan repayment options are available at your company.
Pros and cons of paying off student loans early
Pros of paying off student loans early
- Reach other financial goals sooner. By paying off your student loans quickly, you’ll be able to put more of your focus into things like retirement, homeownership and savings.
- Improve your debt-to-income ratio. Getting rid of a loan lowers the amount of debt you have relative to your income, which will help you qualify for other funding, like a mortgage or credit cards.
- Pay less interest over the life of the loan. The less time you spend repaying your loans, the less interest you pay. By paying off your loans early, you can easily reduce the overall cost of your loans by hundreds of dollars.
Cons of paying off student loans early
- Could lose eligibility for loan forgiveness. If you’re working toward loan forgiveness through an income-driven repayment plan or Public Service Loan Forgiveness, making extra payments or paying your loan in full will reduce the amount you will see forgiven.
- May miss out on stock market gains. Paying extra on your student loans instead of investing for retirement and other long-term goals could cause you to miss out on gains. In some scenarios, you may be able to make more money through investing than you would save in interest by paying off loans early. That said, investing comes with risks.
- Draws focus from other forms of debt. Paying off student loans early may not be worth it if you have other high-interest debts. For instance, if you have a credit card balance with a 16 percent interest rate, it makes more sense to put extra payments toward that account rather than toward a student loan with 5 percent interest.
The bottom line
Student loan debt can be a significant financial burden, but there are steps you can take to eliminate yours more quickly, and you don’t need a high salary to do it. Some are widely available, like automatic payments, while others require a particular job or financial situation.
When considering how to pay off student loans fast, determine the best approach for your finances and personal goals.
Frequently asked questions
It typically takes between 10 and 30 years to pay off a student loan balance, depending on your loans’ interest rates, balance owed, annual income and repayment plan.Your chosen repayment plan greatly influences how long it will take to eliminate student loan debt. While the standard student loan repayment timeline is 10 years, you can also opt for extended and graduated repayment plans for federal loans that last for 25 to 30 years.
Once you’ve considered how to pay off student loans more quickly, it’s also important to consider whether or not you should pay your loans off early. The answer depends on your situation. You probably should if you can afford to pay more than the minimum payment without sacrificing other financial goals.Because student loans come with low fixed interest rates and fixed monthly payments, you may not be in a hurry to pay them off. If you have other high-interest debt like credit cards or personal loans, focus on those first.