11 Tips to Pay Off Student Loans Faster

People with a bachelor’s degree earn $24,000 more per year on average than those with only a high school diploma, according to Northeastern University. However, that higher earning potential comes with a higher cost. Smart Asset reported that the average student loan debt is $28,400 with an average payment of $297 for 10 years.

Here are 11 tips to help pay off your student loans and get out of debt fast.

No. 1: Get Clear on the Numbers

The first step to paying off college debt is to get clear on how much money you owe. College debt usually is a combination of federal and private loans. With each loan, you will want to look at a few different terms.

Loan type: Public and private loans have different payment types.
Loan amount: This is how much money the loan is for.
Interest rate: This is how much interest you will pay on top of the principal amount of the loan.
Loan Term: This will tell you how long it will take to pay off your loan balance in months or years.
Monthly payment: This will tell you how much to pay each month.

Here is a student loan calculator to help you calculate how long it will take to pay off your loans. Make sure to check Student Aid to get a complete picture of all your loans.

No. 2: Understand the Repayment Plans

Now that you are clear on the numbers, it is time to get clear on the different repayment options. Here are a few of the most common options.

Federal Standard Repayment Plans:
- This is the standard 10-year repayment plan. If you get a federal student loan, you will automatically be enrolled in this plan.
Federal Extended Repayment Plan:
- If you have a Direct Loan or Federal Family Education Loan (FFEL), you can enroll in this 25-year repayment plan.
Federal Graduated Repayment Plan:
- For people with Direct or FFEL Loans, they can qualify to have a 10 to 30 year repayment plan. These generally start with a small payment amount and increase over time.
Federal Income-Driven Repayment Plan:
- These repayment plans scale your payment based on your income and family size. The repayment timeline is around 20-25 years.
Private Student Loan Repayment Plan:
- These offer five to 20 year repayment plans. Interest rates are determined by market rates and what your lender offers.

If you can, try to go on the 10-year repayment plan. The faster you can pay off your loans, the more you can save for retirement, a house, and other financial goals.

No. 3: Budget Your Money

Using a budget will help you find additional income to help pay off your student loans faster. Here are a few mobile apps to set a budget.

On top of that, here are a few of our favorite blogs with ideas on how to save and make more money.

Last but not least, be sure to pay off high-interest debt like credit cards and payday loans. Once you pay them off, build an emergency fund so you don’t go back into debt.

No. 4: Communicate Your Goal with Your Friends and Family

Paying off large amounts of debt can be hard to do on your own. Be sure to let your friends, family, and significant other know about your plans. This will let them know why you won’t be attending certain trips or going out to eat. You can always do free/low-cost activities with them instead.

No. 5: Set Up Automatic Payments

Setting up automatic payments will prevent you from missing payments. Most lenders will offer a 0.25 percent to 0.5 percent discount if you set up automatic payments.

No. 6: Make Extra Payments

Making extra payments will help you pay off your loans faster.

The first option is to do bi-weekly payments. This means you will get two extra payments vs. bi-monthly payments.

The second option is to use the extra money that you receive to pay off loans. This includes tax refunds, raises and bonuses, gifts, and other unexpected money.

Another way to make extra payments is to use automatic savings apps like Digit and Qapital. They automatically transfer money into a savings account. Once you save enough money, you can transfer it to your checking and use it to pay off student loans.

Last but not least, if you work part-time while in school, you can start paying off loans. If you choose this option, make sure to pay off the unsubsidized or private loans first, since they will accrue interest while you are in school.

One thing to note is when you pay more than the minimum monthly payment, your student loan servicer might put that extra money on to your next month’s payment. Be sure to communicate with them so that extra money gets applied to paying off the loan faster.

No. 7: Take Advantage of Tax Deductions

Paying off your student loans may qualify you for certain tax deductions.

The first deduction is a student loan interest deduction on your taxes for interest paid during the year. It allows you to deduct up to $2,500 depending on your income.

The second is a deduction for up to $4,000 per year on tuition and fees, but not room, board, and transportation. This money is only for those enrolled in university.

No. 8: See If You Qualify for Loan Forgiveness

Setting up automatic payments will prevent you from missing payments. Most lenders will offer a 0.25 percent to 0.5 percent discount if you set up automatic payments.

No. 9: See If Your Employer Has a Program

Many companies offer to help you pay off student loans while you work for them. Be sure to reach out to your human resources team to learn more about your benefits, and if your company has a program.

If your company doesn’t have one, send this list of student loan repayment programs to them. Due to the Consolidated Appropriations Act of 2021, there are now “employer-provided student loan repayment as a tax-free benefit to employees. This means that through December 31, 2025, employers can choose to make tax-exempt annual contributions of up to $5,250 per employee towards education debt.”

These funds don’t count toward an employee’s gross taxable income. Only 8 percent of companies currently use it. If your employer doesn’t, suggest it to your human resources or finance team.

No. 10: Consider Refinancing or Consolidating Your Loans

Consolidating or refinancing your student loans might be a good option if you have a good credit score.

According to SoFi, “refinancing is when you receive a loan with new terms and use that loan to pay off one or more existing loans.” The potential benefits are one monthly bill, lower monthly payments, and reducing the amount of interest you pay over time. Refinancing student loans is generally only available from private lenders.

Consolidation allows you to combine multiple loans into one and offers many of the same benefits as refinancing. The difference is that your rate is measured by your credit history and other personal financial information. The main thing to watch out for is losing benefits like income-driven repayment, forbearance, and forgiveness when you consolidate federal loans. For more information check out What is Refinancing vs. Consolidation.

No. 11: Take Advantage of Zero-Interest Through 2022

As of today, there is zero payment due and zero interest on federal student loans due to COVID-19 through January 31st, 2022. If you can afford it, take advantage of this time to reduce the principal while the interest rate remains at zero. Many people even pretended that this never happened. For more information view this Washington Post article about student loan relief being extended.

Paying off student loans takes persistence and patience. Most loans will take years to pay off, so being disciplined is essential to your success. By leveraging these tips, you will be able to pay off your student loans faster, so you can focus on your other financial goals.

Are you looking for other ways to save money and get ready for life after college? If so, here are 13 tips to make living with roommates easier, and ideas on how to save money while living in the big city. This blog covers 10 tips to prepare for life after college, and how to start saving for retirement (hint: start early.)