How to Pay Off Your Student Loans Faster

For the past year-and-a-half that I’ve been paying off my student loans, I’ve often found myself thinking about what life would be like if I didn’t have this pesky obligation. For one, I’d have a lot more room in my monthly budget and I would feel so much more freedom in my finances.

Admittedly though, I haven’t done much to speed up the payoff process, only making the minimum monthly payments for most of the term of my loan. I guess it took a backseat to saving money for a house. But, over the last few months, I’ve put some extra effort, money and strategy into paying down my student loans.

No matter the circumstances, student loans really are not a fun part of adult life. Here are some pointers for getting rid of them faster:

Get motivated to pay them off sooner.

It took me a while to finally make paying down my student loans a priority. Why? Because why do I want to spend more money than I actually have to? In reality, paying off student loans ahead of schedule will really just put you in a better financial state in the future. You’ll pay less interest over time and you won’t actually be stuck with the same student loan for 20 years like your term says you will. Find a really good reason that’s personal to you that drives you to pay them off faster. Imagine your life without student loans. Think of anything that will keep you strong in the student loan pay off game.

Pay more than the monthly minimum payment.

Whether it’s $20, $200 or any random amount in between, making a higher payment than required is the best way to pay off your student loans faster.

Your student loan should already be included in your budget. You can budget for higher than your minimum payment, or you could use any money you have left over at the end of the month as an extra loan payment. You can even implement both methods. Either way, paying more than required is a great way to pay student loans off faster.

Tip: Be aware of how extra payments are applied to your account. You want to make sure that the additional amount you are paying is applied to the principal amount rather than to interest.

Decrease your expenses.

Any extra money that can be put toward student loans will help you pay them off faster. “But, what if I don’t have extra money?” You ask. Take a look at your expenses and see if there is anything you can do to slash some. Ask your cable company about a cheaper package, cancel your monthly subscriptions to Netflix, Spotify, Amazon Prime, etc., get a quote from other insurance companies or change your habits and eat out less often and make coffee at home.

Put birthday money, Christmas money, tax return funds, raises and any other extra cash toward your student loans.

If you receive money in addition to your normal paycheck, avoid spending it… no matter how much you want that new computer, those new shoes or to go to that concert. It will be worth it as you get closer to paying off your student loans. Your future self will thank you!

Enroll in auto-pay.

When you enroll in auto-pay, your student loan payment is automatically taken from your account on the due date. Most lenders offer an interest rate decrease for people enrolled in this service. Not only does this eliminate the hassle of having to remember to manually make your payment, but it decreases the amount of interest you pay over time, allowing you to pay off your loans faster. Visit your lender’s website for information or contact them directly.

Avoid repayment programs and other repayment plans.

Although these programs come with a lower monthly payment, which always sounds amazing, they also come with longer terms, which means more interest paid over time. If you are really, really struggling to make those monthly payments on time and in full, these options might work for you. But, if you can make the payments, still pay your other bills and have money left over to enjoy yourself, don’t be fooled by the thought of a low payment.

To put it in perspective, I am on track to pay my most expensive loan off in 8.5 years. There are three other repayment plans I could go with. The most enticing option would decrease my payment each month by $446. (I told you it was enticing.) The catch? It would increase the term of my loan to 23 years and I’d be paying $50,000 more interest! No, thank you. It’s nice to know I can switch to this plan if I am ever in a real bind, but I think I’d rather keep my money than give it to my lender.

Refinance or consolidate your loans

Putting extra money toward your student loans is a sure way to pay them off early, but if you want to make an even more drastic change, look into your refinancing and consolidation options. You can possibly refinance your loans to get a lower interest rate and term length. If you have multiple student loans, you can consolidate them so they combine together, giving you only one loan payment.

Get a side job.

If your schedule allows it, a second job can help you reach your goals in paying off your student loans early. All money made with your second job can be put toward your student loans. While this may be easier said than done, it’s definitely helpful.

I’d love to hear how you’re currently trying to pay off your student loans faster. Even better, if you already did, please let us know how you accomplished it! Let us know in the comments below.

3 Responses to “How to Pay Off Your Student Loans Faster

  • Well said … The bit about “Be aware of how extra payments are applied to your account,” should be bolded, red text, bumped up font and underlined. This blindsided several of friends and relatives over the years – paying extra just to find out that the lender was simply kicking the can down the road. It’s effectively putting the payments into escrow and should be an illegal practice. It can be an article in itself.

  • Interesting, when we make payments on the JDCU student choice line of credit it automatically goes to the interest first and then a small portion goes to the principal, unless I am missing something when I make a payment, we don’t have the option to put towards principal. I guess watch the payment terms of your loans or lines of credit while applying.

    • Amanda Bridge
      4 years ago

      Hi there. In any student loan repayment, the payment will always satisfy the interest first and then the rest goes to principal. This part of the blog post refers to making any extra payments that are in addition to the regular monthly payment you usually make. Let’s say your monthly loan payment is $250, but you have $80 in accrued interest. Out of your $250 payment, $170 would go to the principal amount. However, if you wanted to pay another $250 a week later, you would just have to make sure that your additional $250 is applied to the principal amount.

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