How to Pay Off Student Loans Fast: 10 Methods to Try

A few months ago, I hit “send” on my final loan payment, and felt the biggest sense of relief.

I’m in my late 30s, which means I’ve been out of college for nearly two decades. But believe it or not, I’d managed to pay off my student loans nearly seven years early! 

Part of it was down to my income, sure. But there were other methods that helped me pay off student loans fast. Now, instead of sending $500+ a month to a loan company, my money stays in my pocket. 

Below you’ll find the methods I used, along with others you can employ, to pay off your student loans quickly (or at least faster than you would simply making the minimum payment). 

This article is part of our How to Make Money in College series. For more tips on making the most of your finances, check out the rest of the series: 

 

First step: Get a deep understanding of your loans

Sometimes, looking at my loan statements made me feel dizzy. Not only was it overwhelming to see just how much I owed, but everything seemed so complicated for a non-numbers guy like me. 

However, the key to paying off your student loans fast is to get a deep understanding of how much you owe, how much interest your loans are accumulating, and your payment schedule. 

If you’re struggling to understand your loan terms (and you’re definitely not alone if you are),  you have a few options to help you sort things out. The best bet may be to work with your college or university’s financial aid department. As a student or even a recent grad, the folks there will be able to help you read your statements and create a solid plan for paying your student loans. 

In fact, you will most likely be required to go through what’s known as an “Exit Counseling Session” before you graduate. Though this meeting may seem like a boring requirement (especially when you’re gearing up to start your new post-grad life), it’s incredibly important that you attend, pay attention, ask questions, and take notes. By the end of this meeting you should understand: 

• Your loan type
• The original amount borrowed
• The date when repayment begins
• The projected payoff date (so you can move it closer) 
• Where/how to make payments
• Your interest rates

If you don’t have access to the financial aid department, you can try contacting the company managing your loans directly. They may seem like “the enemy,” but the truth is, they want you to pay back your student loans without defaulting. Their representatives can walk you through your options and help you understand exactly what’s owed. 

If that’s not an option, consider hiring a financial advisor for a one-off session, speaking to a friend or family member who is good with numbers, or watching a YouTube video that walks through loans, like this one: 

 

How long does it take to pay off student loans?

The amount of time you’ll spend paying off student loans depends on a few different factors:

 

How much did you borrow? 

Some students who borrow small amounts of money may be out of debt just a few years after they graduate. Students (like me) who borrow larger numbers (I was right around $66K at graduation) will need more time to make payments.

 

How much interest are you paying? 

Interest makes all the difference when it comes to how quickly you can pay off your loans. The higher the interest rate, the more you’ll have to pay over time, and the longer it will take to become debt-free. 

For the 2023-2024 school year, federal student loans granted by the government have an interest rate of 5.5% for undergraduates, and up to 8.05% for graduate or professional students. Private loans can have even higher interest rates. You should be able to access this information via your lender’s website.

 

How much can you pay above the minimum payment? 

If you want to pay off your student loans ahead of the scheduled end date, you’ll need to find a way to make more than the minimum payment. There are lots of ways to do this, which is what we’ll talk about in the rest of this article!

 

Using a student loan calculator

Your financial aid officers, or the representatives at the company that services your loans, can help you understand how long it will take off to pay your student loans. But you can also try a student loan calculator to discover how much faster you can pay off your student loans if you change things up with your interest rate and payment amounts. 

 

Make a budget that includes loan payments

For the first few years after college, I didn’t have a budget. I was barely making enough money to cover rent, so figured I didn’t have enough money to make budgeting worth it. 

How wrong I was! In fact, the less money you have to play with, the more important a budget is. It allows you to make sure all your money is going to the right places, without sinking you deeper into debt (which is what happened to me after I missed a few loan payments). 

We’ve got a full guide on how to create a college student budget, and we’ve even got a free template you can use to get started now: 

Make sure you have a prominent place in your budget for your student loan payments. If you’re working on a tight budget, it’s fine to simply have the minimum payment in there for now. But no matter what, set aside money to go toward these payments as soon as you can each month, so you never miss a payment. And if you do… 

 

Miss a payment? Tell your loan agency

I missed more than one payment on my student loans, especially in the years after I graduated when I wasn’t making much money. At the time, I felt ashamed and anxious, so I avoided telling anyone about it. 

If I had a time machine, I’d go back and force myself to make a call to my student loan agency the moment I realized I was going to miss a payment. Because being proactive and letting them know will have a much better outcome than hoping they won’t notice the missed payment (trust me, they will). 

If you call your loan agency to let them know you’re missing a payment, a few things could happen. If it’s a one-off situation, they may be able to pause or delay the payment, which is a much better outcome than defaulting. 

You can also talk with your loan agent about changing your payment schedule or monthly amounts if you find you are consistently falling behind on payments. Missed loan payments can negatively impact your credit score, so even reduced payments are preferable to defaulting! 

By the way, here we have lots of tips on how to improve your credit score.

 

Make biweekly payments

Here’s a cool tip I didn’t know before researching this article: Split your monthly payment in two, paying biweekly.

For example, if you owe $300 at the end of every month, pay $150 in the middle of the month and the remaining $150 at the end of the month. 

Not only can this make loan payments more manageable, but it also helps you pay off your student loans faster, because you’ll actually end up making an extra payment every year, without even noticing it. 

How? 

A monthly schedule would come out to 12 payments per year, while splitting payments among 26 weeks (52 weeks in the year, divided by two), you end up with 13 months’ worth of payments over the same time period.

And on the typical 10-year repayment plan, this tip could shave off one whole year of payments AND interest—talk about major savings.

 

Set up automatic payments

Take it from me—without automatic payments, it’s very easy to fall behind. Don’t risk it; set up automatic payments, so you don’t have to worry about logging in every month. 

Staying current with loan payments is key, but there’s another benefit to automatic payments: Some loan servicers offer discounts if you use autopay. It’s likely the discount will be minimal (like .25%), but every cent matters when it comes to paying off your student loans quickly. 

Remember, you can always switch off automatic payments if you’re worried you’ll overdraw your account or need to change your banking information. Just set a reminder on your calendar when the payment is coming up, and you can check your monthly payment off your to-do list. 

 

Make extra payments when you can, and stick to standard payments when you can’t

You’ve got a budget going, and monthly payments set up so you’re never late. Now, it’s time to find ways to make extra payments to chip away at your debt faster. 

Making extra payments may sound daunting, especially if money is tight. But remember that your extra payments can be small amounts; even ten dollars extra each month will get you out of debt sooner. 

There may be moments when you have a windfall of cash. While you don’t have to put every extra dollar you have into your loans, it doesn’t hurt to set aside some of the extra money you get at the holidays, for birthdays, or as bonuses at work, and put them toward your loan payments.

For example, if you get $200 from your grandparents for graduation, you could pocket $150 for something fun, and tuck $50 extra into your next loan payment.  

If you can’t afford to make higher or more frequent payments, the 10-year standard repayment plan is the fastest route to paying down your student loan debt.

Of course, there are two alternatives to the standard repayment plan, and those include income-driven repayment plans and/or student loan consolidation. 

An income-driven repayment plan will likely put off your payoff date by 20 or 25 years, while consolidating your loans could stretch out your repayment plan by a maximum of 30 years. 

While the last two may sound awesome now, it won’t feel awesome later, never mind the fact that you’ll pay a lot more in interest over the lifetime of the loan.  

TLDR: Stick to the standard repayment plan to get out of debt the fastest.

 

Negotiate student loan repayment assistance from your employer

Did you know there are businesses in the U.S. that offer student loan payments as part of their incentive packages? 

Though it’s not exactly common, as of 2020 around 8% of businesses offered some sort of student loan coverage to employees. On top of that, as part of pandemic-recovery legislation, employers can pay up to $5,250 in student loans for employees without being taxed, according to the Society for Human Resource Management. 

If you’re looking for your first job out of college, you may want to consider applying at some of the companies on this list from U.S. News. There are some big names on there, like Google, Fidelity Investments, and Aetna. 

And just because a company doesn’t offer this in black-and-white print in your offer letter, doesn’t mean you can’t negotiate it. If you have a good relationship with your manager, bring it up in a one-to-one meeting, and see if they are aware of the potential tax benefits they might get from helping you pay loans.

 

Pay off capitalized interest when deferring or in forbearance

Aside from federal student loans, all student loans accrue interest while you’re in school, during your grace period, and during periods of deferment and forbearance. 

The interest capitalizes once you begin repaying your debt, meaning your total balance will increase. A bigger balance means higher interest payments—not good if you’re trying to pay off student loans quickly! 

If you can, make payments to reduce interest when you are in a grace period, deferment, or forbearance. Alternatively, if you know your grace or deferment period is coming to an end soon, you could make a single payment to reduce your interest before that date. 

Either way, do your best to get your balance as low as possible before the period of loan relief ends, and you’ll have less to pay in the long run.

 

Use state and federal government programs to pay down debt

Above, we mentioned that some employers may help you pay off your student debt. But there are also different government bodies, at both the federal and state levels, that offer student loan payments as incentives. 

The federal government offers loan forgiveness for people who work in certain industries, including teachers, government employees, nonprofit workers, and medical professionals.

Each of these plans has different stipulations—for example, teachers must work for five academic years in a row in low-income schools before they are eligible. You can learn more on the government’s loan forgiveness page. 

Some states also offer loan repayment as incentives for young workers. For example, The Live + Work in Maine program allows some students to subtract their loan payments from their state taxes owed, which could save you thousands of dollars a year.

 

Try these debt-repayment crowdfunding apps

When it comes to tackling student loans, it’s no surprise—like anything these days—there’s an app for that.

 

GIVLING

Givling is a free game that crowdfunds the payoff of student loan and mortgage debt. 

All you have to do is play the Givling game twice a day to compete for large cash awards. Each time you play, you join a three-person team, and answer true-and-false statements until you lose or reach the statement limit. The more you answer correctly, the higher your score.

If your team scores the highest when the competition ends, then you split the cash award amongst the three of you.

 

CHANGEED

ChangeEd automatically pays down your debt by rounding up your everyday purchases.

For example, if you spend $2.45 on coffee, the app will automatically put 55 cents toward your student loan.

Every time you reach $100 in your account, the app automatically makes a payment toward paying down your student loan debt.

 

GIFT OF COLLEGE

Crowdfund your student loans with Gift of College. To get started, register your student loan account with Gift of College, and then share your profile with friends and family, who can contribute money to help you pay down your debt.

  

Join Shared Harvest Fund

Shared Harvest Fund is a platform that took off during the pandemic. It connects professionals looking to freelance on the side to pay down their student loan debt with non-profits looking for help on a variety of projects. 

Create a profile, and list the social causes you’re most passionate about. If you land a project with a participating non-profit, you can expect to receive a monthly stipend between $250 and $1,000, which is automatically applied to your student loan balance.

Of course, you could always join another freelance marketplace, and make money to pay your debt that way. For more ways to make money fast, on the side, check out this post.

 

Don’t let student loan debt get you down

While student loan debt is the only debt you can’t file bankruptcy from, it’s not always the most important debt to pay first—if you have to make the hard choice between what to pay. 

(And if you’re looking for more ways to make money in college—and post-graduation—to pay off debt fast, read this in-depth guide.)

Still not convinced that debt should be a top priority? Watch below for a few more reasons why…

 

Chip away at your student loans little by little, and apply the tips above that work best for you. 

Did I miss anything? Add your tips in the comments below, so everyone else can benefit, too! =)