Learning how to pay off student loans fast is worth the effort. Getting out of debt earlier will reduce your overall interest charges, saving you money and helping you pursue other financial goals, like a house or a new car.
If you’re looking for the best way to pay off student loans quickly, here are seven moves that could help, along with some additional tips for becoming debt–free:
- 1. Make extra payments
- 2. Make biweekly payments
- 3. Consolidate and refinance
- 4. Avoid capitalized interest
- 5. Pick the right repayment plan
- 6. Enroll in autopay
- 7. Use a cash windfall
Plus:
- Additional ways to tackle student loan debt
- Frequently asked questions
How to pay off student loans fast
Dealing with student loan debt can be burdensome and stressful. Here are some ways to help you stay on track with your debt strategy.
1. Make extra payments
There’s no penalty for paying above the minimum or repaying your student loans early. However, student loan providers typically apply extra payments to next month’s bill, not the principal.
You’ll need to contact your provider and explain how you want extra payments handled. Specifically, you’ll need to request principal-only payments for student loans, which ensures additional funds go directly toward your outstanding balance.
Most loan servicers allow you to make such changes online. Otherwise, contact your student loan servicer by phone or email.
Remember that every dollar helps, even if your budget is tight. Experiment with our student loan payoff calculator to see how much time you could save with extra payments.
Example:
Let’s say you owe $20,000 with a 5% interest rate on the standard 10-year plan. If you include an extra $75 per month, you’ll finish paying the loan three years earlier and save $1,786 in interest.
2. Make biweekly payments
Another option is to switch to biweekly student loan payments. This splits your monthly bill in half, so you’ll still pay around the same amount each month as you were before. However, you’ll make the equivalent of one extra payment each year.
You can try this method on its own or supercharge it with additional payments (as discussed in the previous section).
3. Consolidate and refinance
You might want to consider a student loan refinance if you have a solid income, a credit score in the high 600s and a debt-to-income ratio below 50% (or a creditworthy cosigner). Refinancing can decrease your interest rate, allowing more of each month’s payment to go to the loan balance.
Besides trimming your interest rate, refinancing could also lower your monthly payment by extending your loan term. You also have the option to combine all your loans (and their individual monthly payments) into a single bill — though you can also refinance just one student loan at a time if that works best for your situation.
The main advantage of refinancing is to secure a lower student loan interest rate. If you can’t find attractive rates or loan terms, postponing a refinance is best. Use our student loan refinance calculator to ensure you get a better deal than your current loan.
For example, here’s a breakdown of how refinancing compares to the original loan.
| Current loan | Refinanced loan | |
|---|---|---|
| Loan amount | $20,000 | $20,000 |
| Term length | 10 years | 8 years |
| Interest rate | 8.0% | 5.0% |
| Monthly payment | $243 | $253 |
| Total interest | $9,119 | $4,307 |
| Total payment | $29,119 | $24,307 |
Summary: Dropping from 8.0% to 5.0% could save you $4,812 in interest with only a $10 monthly payment increase, allowing you to repay the debt two years earlier.
Some student loan refinancing rates currently go as low as 4.49%, making refinancing an excellent choice for getting ahead of your debt.
Check out our list of the most up-to-date student loan refinancing rates among our favorite lenders to get an idea of what’s available.
Beware of refinancing federal student loans!
Refinancing federal student loans is generally not advised since you’ll lose access to certain government-funded benefits: These include income-driven repayment plans and student loan forgiveness.
However, if you’re not eligible for those programs, refinancing your federal loans might be worth it — but only if you can find a lower interest rate than you’re currently paying.
4. Avoid capitalized interest
Except for subsidized federal student loans and a few other special cases, your loan will accrue interest while attending school. Once you hit repayment, your unpaid interest will capitalize, adding it on to your student loan balance. In essence, you’ll be paying interest on top of interest.
You can avoid capitalized interest by making monthly interest-only payments while in school and during the six-month grace period after graduation.
And if later on, you pause your repayment via student loan deferment or forbearance, you can still pay the monthly interest to stop your balance from growing. Alternatively, you can make a lump payment right before your payments resume.
5. Pick the right repayment plan
Federal loans automatically come with a 10-year standard repayment plan. Private loans also typically come with a 10-year plan, although some lenders offer 20- to 25-year repayment plans or other options.
If you can’t afford extra monthly payments, sticking to the standard plan is the fastest way to pay off your student debt.
While the federal government offers assistance to those struggling with repayment, through methods including income-driven repayment plans, be aware that these options can extend your payoff deadline to 20 or 25 years. Likewise, a student loan consolidation can lengthen your plan for 30 years.
Despite this, changing your student loan repayment plan might be worthwhile if you do need help making your minimum payment on your federal loans. By contrast, private lenders don’t often allow you to change your repayment plan unless you refinance.
Ultimately, the 10-year standard plan is a solid choice if your ultimate goal is to repay your debt rapidly and you can afford the monthly payments.
6. Enroll in autopay
Many lenders and student loan servicers offer a 0.25-percentage-point rate deduction when you enroll your student loans in autopay. Although this discount might seem insignificant, it adds up over time.
Furthermore, the “set-and-forget” method ensures you’ll never accidentally miss a payment, reducing your chances of a student loan default.
Reach out to your provider to see if they offer an autopay discount.
7. Use a cash windfall
Cash windfalls can include any unexpected or bonus earnings, such as an inheritance, lottery winnings, a lawsuit or insurance claim settlement, work bonuses, a hefty tax refund or a cash birthday gift.
If you suddenly receive a chunk of money, you may be tempted to spend it on fun stuff. However, you could instead make a serious dent in your student loan debt by applying some (or all) of it toward your loan balance.
Plan ahead by deciding how much “windfall” cash to devote to student loans. You’ll want to cover essentials and probably set aside some emergency funds, but after that, you could funnel the rest into your student loan account.
Additional ways to tackle student loan debt
Successfully paying off your student loan debt takes persistence and dedication — and money, of course. Here are five additional ideas when exploring how to pay off student loans.
- Find a job that offers student loan forgiveness
- Apply your raises
- Focus on your budget
- Earn extra with a side gig
- Be strategic about your debt
Find a job that offers student loan forgiveness
Certain jobs offer forgiveness for part (or even all) of your student loans. See our Public Service Loan Forgiveness (PSLF) and teacher student loan forgiveness guides for more details. You’ll need to meet specific requirements and complete the entire work term to receive any type of forgiveness.
In addition, some employers offer student loan repayment assistance. Check with your HR department to see if your company has such a perk.
Apply your raises
Hopefully, your job offers yearly raises as part of the compensation. You could use your raise to buy more stuff — a bigger TV, a better car or more exotic vacations. But, just as with a one-time windfall, why not put it toward student loan repayment?
Focus on your budget
Improving your budget can be a great way to stretch your current cash flow. You can move to a cheaper apartment, skip meals out, buy second-hand clothes and try other money-saving strategies. Use the extra savings to pay down your student loan debt.
Earn extra with a side gig
If you still need extra cash, try supplementing your income with a side hustle. This additional income will help you pay off student loans faster, and you might also learn new skills and have fun along the way.
Be strategic about your debt
When tackling debt, you have two common methods to consider: debt snowball vs. debt avalanche.
- Debt snowball method: Paying off the smallest loan first gives you a sense of momentum to continue eliminating more debt.
- Debt avalanche method: Tackling the highest-interest loan first saves you more money in the long run.
Whatever the method, try to be intentional about it. With enough focus and commitment, you’ll hopefully eradicate those loans in a short span of time.
