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14 ways to pay off your student loans faster
Say goodbye to your student debt faster and save on interest.
With such high student debt loads, getting out of debt can feel impossible, especially if you don’t make six figures. That doesn’t mean it’s impossible, though. Here’s how you can speed up your student loan payment period more quickly.
1. Figure out your payoff date
Difficulty level: Easy
Knowing when you’re due to completely pay off your student loan is the first step toward calibrating your repayments. It can help to budget how much extra you’ll need to pay monthly to move that date sooner.
Not interested in doing the math yourself? Reach out to your lender to find out when you’re set to be free from your student debt. Once you know this, you can be strategic about how to speed things up.
2. Make extra payments
Difficulty level: Easy
The quickest and easiest way to pay off your student debt is to pay a little more than you owe each month. It’s not always as simple as it sounds though: You might have to notify your loan servicer or lender that you want your extra payments to go toward your principal, not toward future repayments (which happened to us). If it’s applied towards a future repayment, then the lender will ask you for less next month and the extra payment won’t have an impact on lowering your overall loan principal.
You don’t have to pay hundreds of dollars extra for it to be worth the contribution. Even setting up autopay at an amount $10 to $50 higher than the amount due can make a significant dent in how much time you need to pay off your student loans.
Say you had $40,000 in student debt with a 5% interest rate and a 15-year term. Here’s how much time you can save by making extra payments to your principle.
| Extra repayment | Monthly repayment | Time needed to pay off loan | Time saved | Savings on interest |
|---|---|---|---|---|
| No extra | $316 | 15 years | 0 years | $0 |
| $10 per month | $326 | 14 years, 4 months | 8 months | $808 |
| $20 per month | $336 | 13 years, 9 months | 1 year, 3 months | $1,440 |
| $50 per month | $366 | 12 years, 2 months | 2 years, 10 months | $3,444 |
| $100 per month | $416 | 10 years, 3 months | 4 years, 9 months | $5,712 |
| $200 per month | $516 | 7 years, 9 months | 7 years, 3 months | $8,376 |
3. Avoid deferment
Difficulty level: Easy
If your finances run into a rough patch, consider cutting down on other areas of spending first before applying for payment deferment or the Repayment Assistance Plan (RAP). These not only increase how much you’ll pay towards your loan from the added interest, they can also lengthen your loan term, depending on the situation, keeping you in debt longer.
4. Spend extra money on repayments
Difficulty level: Easy
You can make a big difference in paying off your student debt if you use money you didn’t count on receiving — birthday presents, inheritances, lottery winnings, tax refunds — to make an extra repayment on your student loans.
If it’s not something your budget is going to miss and you don’t have any other pending large expenses, these can make enormous dents in your student debt and can save you potentially years of repayment, depending on the amount. That vacation to Hawaii or 16th pair of kicks can wait until you’re debt-free.
5. Make payments every two weeks
Difficulty level: Easy
Take your monthly repayment, divide it in half and make that payment every two weeks. Two weeks is just under half a month — enough that it’ll make a difference but not enough for you to really notice it, especially if you get paid every two weeks.
By the end of the year, you’ll have made one extra payment without feeling any major financial pinch.
6. Use your tax deductions and credits to pay off debt
Difficulty level: Easy
One of the nice things about paying off federal loans — and some private loans — while you’re just starting out in your career is that you can often deduct the amount you pay in interest from your income taxes. If you’re still in school, just graduated or are in a training program for your job, you might qualify for additional tax credits on your tuition and textbook expenses.
7. Refinance or consolidate
Difficulty level: Medium
If you’re stuck with high-interest or long-term student loans, you might want to consider consolidating or refinancing your student loan. This involves taking out a new loan with lower rates or a different loan term — or both — that better fits your personal needs.
Refinancing can take some time, and can be as involved as it was to apply for your original student loans, if not more involved. You also might need a cosigner to qualify for the rates you want if your credit score isn’t excellent or if you don’t meet the minimum income requirements.
You might want to skip this one if you have federal loans and consider refinancing only your private student loans at first. Federal student loans come with benefits that private lenders don’t offer — and could potentially help you get out of debt even faster.
Compare personal loans
Before applying for a personal loan, contact the lender to see if they allow you to refinance the specific type of student loan that you have (federal, provincial and/or private).
8. Get out of that repayment assistance plan ASAP
Difficulty level: Medium
That repayment assistance plan might have sounded great while you were working as a freelance journalist in a foreign country (aka broke). But once you have a steady income that’s high enough to pay more than twice that amount, move on to another repayment plan with the shortest term you can afford.
If you have federal loans, you can usually change your repayment plan by contacting your servicer. If you have private loans, however, you might have to refinance your loan with another lender.
9. Use your raise — or part of a raise
Difficulty level: Medium
Just got a raise? Up for one soon? Consider putting it toward your student debt instead of buying a new car or apartment. In fact, if you hold off on large purchases that require financing, you’ll likely get a better deal on interest anyway because your debt-to-income ratio will be lower.
You don’t need to use your entire raise amount if you need extra funds to cover cost of living expenses or other essentials. Even taking half of your raise could help you pay off your student debt more quickly.
10. Cut expenses and stick to a budget
Difficulty level: Medium
This can be as involved as you want it to be. If you’re desperate to get out of debt as soon as possible, consider moving to a cheaper apartment, bargain hunting and holding off on dining out until your debt is paid off.
But it doesn’t have to be that extreme. Something as simple as canceling your cable, cutting back on the booze or limiting how often you dine out can help you pay off your student debt faster.
Don’t want to do that? Even making a realistic budget can help you cut down on excess spending.
11. Start before you graduate
Difficulty level: Medium
Most college students are strapped for cash, but paying what you can toward your student loans, even while in school, can reduce your loan principle, which in turn lowers the interest you owe in the long run.
Even if you start making interest-only repayments while in school, this could reduce your loan principle because once your student loans begin, your lender will capitalize your interest, or add it to your principle.
Just a few repayments here and there from part-time jobs or one-time gigs is all it takes to potentially save you thousands of dollars in the long run and get you out of debt sooner.
12. Get a job that offers forgiveness
Difficulty level: Hard
The federal government forgives student loans from borrowers that participate in its public service or teacher loan forgiveness program. This involves working at an approved institution for several years in exchange for having part or all of your student debt forgiven.
While you might not want to change your entire career path, it could be worth it to read up on the requirements if you’ve considered these jobs.
If you go this route and stand to have most of your debt forgiven, consider signing up for a repayment assistance or income-based repayment plan. That way, you won’t have to make quality-of-life sacrifices in the meantime, as many of these jobs don’t come with high salaries.
13. Pay off your debt strategically
Difficulty level: Hard
If you have multiple student loans, you can use one of these two popular strategies to pay off your debt more quickly:
- Avalanche method. You pay off your loan with the highest interest rate and continue until all of your debt is paid off. The logic is that this method will help you save the most on interest, which translates into less time spent repaying your loans.
- Snowball method. Involves paying off your loans in size order — with the lowest debt amount first. The logic of this is that paying off your smaller loans first will give you an emotional boost that can motivate you to stick to your plan. You won’t save as much on interest.
Interested in refinancing? Compare providers now
14. Move back in with your parents
Difficulty level: Somehow both easy and hard
There’s no way around it: Rent is one of the largest expenses you’re responsible for each month. If you can keep your job and moving expenses are reasonable, consider moving back in with your parents — especially if you live in an expensive city like Toronto and Vancouver.
Live as you would while living on your own — or as much as you can — and put the money you’d be spending on rent, and possibly food, toward your student loans to pay them off quicker.
How to get in that student debt-free mindset
Understand what good debt really means
You might have heard that student loans are a type of good debt. And it’s partly true — borrowing to pay for higher education can help you get a higher salary and live a more fulfilling life.
But just because it comes with rewards doesn’t mean it’s good to keep around. The longer you take to pay off student loans, the more you’ll end up paying in interest. And while a long loan term can help you build up a long credit history, it also means you might have trouble qualifying for other types of credit because you have a high debt-to-income ratio.
Visualize a debt-free you
If The Secret taught us anything, it’s that it’s difficult to achieve goals that we can’t even imagine. This might sound a little nonsensical, but it can seriously help you reduce stress and stay focused on what really matters.
If just thinking about living a life without student loans isn’t enough, try adding up how much you’ll save each month and envision what you could do with that money. Maybe it’s moving to a nicer apartment. Maybe it’s having cable again (ha, just kidding — cable is basically dead). Maybe it’s checking off some items on your bucket list. It’s up to you: It’s your imagination.
Bottom line
Cutting down on the time it’ll take to pay off your student debt isn’t impossible, but it takes some planning. Staying sane while you’re doing it is also a challenge. Keep your eye on the goal and don’t deprive yourself of the things that make your life worth living — otherwise you could get discouraged and give up.
Have more questions about student loans? Check out our guide to student loans or our article on common student loan myths — debunked.
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