Currently, more than 45 million Americans have student loan debt. Many people carry student loan debt for years and even decades.
If you want to get out of debt and pay back your student loans more quickly, you need to have a plan. Certain tricks and strategies can help you pay off your student debt at a faster pace, so be sure that you use them.
Fortunately, we’re here to guide you. Below we’ll tell you how to repay student loans fast.
Examine Your Budget
The first step to paying off your student loan debt is to get a clear idea of what your budget is.
You should take a close look at the money you have coming in each month as well as the expenses you have. Once you know what your current income and expenses are, you can work to tweak your budget accordingly.
Be sure to make some changes and keep your expenses as low as you can. You may need to make a few sacrifices in your life so that you’ll have more money to put toward your student loans each month.
Changing your budget and paying back your student loans more quickly can be well worth the extra effort that it takes.
Reduce the Cost of College
If you’re still in school, remember that you should do everything you can to minimize the cost of your tuition and avoid the use of student loans in the first place.
There are a lot of scholarship options available that you can make use of in addition to or in place of student loans. Be sure that you apply for some of them and do everything you can to minimize the cost of college before you’ve collected a lot of student debt.
You might want to learn more about the differences between financial aid vs scholarships to get a better idea of how you can save money when paying for college.
Know What You’re Dealing With
Once you have a clearer idea of what your budget is and what expenses you have each month, you can then make a smart repayment plan and decide on a plan of attack.
Take some time to look closely at all of your student loans. Organizing and looking over the various minimum payment amounts and interest rates can help you get an idea of what your plan should be.
Understanding exactly what you owe and what your minimum payments are can help you get on the right track to paying off your debt once and for all.
Consider the Debt Avalanche Strategy
One of the most important things to remember when working to pay off student loans and other types of debt is that you need to have a debt repayment strategy in place. There are several different strategies that you can use to pay back student loans.
One option is to use the “debt avalanche” method. With the debt avalanche method, you’ll pay off high interest student loans first.
You’ll meet all of the minimum payments for your loans but will pay extra towards the highest interest rate debt. You’ll proceed to pay off one debt after the other until you’ve paid all of them off.
Try the Debt Snowball Method
Aside from using the debt avalanche method, the “debt snowball” method could be a good choice for knocking out your debt as well. The snowball method can be incredibly motivating and can help you feel even more excited about paying off your loans.
With the debt snowball method, you’ll pay the loans and debts with the lowest balances first. Once you successfully pay off a loan, you can then move on to the next largest one.
Taking this approach will allow you to see your progress clearly and feel better about the changes that you’re making. It can be motivating when trying to overcome a large amount of student loan debt.
Keep Your Motivation Up
The biggest key to making fast progress when paying off your student loans is to stay motivated. Consider what makes you tick and try to look for ways to keep yourself on track even when the going gets tough.
You should be sure to congratulate yourself and celebrate whenever you reach a milestone with your student loan payments. Each time you completely pay off one of your loans, be sure that you take a moment to celebrate a job well done.
Finding small and big ways to motivate yourself and imagining what it will be like to be free from your debt can be helpful. This will allow you to take all of the other actions that you need to take to meet your goal of paying off student loans.
Go Beyond the Minimum
One of the critical steps to paying off your student loans quickly is to ensure that you’re paying more than the minimum monthly payment each month.
If you only pay the minimum payment each month, then it will take a long time to pay off your student loans. Making larger payments will help you make a bigger dent in your total debt and allow you to get out of debt more quickly.
Paying only the minimum will also lead to you paying more interest overall. The longer you take to pay off your loans, the more interest will accumulate. You could end up paying a significant amount more than you would if you had decided to tackle your loan balance more aggressively.
Use Tax Deductions and Credits
If you’re still attending school in an undergraduate or graduate program, then you could be eligible for certain tax credits and deductions.
Making use of the American opportunity tax credit (AOTC), for example, could save you as much as $2,500. The lifetime learning credit (LLC) could help you save as much as $2,000. On the other hand, if you’re no longer in school, you could use a $2,500 student loan interest tax deduction.
If you want to pay your student loans off, be sure that you spend time learning about these various deductions and use them well.
Make Use of Extra Money
A great practice to get into when paying off student loans is to put extra money that comes unexpectedly toward them.
If you get a bonus from an employer, for example, you might want to put a portion of it toward paying off your student loans. It can also be a good idea to use any money you get from a tax refund to pay off your debt as well.
Reconsider using the extra cash you get for special gifts for yourself or vacations. Instead, consider putting it towards student loans instead.
Increase Your Income
If you’re serious about paying off student loans more quickly, then you might need to grow your income. Consider looking for a way to make extra money on a regular basis if you want to pay your loans off fast.
Making more money could result from asking an employer for a raise or promotion. However, it could also mean taking on a new side hustle or a second job.
Driving for a rideshare company, renting out a room in your home, or monetizing a hobby could be well worth it and could help you get your student loan debt knocked out faster.
Consider Loan Forgiveness Options
If you’re eligible, one of the things that you can do to pay your student loans off quickly is to apply for a student loan forgiveness program.
The Public Service Loan Forgiveness (PSLF) program can allow you to get a lot of your debt forgiven if you work for the government or a nonprofit after 10 years of making payments. There are also repayment plans for teachers and for U.S. military personnel as well, so be sure to consider all of your options if any of these categories apply to you.
Refinance Your Debt
You might also want to consider refinancing your student loans. With student loan refinancing, you’ll combine multiple existing loans into a single new loan with different terms.
When doing this, there’s a good chance that you’ll be able to get better loan terms and a lower interest rate. However, you should only do this if you’re in good financial standing. You should plan on having an impressive credit score and a steady job first.
Also, keep in mind that refinancing federal student loans could eliminate your ability to use special federal programs such as Public Service Loan Forgiveness (PSLF) and income-driven repayment plans.
Opt for Biweekly Payments
A simple but effective way that you can pay off your student loans faster is by switching to automatic biweekly payments instead of monthly payments.
By doing so, you’ll end up making more than the equivalent of 12 payments each year. You’ll make enough half payments on your student loan debt each year that it will be like making 13 full monthly payments instead of just 12.
This won’t affect your life all that much throughout the year. However, it can end up helping you pay off your debt quickly without needing to put much thought into it.
Look for Employer Forgiveness Programs
It’s also a good idea to find out if your employer offers any student loan forgiveness benefits.
Some employers will offer to pay off student loans when you work for them. Looking for an employer who offers student loan forgiveness benefits can be worthwhile when you’re job hunting.
If you already have a job, then be sure to do some asking around to find out if your company offers any programs that can help with student loans. Then, find out how you can enroll.
Choose Student Loan Autopay
Enrolling in autopay is also a good way to pay off your student loans faster and pay less overall.
With this type of program, a student loan servicer will automatically deduct a student loan payment from your bank account every month. This will help ensure that you don’t miss a payment and can help you stay on top of your debt.
In addition to this, you can get an interest rate deduction of 0.25% for enrolling in an automatic debit program. This can reduce the overall cost of your student loans.
Pay Off Accruing Interest
One of the things that you can do to pay off your student loans more quickly is to pay off any interest that accrues before it capitalizes.
Interest will capitalize while you’re going to school, during grace periods, and during deferment and forbearance. Paying off this interest as it comes up, even if your grace period hasn’t ended and you’re not required to make payments, can be a good idea.
Doing this will reduce your overall balance and will make it so that you have less to pay back once the repayment period begins.
Follow a Standard Repayment Plan
If you want to pay your student loans off at a faster pace, make sure that you follow the standard repayment plan.
Federal student loans will automatically be placed on a 10-year repayment schedule, and sticking to this plan can be a good idea if you want to get out of debt in a timely manner. Switching to an income-driven repayment option or consolidating student loans for a longer term, on the other hand, can end up leading to a payoff timeline of 20 to 30 years.
While payments will be higher when following a shorter timeline, it can be well worth it if you want to get out of debt and eliminate student loans quickly.
Understanding How to Repay Student Loans Quickly
To learn how to repay student loans quickly, you need to use every trick and strategy that you can. Set a budget for yourself, go beyond the minimum payments, and make use of all loan forgiveness and reduction programs that you can.
Need more financial tips, tricks, and strategies? Browse our blog now to discover more useful financial guides and articles.