10 Tips to Pay Off Student Loans Fast

by | Sep 20, 2019

In March 2019, Americans owed over $1.5 trillion in student loans—up by over 200 percent since just a decade prior. Year after year, the cost of higher education keeps going up and we, the students, are left on the hook for the bill. Even when you take advantage of the best scholarships and grants, student loan debt can feel overwhelming.

Luckily, student loans aren’t a debt sentence. There are effective strategies and tips for paying off student debt without sacrificing the lifestyle you want. Below, we’ve thrown together a quick 10-point guide on how to pay off your student loans in a hurry.



How to Pay off Student Loans Quickly



1. Choose: Snowball or Avalanche

Many of us have to take out more than one loan to cover the cost of our education. Experts suggest there are two ways you can tackle multiple debt repayments—the snowball method, or the avalanche approach. 

The avalanche approach focuses on interest rates rather than balances. In other words, the loan or line of credit with the highest interest rates gets attacked with the most money possible. The other loans are slowly chipped away with minimum payments until the main loan has been repaid.

Some of us prefer to see fast results when repaying our student debt. For this, there’s the snowball method. This approach “gets the ball rolling” by paying off the loan with the smallest outstanding principal amount (e.g., credit card debt). Once the smallest debt is repaid, the next lowest is knocked off until there’s no debt remaining, or money owed.

The key is to organize your monthly payments according to your personality. Do you want to see instant results (the snowball method), or make one large lump-sum payment on your debt over a more extended student loan payoff period (the avalanche method)? Here’s a way to estimate how long it will take to pay off your student loans.


2. Understand Loan Refinancing

For those of us who didn’t take Personal Finance 101 in school, it can be hard to understand how debt refinancing works. Fortunately, it doesn’t take long to learn.

Student loan refinancing repackages existing student loans with a new, all-in-one loan that has a lower interest rate and more favorable terms. Under this arrangement, you only make one monthly payment instead of two or three.

For instance, a federal student loan, state student loan, and a private lender bank loan may have an average interest rate of seven percent over a ten-year repayment term. After refinancing your student debt, all three loans bundle into a single loan at an average interest rate of six percent over 11 years.

If done correctly, debt refinancing can leave you in an advantageous position. After all, lowering your average interest rate is a sure-fire way to reduce your total student loan debt burden over time.


3. Split Your Payments Up

Consistency is the name of the game when it comes to paying off student loans. For some, shelling out $500 for a monthly payment (or two, or three!) is too steep to manage. That’s why we suggest splitting your payment schedule into more manageable money chunks.

Sure, you might not have $500 lying around at the end of the month—but you might have $125 per week or $250 bi-weekly. And as a bonus, paying biweekly (26 times per year) adds up to 13 months’ worth of repayments. In other words, paying your student loans on the 1st and 15th of the month can squeeze an extra month of debt repayment into a calendar year.

Consider using Student Loan Hero to calculate how you can effectively split your loan repayments up.


4. Activate Auto-Pay

Remember, interest is the enemy. If you want to minimize the impact of a high interest rate on your balance, consider signing up for autopay. This feature lets you automatically deduct a pre-determined sum from your bank account on a recurring schedule repayment plan. 

Essentially, autopay lets you “set it and forget it,” which can offer some serious peace of mind. But convenience isn’t the only benefit. 

Some lenders or student loan servicers offer cushy discounts to student loan borrowers who use auto-pay payments, with some even knocking off 0.2-0.25% of the overall interest rate—in effect, saving you lots of money and boosting your credit score by making extra payments.


5. Kill Off Capitalized Interest

Private student loans with variable interest rates almost always accrue capitalized interest while you’re in school. Worse yet, they also add up during the grace period on your federal student loan and even worse yet, they still get tacked on in the event of a deferment and forbearance period, all at a variable rate.

This type of interest capitalizes (is “added on” to the total unpaid interest costs) once your repayment period begins. Before you know it, you’re in a student loan debt spiral thanks to unaccounted accrued interest over many months of extra payments. 

While you’re still in school, or during your grace period, consider making extra payments. Sure, it’s a bummer to think about your loans while in school, but it’ll save you money by reducing your loan balance in the long run.


6. Seek Out Repayment Assistance 

After graduation, look for a job with a company that offers repayment assistance. Today, more and more businesses are attracting and retaining top talent by offering their employees a tuition reimbursement or repayment stipend on top of their paycheck.

In some cases, corporate student loan repayment assistance programs can shave thousands of dollars per year off your balance. Here are just a few of the employers that offer student loan repayment assistance for private loans or federal loans:

  • US Government (DOD, DOJ, SEC, etc.)
  • PricewaterhouseCoopers (PwC)
  • Kronos
  • Connelly Partners
  • Fidelit
  • Natixis Global Asset Management
  • Nvidia


7. Stick to The Standard

Federal student loans are automatically set to a 10-year repayment schedule by default. However, federal loan repayment schedules can also be readjusted according to your income level. For low-income borrowers, consider an income-based repayment so that you have more time to pay off your student loan debt (i.e., 15-20 years).

Unless it’s a necessity, it’s generally a bad idea to opt for an extended repayment schedule. Extending your loan fulfillment timeline will result in a long-term debt trap and a higher overall interest burden. Instead, stick to the standard 10-year timeline whenever possible.


8. Turn A Windfall into Relief

Don’t let your raise at work, unexpected inheritance, or lottery windfall go to waste. Instead, invest it wisely by throwing it at your student loans. Whenever you run into a new source of money, consider allocating a portion of it to your loans. 

It might help to create a personal “rule” for finding new money. For instance, half of every financial gift you receive, or bonus at work, needs to be put toward your highest-interest student loan. 


9. Put Your Side Hustle to Work

Consider dedicating “side hustle” projects like Lyft or Uber Eats to generating income for extra repayments. 

The beauty of peer-to-peer “gig” jobs like Uber is that they can be jumped into immediately after graduation (or even during school). Therefore, you can start tackling your loan balance and making extra money without having to get hired by a traditional, full-time employer.


10. Consider Loan Forgiveness

If you’re struggling with debt, it might be time to think about student loan forgiveness programs. While many private student lenders don’t offer loan forgiveness options, the federal portion of student loans can be forgiven after 20 or 25 years. Be warned, however, that the outstanding balance student loan payments may be taxable.

Generally, loan forgiveness is a “last-ditch” option for money-strapped borrowers. Loan forgiveness, over the 20 or more years it takes to fulfill, will tank your credit score, ruin your debt-to-income ratio, and accrue sky-high interest payments on the loan principal.

Achieving financial freedom starts with knowing your repayment options—all of your options. For more helpful money-saving strategies and tips, sign up for HiCharlie for free today. 

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