Home > Student Loans > 7 Options for Paying Off Student Loans

Comments 0 Comments

A significant part of what makes us human are the different views each one of us has about one thing or the other. But one thing everyone can agree on is this: student loan debt isn’t a small issue. And paying off student loans isn’t easy. Debt.org reports that in February 2017, student debt rose for the 18th year, hitting $1.4 trillion dollars.1

Each person with a student loan had an average debt of $37,172.1 It isn’t fun when you get a paycheck from your job after graduating and have to spend the bulk of it on your student loan.

Most people spend a large chunk of their post-college lives repaying student loan debt. But it doesn’t have to be that way. To help pay down your student loan debt faster, start by rethinking your repayment plan strategy.

1. Pay More than the Minimum Required Payment

This is one of the most effective ways to reduce your debt. The way to do this is to take the payment you already have and add an extra sum to it. Because your payments are already set up, any additional payment you make will go to your principal.

If you want to simplify the process, opt for automatic payments with your loan servicer, adding the extra amount automatically. This helps prevent you from being indecisive about adding the extra amount to your payment. And it makes it harder for you to change your mind.

2. Look for Refinancing and Consolidation Opportunities

Loan refinancing for student loans, including federal student loans, is one of the best things you can do for yourself when it comes to paying off student loans faster. While refinancing, remember the aim is to reduce your interest rate, which can put more of your payment toward reducing your student loan debt.

If you successfully refinance several student loans, you can secure one consolidated loan that lets you to make just one monthly payment instead of multiple payments. You can also choose to refinance one student loan to get a better interest rate.

3. Get a Job that Offers Loan Forgiveness

Some jobs that offer loan forgiveness for all or part of your student loans. Sample jobs include teaching or public service work. Getting a job that offers loan forgiveness can go a long way, because you get added money on top of your salary.

The only potential downside to a job thta offers student loan forgiveness is that you may to work for the company for a fixed number of years as well as meet some other requirements to qualify for loan forgiveness. If you quit early, you’ll be back to paying off your student loan debt.

4. Run Away from Repayment Schemes

Steer clear of loan repayment programs that are income-driven. Most of these federal backed student loan repayment schemes aim at reducing payments by increasing the length of the loans. The result is that it will take longer to pay off your student loans, which will extend your debt,

Consider Pay as You Earn (PAYE) for example. This plan can potentially stretch repayment periods from 10 to 30 years, putting you in debt for a large part of your life.

5. Think About Your Debt Strategically

While adding more money to your monthly student loan payment is one of the quickest ways to pay off your student loans, you can also use that extra cash in other ways.

With student loans, the wise thing to do is to pay off the loans with the highest interest first. To do that, you use the “debt avalanche” method. You make only the minimum payment on all your loans and put the remainder on the loan with the highest interest rate until it’s paid off—so you’re paying it off first, but still making payments on all your loans.

Similarly, consider paying off private loans first before federal loans. Private student loans usually have higher interest rates and more rigid repayment terms compared to the federal loans.

By choosing to deal with the loans with the highest rates first, you end up saving money on interest. You can also consider doing the inverse by paying off loans with the lowest balances first. While this may mean you don’t get to save as much on interest, the psychological boost from closing accounts can be beneficial on your journey.

6. Choose Interest Rate Reductions

Reducing the cost of your loans and accumulating wins using the strategies above can result in smaller savings that add up and help you on your repayment quest.

A lot of loan services give users a 0.25% interest rate deduction on federal loan debt when opting for automatic payments. While this may not be millions of dollars, saving a few hundred dollars doesn’t hurt.

Aside from the savings you get from interest, making automatic payments part of your repayment plan can make life run more smoothly. Automatic payments eliminate worrying about missing or late payments, and not missing payments is good for your credit.

7. Maximize Tax Deductions and Credits

By repaying off your student loans, you may become eligible for the student loan interest deduction on your federal taxes. The student loan interest deduction can reduce $2,500 from your tax obligation each year.

You may also be eligible for tax credits if you’re paying tuition still, including while enrolled in graduate school. While there are no tax credits for paying off your student loans, if you’re a current or prospective student, check to see if you’re eligible for any tax credits. Some credits are worth up to $2,500 annually.

Happy learning and earning.

1 https://www.debt.org/students/

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team