4 Ways to Pay Off Your Student Loans Faster

So you have student loans and can’t wait to get them paid off? Join the club! There are millions of people across the U.S. who are in that very position right now. Some are struggling, some are making progress, and some are just getting by.

For those who are looking for ways to pay those student loans off faster, here are four solid tips that can get you debt-free quickly.

1. Reduce Interest Rates if Possible

Almost every student loan lender (including the Department of Education, which is the lender for all federal student loans) has some kind of interest rate discount for people who set up direct deposit. Usually the discount is about 0.25%. The lenders prefer direct deposit because it increases the likelihood that you’ll continue to make on-time payments. And while 0.25% may seem insignificant, it’s actually very significant — because over the course of 10 (or more) years it can knock off a big chunk of the interest you’ll pay over the life of the loan. In fact, if you have a loan amount of over $20,000, that “insignificant” discount could save you hundreds of dollars. Which would help you get out of debt faster.

You should also check with your lender to see if they have any other interest rate deductions. Some lenders may be able to reduce your interest rate based on factors like having a high credit score or having a history of on-time payments. It’s always good to double check — you never know what you might find.

A final consideration is whether it’s worth doing a loan consolidation. The federal government (and some private lenders) offer consolidation loans for their borrowers with student loans. In some cases, you can also reduce your interest rate with one of these consolidation loans. What you need to pay close attention to, however, is the effect it will have on all your loans. For example, it won’t help you if one of your loans winds up with a lower interest rate (after consolidation) while another one ends up with a much higher interest rate.

2. Make More Frequent (or Bigger) Payments

This sounds obvious, but it still deserves your attention. Sure, the easiest way to pay off your student loans faster is to simply pay more each month. But how much more should you pay? And will your lender accept it — even if you pay early? The answer is, yes, the lender is supposed to always accept your payment. And as for how much extra you should pay each month, you should first decide what percentage of your monthly income you think you can afford to send to your student loans.

Most people start with somewhere around 5-10% of their income — although for others the amount of their student loan payments makes up a much greater percentage.

So you’ll need to figure out how much you can afford to pay and then make a plan for how to do it. One method that can help you pay off student loans faster is biweekly payments. Basically, with bi-weekly payments you make a half-month payment every two weeks. Since that means you end up paying 26 bi-monthly payments (the equivalent of 13 monthly payments) per year, you will chip away at your student loan balance much faster.

Just make sure you’re not overpaying one month, then missing your next payment. Any missed payments can hurt your credit score, costing you more money in the long run when you want to buy a home or get a credit card. Your payment history is one major component of your credit score. If you want to monitor your credit, you can get your Credit Report Card, which gives you a truly free credit score and also gives you a grade for each of the major components of your credit score so you know what to do to improve it.

3. Earn More Income to Put Toward Loans

Of course, it’s hard to put additional money toward your student loans if you don’t have additional money in the first place. One way to gain extra income is to take up side jobs. There are an almost unlimited number of side jobs out there, and depending on your abilities and preferences you can no doubt find one that suits you. Perhaps you’d be able to tutor a local high school student, teach music lessons, or sell crafts you make.

Also keep in mind that if you have a skill such as writing, designing, etc., then you can always do freelance work. With freelancing, your weekly hours are pretty flexible and at the same time you can earn a significant amount of money.

4. Budget Better and Save Money

No matter what else you do, it’s extremely important that you become a master of budgeting. Your budget will be the one thing that guides you to paying off your student loans faster. Without a budget, you’d be hard pressed to know exactly where your money is going.

With a budget, however, you can plan exactly where your money goes each month. And with that kind of control, you can ensure you have enough left to pay your student loans every month. To accomplish this, it will help to save money in every aspect of your life. When you go to the grocery store, look closely at the prices of each item you buy. Ask yourself if there are any impulse purchases in your cart that you don’t really need. If so, put them back. Meanwhile, try to only buy reasonably-priced items. Luxuries can wait until after your student loans are paid off.

And it should go without saying that you should try to limit your trips to restaurants (and movie theaters, concerts, etc.) while you’re paying off your student loans. These kinds of expenses are exactly the ones that will eat up your income for paying off debt and will prolong your exposure to indebtedness.

Hopefully these tips are helpful. With the right plan and a bit of determination, you will definitely get those student loans paid off faster than you might think. Let us know in the comments below what your main challenge is when it comes to getting out of debt.

If you’re interested in learning about how student loans and other types of debt may be impact your credit, check out Credit.com’s free Credit Report Card for an easy-to-understand overview of your credit standing, along with your credit scores.

Image: iStockphoto

You Might Also Like

A young woman stands outside in front of a green tree, holding her books and wearing a backpack, smiling off into the distance.
As of early 2020, student loan debt in the nation had reached mor... Read More

March 16, 2021

Student Loans

Attending college or university is a dream for a ton of people. Y... Read More

March 16, 2021

Student Loans

A woman sits on the floor in front of a couch with a laptop on her lap
As of February 2020, student loan debt in the United States reach... Read More

March 16, 2021

Student Loans

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. Compensation is not a factor in the substantive evaluation of any product.

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