How to pay off your student loans faster

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

In 2020, Americans hit a new record for total student loan debt. There is a total outstanding balance of $1.6 trillion in student loan debt spread across 45 million people. And in 2019, the average graduate took out just over $30,000 in student loan debt to fund their education. More students are turning to student loans—and at more significant amounts. 

Unfortunately, student loans can follow you after graduation and take a huge toll on your credit. Many individuals sign up for student loans not fully understanding just how large their payments will be upon graduation. The high monthly payments often cause young graduates to make payments late or miss them entirely and default on their loans, which can wreak havoc on a person’s credit score. 

So, are you wondering how to get rid of student loans fast? Unfortunately, there’s no quick, magic solution. However, there are options out there that may help you pay off your student loans more quickly than sticking to the repayment plan automatically assigned to you. Keep reading to see what these options are so you can understand which option works for you. 

1. Consider your repayment plan options

If you have a federal student loan, you’ll automatically be enrolled in the Standard Repayment Plan. This plan spreads out your payments over 10 years and is the option that allows you to pay the least amount of interest. For this reason, if you can’t afford to make extra payments on your student loan, this is usually the best option. 

There are other repayment plans for you to consider. An Income-Driven Repayment Plan will take 10 to 15 percent of your discretionary income monthly and can span up to 25 years. If your loan is not paid off in full within those 25 years, the balance of your loan is forgiven. This option is typically best for people who make a low income. 

There are other options as well, such as the Graduated Repayment Plan and the Extended Repayment Plan, to name a few. The Graduated Repayment Plan is a 10-year loan with payments that increase every two years, so it’s ideal for people who expect their income to grow over time. The Extended Repayment Plan allows individuals to take 25 years to pay their student loan (but requires you owe a minimum of $30,000). 

Do your research and pick the plan that works best for your situation. Take the time to consider your current income, your expected income growth and the total interest you’ll pay with each repayment option. 

2. Start making payments before you graduate

If you have a subsidized federal student loan, the government covers your interest while you’re in school and for six months post-graduation. However, if you have an unsubsidized loan, interest starts accruing the day you receive your money. This means that while you’re in school, your student loan debt is growing. 

Consider making payments on your student loan while you’re still in school. If the payment can even cover your monthly interest, it will make a significant difference when you graduate. 

A word of caution: Make sure to contact your lender about early payments. Some private lenders will charge a fee for early payments. 

3. Apply early payments to the principal

If you are able to, consider making early payments on your principal loan. If you want to make extra payments, make sure to do so correctly. Most student loan lenders will take prepayment and apply it to interest first or to your next month’s payment. Neither of these options helps you pay off your loan faster. 

Whenever you make an early payment, contact your lender and specify that it should be applied to the principal amount. Additionally, while you’re on the call, take the time to verify that you won’t be charged a prepayment fee. 

4. Pay more than the minimum

Just because you picked a repayment plan doesn’t mean you have to stick to that exact monthly payment. If you ever find yourself with extra money—such as tax refunds, gifts or side jobs—apply that money to your student loan. 

You can also try to make payments twice a month instead of monthly. Many people use a biweekly payment approach for their mortgages, too. Biweekly payments mean you end up making one extra full payment in the year. If you have a $30,000 loan for 10 years at a six percent interest rate, having biweekly payments will allow you to pay off your debt faster and save $1,186.56  in interest.

5. Apply for student loan forgiveness

There are student loan forgiveness programs for specific individuals. These programs include Teacher Loan Forgiveness, Military Forgiveness, Public Service Loan Forgiveness and other versions run by state governments. 

Each of these programs has different factors for qualifying but usually requires that the individual works for a specific employer for a period of time while making payments. For example, the Public Service Loan Forgiveness Program requires that you complete 10 years’ worth of payments and spend that time working for a nonprofit or public sector employer before your remaining balance may be forgiven. 

It’s important to note that you shouldn’t rely on a forgiveness program as they can often be challenging to qualify for. 

6. Consider refinancing or consolidating

Student loan refinance

If your credit score is healthy or has improved, you should consider refinancing your loan at a better interest rate. When you refinance, your lender looks at your credit score and income level before determining your loan interest rate.

If your credit score is high, that interest rate may be lower than your current rate, which can save you a lot of money in the long run. Additionally, if your credit score continues to improve, you can refinance again and get a better rate each time. 

If you don’t have a good credit score, you could use a cosigner to refinance. Your cosigner’s healthy credit will allow you to qualify for a better interest rate. 

Student loan consolidation

If you have multiple student loans—usually a mix of private and government—you can consolidate them into one. When you consolidate your loan, you typically get an equal or overall lower interest payment than what you were paying before. Additionally, you only have to worry about making one monthly payment, which can relieve stress and allow you to focus on a repayment plan. 

7. Set up autopay

With many lenders, signing up for autopay gets you a slightly lowered interest rate. The added benefit of this option is that you never miss or make a late payment, both of which can severely lower your credit score. 

Have a plan for your finances

Your student loan likely allowed you to get the education you wanted. Unfortunately, it does come at a high cost. Many people are surprised to find out just how long it’ll take to pay off their student loans. But that doesn’t mean you can’t be proactive and pay off your loan faster. 

The most crucial step is to make a plan and stick to it. This advice applies to all other areas of your finances, too—like your credit, savings and budget. When you have a plan, you can control your finances and ensure you’re staying on track. 

If you already have a student loan repayment strategy, check to make sure it’s still best for you. And if you don’t yet have a strategy, now is the time to come up with one. Work to pay off your student loans faster so you’re one step closer to financial freedom.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.