How to Pay Off Federal Student Loan Debt Faster

Ben Luthi

Average federal student loan debt is over $30,000 for borrowers who are 25 and older, according to Purefy’s student loan debt statistics almanac.

That’s a staggering figure for college graduates who may struggle to pay it off while pursuing other life goals during the early stages of their careers.

If you have crushing student loan debt, here are some ways you can get rid of it more quickly — and finally get more room in your monthly budget.

Average federal student loan debt by the numbers

The older you are, the more likely you are to have a high student loan debt load. According to data compiled by Purefy, here are the averages by age:

AgeAverage federal student loan debt
24 and younger$14,298
25 – 34$32,513
34 – 49$38,894
50 – 61$37,983
62 and older$35,684

The average monthly student loan payment is $393, and the majority of borrowers took out multiple loans during their time in school.

As a result, understanding how to pay off student loans faster can help you get a head start — and save both money and time.

Why learning how to pay off student loans early is a good idea

The standard repayment term for federal student loans is 10 years, and the U.S. Department of Education offers repayment terms as long as 30 years. But even being stuck with student loans for a decade is a long time. Here’s why you should consider making a plan to pay off that debt sooner rather than later.

  • You’ll have the capacity to pursue other life goals: The average monthly student loan payment of $393 can significantly limit your opportunities to improve your financial health and overall well-being. If you can eliminate your student loans faster, you’ll be able to use that monthly cash flow to work toward goals that are more important to you.
  • You can lower your debt-to-income ratio: Your debt-to-income ratio, DTI for short, is an important factor that lenders consider when approving you for credit. It’s especially important to mortgage lenders, so if you’re hoping to buy a house in the future, getting rid of your student loans can reduce your DTI and help you get approved for a bigger mortgage loan.
  • You’ll experience less stress: Student loan borrowers can experience various psychological effects, including lack of sleep, headaches, muscle tension, and more. The sooner you can eliminate your student loan debt, the sooner you can experience peace of mind.

How to pay off student loans faster

There are two primary ways you can eliminate your student loan debt faster than the standard repayment plan offered by the federal government: making larger payments and refinancing your loans with a shorter repayment term.

Make larger payments

It may be difficult enough to make the standard payments on your student loans every month. But if you can manage to increase those payments, you could save a significant amount of interest and cut short your repayment term by several months or even years.

Here are a few ways you can accomplish this goal:

  • Increase your income: Whether it’s working overtime at your current job, taking on a second part-time job, or using your skills to do small jobs or get gig work, there are several ways you can earn extra money to pay down your student loan debt. Research your options and choose one based on your situation and the time you have available.
  • Use savings or cash windfalls: Most people aren’t going to inherit a massive fortune. But if you receive a bonus from work or a refund on your tax return, consider using that money to pay down debt instead of spending it. And if you have significantly more money saved up than you have in student loan debts, it may be worth using some of that money to pay down your balances in larger lump sums.
  • Cut back on other expenses: This step can be hard, and even impossible for some who are struggling to get by. But if your budget includes some discretionary spending, look for areas you can cut back each month and reallocate it for debt payoff. For example, you may choose to cut back on eating out one month and clothing purchases the next.

As you consider these and other ways to make extra payments on your student loans every month, make sure you’re still covering your essential money bases, including building your emergency fund, saving for retirement, and paying off other high-interest debt.

Refinancing student loans with a shorter term

Among the options for how to pay off student loans early, refinancing your debt can be one of the most effective.

Refinancing student loans involves combining some or all your existing student loans into one new loan with a private lender. Through this process, you may be able to qualify for a lower interest rate, which can save you substantially on interest costs.

What’s more, private refinance lenders typically offer repayment terms ranging from five to 20 years, which means that you can officially reduce your repayment term.

By dropping your repayment term, you can get rid of your debt much more quickly while paying significantly less in total interest. Plus, you can have the added bonus of a lower rate, saving you on interest costs payment to payment as well.

This option can be an excellent solution if you have great credit and a relatively high income. Both of those attributes can help you qualify for a low interest rate. Even if you can’t get a lower interest rate, you may still be able to save money on total interest if you reduce your repayment term.

Just make sure to run the numbers to determine your new monthly payment and verify that it’ll be affordable. The last thing you need is to end up with a higher monthly obligation that you can’t meet.

The bottom line

If you’re trying to figure out how to pay off student loans faster, making extra payments and refinancing with a shorter repayment term are your best bet to accomplishing your goal.

If you’re considering refinancing, make sure to use the Purefy Compare Rates tool to shop around the get rate quotes from multiple lenders in one place. This process can help you ensure that you get the lowest interest rate possible based on your credit qualifications.

Also, consider asking someone with a strong credit history and income profile to cosign your new loan with you. This can help improve your chances of getting a low rate, making your student loan payments more affordable.

Whatever you choose to do, take some time to research all your options and pick the one that’s the best fit for your current financial situation.

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