Today’s exorbitant amount of student loan debt can seem overwhelming. You are ready to start your life but feel dragged down by your student loans and interest. Sound familiar?
Well, you don’t need to wait for that six-figure income to get rid of student debt for good. With a little planning, you can learn how to pay off student loans fast.
With more than seven out of 10 graduating students leaving college with huge student debt, one of the biggest questions is how to take those loans and restructure or repay them quickly. Whether you want to qualify for your first home or start saving for your future, finding ways to pay off student loans quick can only help.
Why pay off student loan debt early?
While there’s nothing wrong with paying those student loans at the standard 10-year term, you can enjoy numerous benefits by restructuring or repaying the debt in a format that better suits your needs and save money.
Here’s exactly what is to be gained by paying quickly:
- Save money on interest over the life of the loan. By shortening the terms of your current loan or refinancing to get a lower rate, you may end up paying less interest.
- Free up your finances so that you can focus on other things like a new home, dream vacation, or starting a retirement or emergency fund.
- Improve your debt-to-income ratio to boost your borrowing power for that new mortgage, car, or business start-up.
- Live a more stress-free life. Those student loan debt payments can take a big chunk out of your monthly income, as well as your expendable cashflow. By paying that debt off quickly, you can breathe more easily.
How to pay student loans more quickly
Ask yourself, “Should I pay off student loans early?” If the answer is yes, then it’s time to get to work so that you can reach your financial goals. Consider these options that can be used individually or in partnership to pay off your debt.
1. Cash windfalls
Whenever you receive a lump sum cash payment, consider paying it directly towards your student loan debt. It could be a signing or annual bonus, an inheritance, a tax refund, or cash settlement. Whatever the source, it may make solid financial sense to put it towards student debt reduction.
2. Make larger payments
Since student debt rarely carries prepayment penalties, it may be a good solution to make larger payments each month (or when you are able). By paying more of the principal, you end up saving on interest in the long term as well.
3. Look for a company that offers repayment assistance
If it’s feasible, consider switching employers to one that offers a repayment assistance program. Companies have long offered tuition assistance, but now more organizations are offering student loan repayment assistance.
While still growing in popularity, progressive companies recognize the extreme burden placed on graduates as they are starting out. Programs can range from several hundred dollars to $10,000 or more.
4. Make a payment with each paycheck
If you are paid every two weeks, plan to make a half-month payment with each paycheck rather than just one per month. At the end of the year, you will have made 26 payments total. Over the 10-year life of the loan, that equals a full year of payments made in advance with the corresponding interest saved.
5. Make some additional cash
If paying off your student debt is important, then you may want to consider earning extra money through part-time or secondary opportunities. Find ways to earn extra money and you can improve your ability to pay off your student loan debt. Consider these options:
- A second part-time job
- Starting a side business
- Gig work through UpWork, TaskRabbit, or Guru
- Working overtime at your current job
- Driving for Uber or Lyft nights or weekends
6. Tighten your “discretionary expenses” belt
Whether it’s eating out, mani-pedis, or online shopping, cutting back on discretionary expenses can really add up. First, develop a realistic budget and then be diligent about sticking to it. And be sure to allow yourself one splurge per month; it helps you stick to the plan.
7. Refinance student loans
One way to make a real impact may be to refinance your student loan debt into one manageable payment with reduced interest and better terms.
Today, refinancing your student loans is easy and carries no fees or prepayment penalties. Refinancing also allows you to be selective about your loan program depending on your credit worthiness.
Why student loan refinancing can help
If you have good credit and a solid income, refinancing your federal and private student loans is a terrific way to accomplish these three things:
- Get a better interest rate that will save you money over the life of the loan.
- Choose the length of loan that best works for you. If you are looking for ways to pay off student loans quick, then refinancing allows you to qualify for a shorter term. Conversely, if it’s a longer term with lower payments that you’re after, that’s possible as well.
- Consolidate several loans into one easy payment with low interest.
The first step to refinancing student loans? Compare your rate offers and find your best option.
With just a few minutes of your time to answer some simple questions, Purefy’s Compare Rates tool presents you with pre-qualified interest rate offers and loan terms from multiple highly vetted vendors. The information is real-time and based on your circumstances. And it doesn’t affect your credit score.
If this sounds like a terrific way to explore refinancing risk free, then try our rate comparison tool to get preferred repayment terms with no teaser rates. This lets you make decisions based on actual offers from reputable loan companies. We include rates, terms, and monthly payments in one easy to read chart.
As you consider options that will impact your long-term financial plans, it’s important to find ways to pay off student loans quick. Refinancing to get lower interest rates and more favorable terms may be your best option.
If you are interested in how to pay off student loans fast, use Purefy’s Compare Rates tool to compare multiple lenders all in one convenient place.