Here’s How to Pay Off Student Loans Early — In Less Than 10 Years

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Before You Read, Lower Your Student Loan Payment

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Before You Read, Lower Your Student Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.

Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

Depending on the type of student loans you have, you could be in debt for a long time.

Payment terms can range from 10 to 30 years in length. That means if you graduated when you were 21, you could still be making payments on your loans when you’re in your 50s.

With so much debt, you may not be able to do the things you want like traveling, buying a home, or starting your own business. If that’s the case, you need to figure out how to pay off student loans in 10 years or less to help make your goals a reality.

If you’re wondering how to pay off student loans early, here are seven ways to make it happen.

1. Reduce your expenses

First, make a list of all your fixed and recurring expenses. Account for things like:

  • Rent
  • Utilities
  • Groceries
  • Student loan payments
  • Car loan payments and car insurance
  • Entertainment and shopping

Review your credit card and bank statements to make sure you aren’t missing anything — certain monthly subscriptions can be sneaky, like streaming or music services.

Once you know exactly how much money you’re spending each month, you can look for ways to reduce your expenses.

Drastic lifestyle changes like getting a roommate or selling your car and using public transportation, will give you the best results. However, small changes — like cooking at home rather than eating out, buying secondhand clothes instead of new, or cutting out a few monthly entertainment subscriptions — can have a big impact over time.

2. Follow the debt avalanche method

You likely have several different student loans from multiple loan lenders. If you’re wondering how to pay off student loans in 10 years, the most efficient way to manage your different loans is to follow the debt avalanche strategy:

  1. Order all your loans from the one with the highest interest rate to the lowest.
  2. Continue to make the minimum payments on all your loans.
  3. Any extra money you have each month — even if it’s just an extra $10 or $20 — goes toward the loan with the highest interest rate.

Once the debt with the highest interest rate is paid off, you roll the payment you were making on that loan toward the debt with the next highest interest rate. You continue this process until all your debt is paid off.

By tackling the highest-interest debt first, rather than the loan with the smallest balance, you save the most money in the long run. And you’ll ultimately get out of debt faster.

3. Use unexpected income

Throughout the year, you may get unexpected influxes of cash. Whether it’s a bonus from work, a tax refund from the IRS, or a birthday gift, use those windfalls to make lump sum payments toward your debt. It will help cut down on interest charges and allow you to pay off your loan earlier.

For example, if you had $40,000 in student loans with a 10-year repayment term and a 5% interest rate, your monthly payment would be $424. Over the length of your loan, you’d repay a total of $50,922.

But let’s say you received a $1,000 bonus from work. If you applied that full $1,000 as a lump sum payment, you’d knock four months off your repayment term. Even better, you’d reduce your repayment total to $50,282. By using your bonus as a lump sum loan payment, you’d reduce the accrued interest by $641.

4. Ask your employer for help with your payments

An increasing number of employers are recognizing that student loans are a major issue for employees. Because of this, some employers are starting to offer student loan repayment benefits to recruit and retain new talent.

In fact, the International Foundation of Employee Benefit Plans reported in a survey that 4% of responding organizations offer a student loan benefit, but 23% of organizations are considering implementing one.

Employer student loan repayment benefits work like a retirement contribution match. Typically, the employer will match your student loan payments up to a set amount, effectively doubling your student loan payments.

Check with your employer’s human resources department to find out if your company offers a similar program.

5. Take advantage of interest rate discounts

Most lenders offer some form of interest rate discounts, including:

  • Automatic payment discounts: If you sign up for automatic payments, where the lender automatically pulls the payment from bank account each month, most lenders will give you a 0.25% discount on your interest rate.
  • On-time payment discounts: Make all your payments on time for two to three years, and some lenders will reduce your interest rate by 0.25%.
  • Loyalty discounts: If you make payments on your student loans from a bank account with the same lender, you may qualify for a 0.25% loyalty discount.

If a 0.25% interest rate discount sounds insignificant, you should know that it can have big results over time.

For example, if you had $40,000 in loans at 6% interest and a 10-year repayment term, you’d repay a total of $53,290. But if you qualified for a 0.25% interest rate discount — dropping your rate to 5.75% — you’d repay just $52,589.

That —small” discount would allow you to save $601.

6. Claim the student loan interest tax deduction

Whether you have private or federal student loans, the interest you pay toward your debt can help you save major money at tax time.

You can deduct the lesser of $2,500 or the amount of interest you paid during the year. You can claim the student loan interest tax deduction even if you don’t itemize your deductions.

The student loan interest tax deduction reduces your taxable income, lowering your total tax bill or even giving you a bigger tax refund. You can use that extra money to make additional payments towards your student loan balances each year at tax time, helping you get out of debt earlier.

7. Refinance your student loan debt

If you want to aggressively pay down your student loans much more quickly, student loan refinancing is a smart and effective way to do it.

Here’s what you need to know if you’re wondering:

  • Should I consolidate student loans?
  • Can I refinance my student loans?

Refinancing is a strategy where you work with a private lender to borrow money to cover the amount of your existing debt. You can refinance both federal and private loans and consolidate them together to get one easy-to-manage loan — with money saving benefits.

The new loan has different loan terms, including the interest rate and minimum monthly payment.

With good credit, you could lower your interest rate. If you keep making the same monthly payment as you were before, you could reduce your loan term and become debt-free sooner.

For example, say you had $30,000 in student loans at 6.5% interest. Under a 10-year repayment term your monthly payment would be $341, and you’d repay a total of $40,877. Interest charges would cost you $10,877.

If you refinanced and qualified for a 10-year loan at 5% interest, your minimum monthly payment would drop to just $318. However, if you want to pay off your loans faster, you could keep making the same monthly minimum payment as you had before — $341. Even though you’re only paying $23 extra each month, you’d pay off your loans 10 months ahead of schedule. And, you’d save $745 in interest charges.

Repaying your student loans early

If you’re overwhelmed by your debt, figuring out how to pay off student loans in 10 years or less can feel overwhelming. But by coming up with a repayment strategy, you can make simple changes to increase your payments and lower your interest rate. Over time, these little changes can add up, helping you eliminate your debt months or even years ahead of schedule.

By choosing a student loan refinance, you could qualify for a lower interest rate and better monthly payment to make your financial life simpler to manage.

Visit our Compare Rates Tool to quickly find your best refinancing option and easily apply to start saving money now — with no credit check required.

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