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Is student loan debt controlling not only your wallet but your life? You aren’t alone, roughly 44.7 million Americans are also suffering from student loan debt. Don’t give up hope just yet, there are some things you can do to feel in control and get out of debt faster.
While I came out of my graduate programs with a hefty six-figures in student loan debt, I used these tips for paying off my student loans in a short period of time.
Keep reading to learn nine powerful tips for paying off student loans faster than you think.
1. Sign up for Autopay
Most loan servicers will allow you to sign up for automatic payments. This will not only give you peace of mind with making your payments on time, but can also give you a quarter-point discount on your interest rate!
While this won’t save you a huge amount of money overall, it’s a passive way to save what you can.
The bigger reason to do this is that activities that are automated are never missed.
Auto-pay money will pull from your account, regardless of how you feel about it and this is a powerful way to stay on track.
2. Pay More Than the Minimum
One of the easiest ways to pay off your student loan debt faster is to make more than just the minimum payment. This is a great way to make your debt decrease quicker.
Commit to paying as much extra as you can to your monthly minimum, even if that means only $20 one month or $50 the next.
Just make sure that your loan provider is applying this extra amount to the principal of your loan and not towards your next months’ payment or you won’t be making any headway.
Over time, as your financial situation may change, try and increase the extra monthly payment amount you make to have a greater impact on your loan.
Another way to make more than just the minimum payment is to apply any yearly bonuses or extra cash you receive throughout the year to your loan. It might not be as much fun to make use of your birthday money as an extra loan payment but it will benefit you more in the long run if you do.
You can also use tax refunds for this purpose!
According to the IRS, three in four Americans receive a tax refund each year, and the average amount returned is approximately $3,000.
If you apply your tax refunds toward your student loans for 5 years in a row, you’ll have made a huge dent in your student loans.
Since you’re going to have your student loans automated, you can make your overage payments in one of two ways:
- Method 1 (Automated): The first method is to automate your additional principal payments by setting up your auto-pay to submit an additional $20, $50 or even $100 per month.
- Method 2 (Manual): The second method is a manual one. With this approach, every time you make or save a bit of money, you quickly log into your student loan repayment dashboard and apply it toward the payment of your loan principal.
Below is a screenshot of the student loan pay-down that a friend of mine achieved in a short period of time.
As you can see, this friend paid off $27,406.77 of their student loans in only 2.5 years!
Best of all, this friend works at a university and a gym and picks up additional money doing pet sitting and related tasks.
I am extremely proud of this friend, because they are a perfect example of a dedicated, money savvy individual who is rapidly on the path to financial freedom.
I am showing you this example so that you understand that you don’t have to be a neurosurgeon or a hedge fund manager to take control of your student loans.
3. Increase Your Income To Pay More, Faster
Another way to rapidly whack away at your student loans is to increase your income, because this will allow you to pay more, faster, toward your student loans.
One of the simplest ways to do this is to ask for a raise. You’d be surprised how few people appreciate their true value. They undersell themselves, assuming they’ll be offered a raise when they’ve earned it.
Remember, you’re not paid what you’re worth. You’re paid what you ask for.
Never make assumptions. Instead, organize a meeting with your employer. A simple request for more money could be all it takes. It pays to prepare though. Go into that meeting with proof of your value, such as sales data and other evidence.
Also, remember that a salary increase is not the only way to get more income from your boss.
For example, if your request for a salary raise gets turned down—which can happen if there are set pay tiers within your company/organization—then ask for other creative alternatives, such as:
- A year-end bonus
- Money toward your commuter costs
- A commission or performance-based bonus
- Professional development credits (this can position you to switch to a higher paying job)
You can also get extra income through a side hustle. In this article, I describe 4 awesome ways to work from home and all of them can be done as part-time gigs. The extra money you make can go straight to your student loan without effecting your regular monthly bills and other responsibilities.
The more you are able to increase your income, the more you’ll be able pay down your student loan principle, which will both reduce the life of the loan and reduce the total amount of interest that you’ll owe over it’s lifetime.
4. Pay Attention: What Gets Measured Gets Managed
While signing up for auto-pay can often get your a quarter-point discount on your interest rate, the problem with this is that it makes your loans all too easy to “set and forget.” This won’t help you to aggressively pay them off.
For this reason, I also recommend that you physically track your student loans and adjust the totals every time you make a payment.
Even though my student loan providers had online dashboards I could use, they were each on a different website, so I kept my own record of my student loans in an Excel spreadsheet and manually adjusted the totals every time I made a payment.
While this took a bit of extra time, it was extremely rewarding to be digitally “knocking down” the total and seeing it decrease.
Even though my loans started in the six-figures, I could see the progress I was making, which kept me highly motivated to negotiate a raise, pick up extra work, learn new skills and start a business (in that order).
I also printed a copy of my loan repayment spreadsheet and kept it on my wall until all of my student loans were paid off in full.
When that happens, the lender will mail you a piece of paper acknowledging that your loan terms have been satisfied, which is a darn good feeling! (Send me a pic when this happens!)
This point may seem simple, but it was a huge part of my student loan re-payment success.
If you’re less of a computer person (or not fond of Excel), you can do what a different friend of mine did and keep track of your student loans on a whiteboard in your room.
Remember this life truth: Results flow where energy goes. Or as the the famed management expert Peter Drucker says, “What gets measured gets managed.”
5. Divide Your Monthly Payments into Two
Another amazing way to pay off your loan payment faster is by breaking up your monthly payment into bi-weekly payments.
This helps to make payments easier to manage for you, especially if you get paid every other week, and will also have you making one extra payment for the year.
When splitting your payments up for 26 weeks of the year you will end up making 13 payments over the course of the year. This is because some months have 4 weeks, while others have 5 weeks.
If you are on a 10-year repayment plan, making one extra payment each year will end up saving you an entire year of payments, saving you both time and interest.
6. Pay Your Capitalized Interest
If you have borrowed unsubsidized loans from the federal government then interest will accrue while you are attending school, during your grace period before repayment, and during periods of time that you might be on deferment or forbearance.
Once your repayment period begins, this interest capitalizes and your total balance will grow which means that you are now paying interest on a larger loan amount.
If you are capable, pay the interest that accrued during your grace period or postponement before it has a chance to capitalize.
While this will not speed up the amount of time it takes to pay off your student loan, it will mean that a smaller amount will be due and you’re less likely to have to extend the life of your loan.
7. Stay on the Standard Payment Plan (Don’t Extend It)
Once you are out of the grace period, the government automatically places you on a 10-year repayment plan for your student loans.
It is best to stay on this payment plan so that you can get the full loan paid off quicker and you will also save money in interest.
If you are unable to make the full payment, then you can apply for an income-driven repayment plan but this can extend the life of your loan to 20 or 25 years.
8. Refinance
If you have a solid income and a history of making your payments on time then you are a good candidate for refinancing your loans.
If you are on the standard repayment plan, then refinancing will consolidate your multiple loans with one single loan and at a lower interest rate.
When refinancing you can also choose a different loan term that is shorter than your original. Your monthly payment may increase but you will finish paying your loan off quicker and save yourself money on the interest.
Another bonus to refinancing is you will only have one monthly payment to make instead of multiple payments each month.
Here is a list of 10 companies that can help you to refinance your student loans at a competitive interest rate and it only takes a few minutes to submit your info to them: www.credible.com/refinance-student-loans
I have no relationship with any of those lenders (or the website providing them), so feel free to do a Google Search for “student loan refinance ” to find your own options too!
9. Seek Student Loan Repayment Opportunities
When looking for a job after leaving college, consider looking into opportunities at a company that offers student loan repayment as a benefit to you.
Many employers are realizing the impact this can make in finding new talent and are offering the option as part of their hiring package.
This is a relatively new perk among companies so do your research when on the hunt for a job. When hired you may receive anywhere from $500 to $10,000 a year, which is a huge advantage to getting out of debt sooner.
Paying Off Student Loans Faster
These are all important tips for paying off student loans and can help you out if you’re committed to getting out of debt. Which ones are you going to tackle first?
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