How to Pay Off Student Loans Fast: 11 Best Ways

Student loans can be a heavy financial strain, with repayment plans stretching up to 25 years and accumulating interest. Fortunately, there's no penalty for paying off your loans early and doing so can free up your finances for other priorities.

If you're looking for a fast strategy, one of the quickest ways to pay off student loans is by making extra payments whenever possible. Beyond that, you can explore options like enrolling in automatic payments or finding loan repayment assistance programs to speed up your progress.

Making extra payments means paying more than your required monthly student loan payment. You can make extra payments whenever you have additional funds, such as a bonus or other financial windfall. Larger payments reduce your loan's principal faster, shortening the total payoff time and decreasing the interest you'll accrue. For example, increasing your monthly payments by just $50 can significantly impact your loan balance over time.

Consider a $15,000 loan with a 4.3% interest rate. If you make the minimum payment of $100 per month for 10 years, you could end up paying around $12,000 toward your loan but may pay $5,000 of that total in interest. As shown in the chart above, increasing your monthly payment to $150 would reduce the interest to about $3,000 over the same period, leaving you with a remaining balance of only $600 instead of $8,081 after 10 years.

If you're unsure how to start increasing your payments, consider using the debt snowball method, especially if you have multiple debts. This method lets you focus on paying off your smaller loans first while making minimum payments on larger debts. You can also use a student loan calculator to see how much faster you can pay off your loans by making extra payments.

Enrolling in automatic payments allows your loan servicer to automatically deduct your monthly payment from your bank account, ensuring you never miss a payment. Missing payments can slow down your repayment progress and lead to late fees, damage to your credit score or even loan default. Automatic payments help prevent this, but ensure you always have enough funds in your account to cover the payments.

This strategy can also save you money. Many loan servicers offer a small interest rate reduction, typically 0.25%, just for signing up for automatic payments. For example, MOHELA provides this discount to borrowers who enroll in autopay, helping you save on interest over time. Automatic payments are particularly useful for managing multiple bills, as they simplify the process and reduce the stress of remembering due dates.

Although student loans are typically paid monthly, you can opt to pay biweekly instead. With this strategy, you make half your monthly payment every two weeks. This results in 26 half-payments over the course of the year or equivalent to 13 full payments instead of 12. That extra payment each year helps reduce your principal balance faster and cuts down on the interest you'll pay over time.

For example, if you have a $20,000 loan at a 5% interest rate with a monthly payment of $200, switching to biweekly payments of $100 could save you around $700 in interest and allow you to pay off the loan nearly a year earlier.

If you're comfortable with the higher payments, opting for a shorter repayment term is one of the most direct ways to accelerate your loan payoff. It can significantly reduce the amount of interest you'll pay over the life of the loan. For example, switching from a 20-year repayment plan to a 10-year plan could cut your repayment period in half and save you thousands of dollars in interest. However, before making this decision, closely review your budget to ensure you can manage the increased payment without straining other financial priorities.

Capitalized interest occurs when unpaid interest is added to your loan's principal balance, increasing the total amount you owe. This typically happens when payments are paused during deferment, forbearance or the grace period after graduation. If left unpaid, the interest accrued during these periods will be added to your principal when repayment begins, leading to a larger loan balance and more interest charges over time. For example, if you have a $20,000 loan that accrues $1,000 in interest during your grace period, that $1,000 will be added to your principal if unpaid.

The federal government offers various student loan forgiveness programs to help eliminate a portion or all of your student loan debt after meeting specific requirements. For example, the Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your federal student loans once you've completed 120 qualifying payments while working for an eligible employer, like a government or nonprofit organization. Other programs, like Teacher Loan Forgiveness, provide up to $17,500 in forgiveness for teachers working in low-income schools for five consecutive years. Additionally, you may qualify for a loan discharge if you meet certain criteria, such as permanent disability or school closure.

Many states and some universities offer loan repayment assistance programs (LRAPs) to qualifying borrowers. These programs are typically designed for individuals working in eligible professions, often in nonprofit settings or high-need areas, such as health care, education or public service. LRAPs provide financial aid, such as grants or subsidies, to help pay down student loan debt and, in some cases, may offer partial or full loan forgiveness after completing a certain period of service. Here are examples of state and institutional LRAPs:

Refinancing allows you to replace your existing student loan with a new one, often at a lower interest rate. This option is available through private lenders and can help you secure better payment terms, such as a lower monthly payment or shorter repayment period. A lower interest rate helps you pay off your loan faster by reducing the amount of interest you accrue, allowing more of your payments to go toward the principal.

However, refinancing federal loans into private loans will permanently disqualify you from federal benefits like loan forgiveness, income-driven repayment plans and other government-exclusive relief options. This is something to consider if you're working toward PSLF or need the flexibility of federal repayment options.

Many employers now offer student loan repayment assistance as part of their benefits package. This can include monthly contributions toward your student loan balance, which can help you pay off your debt faster. Some employers provide a set amount each year, often up to a specific limit, to assist employees with managing their student loans. Under current tax laws, employer contributions toward student loan repayment are not taxable as long as they don't exceed $5,250 per year.

You may be eligible to deduct up to $2,500 of student loan interest from your taxable income each year, which can lower your tax liability. This deduction applies to interest paid on federal and private student loans, and you can claim it even if you don't itemize your deductions. To qualify, you must be legally required to pay interest on a qualified student loan, and your filing status cannot be "married filing separately." Additionally, there are adjusted gross income (AGI) limits that determine eligibility for the deduction.

Another effective way to pay off student loans faster is to increase your income. This can be done by picking up a side hustle, such as freelancing, tutoring, delivering food or offering services like graphic design or social media management. You can also consider starting a small business, such as selling handmade goods or offering consulting in areas in which you excel.

Beyond side gigs, increasing your primary income can have a significant impact. Focus on improving your skills or furthering your education to qualify for higher-paying jobs. Be sure to negotiate your salary when accepting new roles or during performance reviews to maximize your earning potential.

If you're still in college, consider working a part-time job to offset the cost of your student loans and reduce the amount you'll need to borrow. Check your school's resources for on-campus job opportunities or take on summer jobs. If local work isn’t an option, explore online opportunities, such as virtual assistant roles, freelance writing or online tutoring. Just be careful not to take on too much; maintaining a healthy balance between work and school is important.

Learn more about paying off your student loans faster, whether you're dealing with federal or private loans or working with a low income. Below are some common questions and answers to help guide your repayment strategy.

If you're looking for more information on student loans, MoneyGeek has a variety of resources to help you understand loan options, application processes and repayment strategies.

• Complete Guide to Federal Student Loans: Learn the key details about federal student loans, including how they work and how to apply.
• Best Low-Interest Student Loans: Explore the best student loans with low-interest rates to help reduce your borrowing costs.
• Best Private Student Loans: Find the top private student loan options available, including those with the best rates and flexible repayment terms.
• Best Student Loans Without a Co-Signer: Discover student loan options that don’t require a co-signer, making it easier for students to secure funding independently.
• Can You Pay Student Loans With a Credit Card?: Learn the pros and cons of paying student loans with a credit card and whether it’s a smart financial move.
• Guide to Filing Bankruptcy on Student Loans: Explore the legal options for discharging student loans through bankruptcy and the difficulties involved.
• How to Apply for Student Loans: Learn about the student loan application process, including eligibility requirements and the steps needed to secure funding for your education.
• How to Choose a Student Loan: An all-in-one guide covering everything you need to know about student loans and repayment strategies.
• How to Protect Yourself from Unfair Student Loan Practices: Understand unfair student loan practices and learn how to protect yourself from predatory lending.
• International Student Loan Guide: A comprehensive guide for international students looking for loan options to study in the U.S.
• Subsidized vs. Unsubsidized Student Loans: What to Choose?: Compare subsidized and unsubsidized loans to decide which option is best for you.
• What Is an Unsubsidized Student Loan?: Understand the differences between subsidized and unsubsidized student loans and how each type impacts your repayment.
• What Is the Average Student Loan Debt in the US?: Get insights into the average student loan debt in America and understand how it affects borrowers nationwide.
• Ways to Pay for College: A comprehensive resource for finding ways to pay for college, including loans, scholarships and financial aid.