How to Pay Off Student Loans Fast: 11 Best Ways

Pay off student loans fast by making extra payments, choosing shorter repayment terms, increasing your income and exploring relief options like loan forgiveness or repayment assistance programs.

By Nathan Paulus

Edited by Victoria Copans

Updated: November 8, 2024

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A man embraces a graduate wearing a cap and gown, smiling and holding a diploma, capturing a moment of pride and accomplishment after a graduation ceremony.

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.

Key Takeaways

Making extra payments is one of the most effective ways to repay your student loans fast. By paying more than the minimum each month, you reduce the principal balance faster, which decreases the overall interest you'll pay.

Opting for a shorter repayment term may raise your monthly payments, but it greatly reduces the overall interest you'll pay over the loan's duration, allowing you to pay down your debt faster.

If you're looking for relief, explore programs such as student loan forgiveness and loan repayment assistance programs (LRAPs). You can also take advantage of employer student loan repayment assistance and tax deductions to reduce the overall cost of your loan.

Increasing your income by taking on a side hustle, seeking higher-paying jobs or negotiating your salary can also accelerate your loan repayment when allocating this extra income to your student loans.

1. Make Extra Payments Whenever Possible

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.

ENSURE EXTRA PAYMENTS GO TO THE PRINCIPAL

When making extra payments, always confirm with your loan servicer that the extra amount is applied to the principal balance, not toward future payments. Some loan servicers automatically apply overpayments to future bills, which won't help you pay off your loan faster.

2. Enroll in Automatic 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.

To set up automatic payments, contact your loan servicer or sign up online. Provide your bank information to allow for monthly deductions. If your loan servicer doesn't offer automatic payments, you can set up recurring payments through your bank. If you can afford it, consider adding a small extra amount to each automatic payment to reduce your principal balance faster.

3. Consider Biweekly Payments

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.

HOW TO SET A BIWEEKLY SCHEDULE

To set up biweekly payments, contact your loan servicer to see if they offer this option. If they don't, you can manually set up biweekly payments through your bank's bill pay system. Be sure to confirm with your servicer that the extra payments are applied to the principal balance.

4. Opt for Shorter Repayment Terms

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.

AVOID INCOME-DRIVEN REPAYMENT PLANS (IDRS)

Income-driven repayment plans (IDRs) base your monthly payment on your income and family size, often extending the repayment term to 20 or 25 years. While IDR plans lower monthly payments and provide flexibility, they extend your repayment period and increase interest costs. If paying off your loans quickly is your goal, IDRs aren’t ideal since they reduce payments rather than the principal.

5. Pay Capitalized Interest Immediately

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.

PAY INTEREST BEFORE AND DURING THE GRACE PERIOD

Consider making interest payments while the loan is accruing interest, both while you're in school and before the grace period ends. If monthly payments aren't feasible, aim for a lump-sum payment before the grace period ends to cover the accrued interest. Although this won't directly speed up your repayment, it prevents your balance from growing and reduces the total interest you owe.

6. Apply for Student Loan Forgiveness

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.

ENSURE YOU MEET ELIGIBILITY REQUIREMENTS

Each forgiveness program has its own set of qualifications, and some are specific to certain professions or fields. Regularly review the eligibility requirements of the forgiveness program you're pursuing and ensure that you meet the necessary criteria. This includes working for a qualifying employer and making the required number of payments. Keeping track of your progress can help you stay aligned with program guidelines and ensure you're eligible for forgiveness when the time comes.

7. Find Loan Repayment Assistance Programs

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:

State/Program	Description
California	The California State Loan Repayment Program (SLRP) offers repayment assistance to health care professionals who work in designated Health Professional Shortage Areas (HPSAs). Eligible professionals include physicians, dentists and nurse practitioners.
New York	The New York State Licensed Social Worker Loan Forgiveness Program provides assistance to social workers who practice in critical human service areas, helping them pay off student loans more quickly.
North Carolina	North Carolina's Forgivable Education Loans for Service (FELS) program offers loan repayment assistance to students pursuing degrees in critical-need professions such as teaching, nursing and allied health, provided they work in North Carolina after graduation.
National Health Service Corps (NHSC) Loan Repayment Program	This program provides loan repayment assistance for health care professionals working in underserved areas. It offers up to $50,000 in loan repayment for two years of service at an approved site.

HOW TO EXPLORE ELIGIBILITY OPTIONS

To find state-specific LRAPs, visit your state's educational agency website, which can be accessed through the Department of Education. You can also explore professional organizations or associations in your field to discover industry-specific loan repayment assistance programs. Networking or joining professional groups can help you uncover additional opportunities for loan assistance.

8. Consider Refinancing Your Student Loan

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.

WHEN REFINANCING STUDENT LOANS MAKES SENSE

Refinancing is particularly beneficial if your credit score has improved or interest rates have dropped since you first took out the loan. It's also ideal if you no longer rely on federal benefits and want to save money by paying off your loan faster. However, if you plan to take advantage of federal loan forgiveness programs or income-driven repayment options, refinancing may not be the best choice.

9. Take Advantage of Employer Student Loan Repayment Assistance

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.

CHECK WITH YOUR HR DEPARTMENT

Speak with your HR department or review your employee benefits package to see if your employer offers student loan repayment assistance. Some companies may also provide other financial benefits, such as tuition reimbursement or assistance with other educational expenses. Combine any contributions from your employer with extra payments you make to pay off your loans even faster.

10. Use Tax Deductions

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.

SPEAK WITH A TAX ADVISOR

To maximize your tax benefits, consult a tax advisor who can help you determine whether you qualify for the student loan interest deduction. They can also provide guidance on how to properly claim the deduction and navigate income limits, ensuring that you reduce your tax liability and use any savings to pay down your student loan balance faster.

11. Increase Your Income

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.

ALLOCATE EARNINGS TO INTEREST

Consider allocating a portion of your part-time or side job income directly toward paying off accrued interest while still in school. Even small contributions can prevent capitalized interest from increasing your loan balance, which reduces the overall cost of your loans in the long run.

Paying Off Student Loans Fast: FAQ

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.

What is the fastest way to pay off student debt?

The fastest way to pay off student debt is by making extra payments whenever possible, directly reducing your loan's principal balance. Opting for shorter repayment terms, such as 10 years instead of 20, also speeds up the process. Additionally, biweekly payments, refinancing for a lower interest rate and using lump-sum payments from bonuses or tax refunds can help you pay off your loans faster.

How can I pay off student loans fast with a low income?

Paying off student loans quickly with a low income can be challenging, but it's possible with careful budgeting and strategic planning. Start by cutting unnecessary expenses and redirecting extra funds toward your loan payments. Consider picking up a side job or freelance work to increase your income. Additionally, look for loan repayment assistance programs or explore income-driven repayment plans to minimize monthly payments while making extra payments whenever possible. Even small additional payments can add up over time and reduce your overall debt.

How can I pay off private student loans fast?

To pay off private student loans faster, consider refinancing to secure a lower interest rate if your credit score has improved or market rates have dropped. A lower interest rate means more of your payment will go toward the principal balance. Making extra payments whenever possible, enrolling in automatic payments to avoid late fees and using any windfalls, such as tax refunds, for lump-sum payments can also help reduce the balance quickly. Be sure to check with your lender about prepayment policies and ensure your extra payments are applied to the principal.

How can I pay off federal student loans fast?

Paying off federal student loans quickly requires a combination of strategies. Start by making extra payments when possible and ensuring they go toward the principal balance. Consider enrolling in automatic payments to lower your interest rate and avoid late fees. If you qualify, consider forgiveness programs like PSLF or Teacher Loan Forgiveness, which can reduce or eliminate your debt after meeting specific requirements. Refinancing may not be the best option for federal loans since it could cause you to lose access to federal protections, such as income-driven repayment and forgiveness programs.

How long does it take to pay off student loans?

The time it takes to pay off student loans depends on factors like the loan amount, interest rate and repayment plan. Standard repayment plans for federal loans typically last 10 years, but some borrowers may take 20 to 25 years if they use income-driven repayment plans. If you make extra payments or choose a shorter-term repayment plan, you can pay off your loans quickly. For private loans, the repayment term can vary from 5 to 20 years, depending on the lender.

Can I pay off my student loans early?

Yes, you can pay off your student loans early without any prepayment penalties. Making extra payments or paying more than the minimum each month can help reduce your principal balance faster, lowering the total interest you'll pay over time.

Is it better to pay off student loans fast or slow?

Paying off student loans fast can save you money on interest and reduce financial stress, freeing up your budget for other priorities. However, it depends on your financial situation. A slower approach might make sense if you have high-interest debt or want to invest your money elsewhere. If you can afford it, paying off loans faster is generally a good strategy to minimize long-term costs.