How to Pay Off Student Loans (Faster)

pay off student loans faster

Full disclosure: Like many of our readers, I’m a student loan borrower. And even though I’m only a few years into my repayment for $23,000 of student loans – I’m already sick of it. Aside from student loan payments sucking up much of my extra income, seeing my monthly student loan bill is a constant reminder of just how much farther I have to go before I’m debt free. Seeing that far-distant debt free date is aggravating, so I think I speak for many when I say: ARRGH.

But there is a bright side to regularly checking in with my progress timeline. Monthly payments and milestones are also incredibly effective motivators. Yes – seeing the timeline of repayment can feel frustrating, but it also means that I’m motivated to boot these payments for good and I’m ready to go about it as efficiently as possible.

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I want you gone, student loan debt! It’s only a matter of time…

Realizing the longevity of your debt repayment is a challenging fact to face but can also help you organize your plan of action so that you can finish paying off your student loans as quickly as possible. After all, I have other things I’d like to be paying for – travel, dance classes, my retirement. So here are the tricks and tips to focus your repayment and help rid the inbox or mailbox of loan statements as quickly as possible!

Take advantage of any interest reduction deals

When you first begin your federal student loan repayment you’ll usually be offered a few options that are incentivized by interest rate reductions. For instance, if you opt for payments to be automatically debited, then you’ll be eligible for a .25% interest rate reduction. Take it! This will directly impact how much you pay in interest. Even a small reduction will have a substantial impact on your overall plan. If the terms are feasible for your repayment plan, then take advantage of these opportunities.

On the flip side, opportunities to refinance your student loans are on the rise. While the possibility of reduced interest rates is appealing, make sure that you’re not entering into an agreement with a variable interest rate that could potentially climb above your current rate. Also to be noted – when you refinance a federal student loan with a private lender you will lose out on the attached protections (forbearance, deferment, alternate repayment plans), so really weigh the ultimate benefits of a lower interest rate versus the potential protections.

Research your repayment options

If you have federal loans, you can take advantage of the various repayment plans offered. These plans include…

…and offer you specialized repayment options that are often based on a repayment track based around your income and earnings. Most of these repayment plans also offer partial loan forgiveness if you stick to the plan for a given time (in some cases 20 years, others 25 years). While these plans are great opportunities to ease the burden of monthly payments, they may not represent the fastest track out of debt. If you can pay above the minimums and would like to rid yourself of debt on a faster track, then you should do so. Just because they suggest a minimum payment doesn’t mean you should only pay that minimum. You can wind up paying way more in interest that way!

For even more information you can research the terms of theses repayment options on the Student Aid website.

Include student loans as a part of “paying yourself”

Ever heard the phrase “pay yourself first”? That means putting money into your bills and your financial requirements right when you deposit your paycheck rather than drawing from it as the month goes on and simply estimating that you’ll have enough. Make your student loan repayment a regular part of your financial schedule and include them when you pay yourself first. This will allow you to effectively budget and readjust your repayment and also prevent you from overspending.

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Allocate your payments correctly

When paying your monthly bill, make sure that your money is being applied to the right part of your payment. Some servicers default any excess payment towards future bills rather than paying down the current principal. It’s a hidden tactic that could end up costing you quite a bit. To prevent this, you will have to make sure that any extra payment is paid towards your balance rather than being pushed for future payments. When asked, choose “do not advance due date” or similar options that make it clear that you do not want your money to be applied to future payments.

Set up bi-weekly payments

Bi-weekly payments can save you an incredible amount of money over the life of your loan. It works like this: You take your monthly payment, divide it by 2, take the new number and pay every 2 weeks. Because the year is made up of 52 weeks, you’ll be paying 26 “half” payments (13 payments total) instead of paying 12 full payments in the year. This works out to an extra payment each year, which can do wonders over the life of your loan. You can even automate your bi-weekly payments in order to ensure that you never forget or miss a payment.

Quick tip: When you use bi-weekly payments, you’re essentially adding an extra payment into your yearly timeline of payments. To see the impact you can use our bi-weekly payment calculator.

Increase your payments incrementally

You’ll end up paying much more on interest payments if you stick to paying the minimums each month. That being said, upping your monthly payments by a large sum can leave you feeling stretched during the month and consequently make you feel that it’s impossible to increase your payments. So instead of immediately jumping in full force, experiment with upping your student loan payments by a small increment each month. 200 dollars more each month might sound too hard but 10 dollars might not. In this way you can find the “sweet spot” of your payments without feeling overly frustrated or stretched. To help you calculate the impact of even a few extra dollars each month, you can punch the numbers and see the impact of these measured adjustments.

What To Do If You’re Feeling Stuck

Federal forgiveness plans

If you have federal student loans, then you have the opportunity to benefit from a loan forgiveness program. Some of the most popular programs are geared towards teachers and public servants, but all require you to apply and follow the terms for the duration of the repayment plan. You’ll have to be on top of the paperwork and maintain the requirements to qualify, though the effort is worth the potential amount to be forgiven. To learn more about how to apply for the program, read our post on how to apply.

Explore alternatives when facing financial hardship

If you simply stop paying your student loans you will default and face serious penalties. If you’re facing financial hardship, you do have options and should seek all opportunities to get back on track. Remember that you can always apply for deferment or forbearance, which can give you some breathing room.

Student loan debt doesn’t just go away if you choose to stop your repayment, unfortunately. That’s why halting payments will only prolong your repayment and result in negative financial repercussions. If you’re struggling to make your payments you should talk to your loan servicer and work together to find a repayment plan that makes sense for your circumstances. For more information on default, visit the Federal Student Loan website. Beyond this resource, you can check out our student loan debt resource center for more great tips and tricks!

If you’re lucky enough to be reading this while you’re still enrolled, or even thinking about re-enrolling in grad school, here’s one last tip: start paying when you’re in school! This is beneficial in a few ways. Not only do you get a head start on paying off your loans, you also begin forming valuable habits that will make the transition to making payments after college a little bit less jarring.

Making payments while still enrolled in school is an option that’s offered most clearly with private student loans (in fact, most require that you begin your repayment while in school via interest payments or a minimum required payment) but if you have an unsubsidized federal loan then you also have the option of making interest payments while still enrolled. This isn’t the default option so you will have to opt in and contact your lender in order to begin these payments.

I know I’m stuck with my student loans and the “ARRGH” feeling definitely stands. But having a plan and understanding what steps I can take in order to pay off my loans as quickly as possible is empowering. I’m ready to get rid of that debt, and I’m ready to pick up the pace on my way towards zero.

Do you have student loans? Leave a comment and share your strategies for paying them off!

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  • Dee

    We totally pay ourselves first when it comes to paying off student loans! In fact, we recently amped it up to turbo mode on the student loan repayment, so we now make a full loan payment every two weeks right after we get paid. We hope to get the student loans gone MUCH faster this way!!

    • Claire Murdough

      It’s such a valuable habit to develop!! That was one of the best changes I made when I started getting really serious about my repayment. In a weird way, putting part of my paycheck directly into bills makes it feel less painful – almost like I’m using money that I never fully form a bond with. Keep up the good work!

  • bookishheather

    I hate debt, and my only current debt is student loans. One year into repayment of graduate loans I’m even more focused and determined than when I was paying off my undergraduate loans. Probably the biggest lesson I’ve learned from Ready for Zero this go around is about the bi-weekly strategy.

    I’d like to take advantage of my lender’s infinitesimal discount for signing up for auto-pay, but I haven’t because I suspect I won’t be able to do the bi-weekly payment anymore…

    • Solace

      I don’t know how you’re doing it right now, but I managed to reconcile the two. My due date is the 5th, so my direct debit amount comes out on that date every month. I treat that as the payment for the first paycheck of that month (I put my payments into my bill pay account one paycheck ahead so that this date coming before my paycheck doesn’t screw me over). Then I make another payment on every other payday in the month. It’s not automated, no, but I generally just schedule a bunch of payments out and forget about it for a couple of months. Not the most streamlined process, but at least it takes advantage of both the bi-weekly payments and the lower interest rate.

      • Claire Murdough

        Thanks for sharing your tactic, Solace! It’s a pain, but hopefully it will help you to pay off your student loan debt even more quickly!

    • Claire Murdough

      Nice!! So happy to hear you’re rocking the repayment and that you’re using the bi-weekly strategy. In terms of the automated/bi-weekly issue, Solace’s comment covers one way to go about it. There’s definitely room for improvement on the loan servicer’s end (would be great if they allowed bi-weekly automation) but if you debit one of your payments via their website and then manually pay another after two weeks, you can take advantage of both options.

  • Adam Kamerer

    My wife and I have been chewing away at one of her loans. We’ve found that it helps to focus in on one loan at a time. We’ve thrown everything we can at it — most of our tax return, the money I’ve saved on our groceries from couponing, and little windfalls here and there. It works!

    • Claire Murdough

      That’s awesome, Adam!! So smart to take the yearly (or monthly) savings and put them towards your debt repayment. Tax returns are a really great way to hack away at the principal balance!

  • joe

    I feel your pain! I went to one of the top schools for Engineering, but it came at a very high cost. Over $85,000 in student loan debt. It took a while to get on my feet but I will say this has been the biggest help for me:

    1) Slash your cable and ditch the smartphone! You will easily free up about $100/month for loan payments.
    2) Sell the car. I got rid of my brand new Chevy Colorado and bought a used car from my mother-in-law for $500. Best decision I ever made!
    3) Pay extra on your loans the SECOND the paycheck hits your bank account. Let your money work for you before it burns a hole in your pocket.
    4) Tell everyone what you’re trying to do, and let the world know the progress you’ve been making. It helps to have a team behind you cheering you on.
    5) Set small goals! It is way less daunting to look at an individual $3,500 loan and begin to attack that. And you feel awesome once you get one paid off. Just make sure to snowball that payment onto the next one.

    I think I’m in a little bit of a worse situation than most. But over the past couple of years I’ve been able to slash away over $16,000. And no, I don’t have a big engineering salary…I live in Michigan and barely make over $45k/year. That’s four years out of a top engineering school.

    The point is, if I can do it, you can too! It just takes discipline. I’ve been able to slash over $10,000 in the last 9 months by staying focused and being determined, like everyone else, to get out of debt for good!

    Good luck everyone!

    • Benjamin Feldman

      Hi Joe, thanks for your comment! It sounds like you’ve been taking all the necessary steps to get out of debt as soon as possible. Would you be interested in turning this into a guest blog post (based on your personal experience) for our blog? If so, let me know! One other thing: have you tried out yet?

      • joe

        I would absolutely be willing to do a guest blog post for your blog. I joined a long time ago, and I have to say, it is what got me more motivated and involved in my debt! Is there a way I could send you my email to discuss further?

        • Benjamin Feldman

          Wow, that’s great news! I’m so glad ReadyForZero was helpful and I can’t wait to hear more about your story. I will send you an email right now, using the email address that’s connected to your Disqus account. Thanks!

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  • Ashlee Chu

    With my own student loan debt, I certainly took advantage of the interest reduction by opting for electronic communications as well as consolidations. I have found that those are the two best (and easiest ways) to reduce a small portion of the student debt load; especially when I don’t qualify for other programs or assistance.

    • Benjamin Feldman

      That’s great you were able to make use of both options! The consolidation one can be intimidating and not always easy to understand – I’m glad you tackled it and used it to save some money!

  • Retiring mom

    My parent plus loan is 26,000..I have an automatic debit of 200.00 deducted monthly from my account, I have also set up an additional automatic weekly payment of $100.00…I want to pay these loans as soon as possible, I’m planning on retiring in 5 years and would like to be done with these loans. Am I doing the right thing, the interest on this loan is 6.75.

    • Benjamin Feldman

      It sounds like you have a good plan! By the way, have you tried using ReadyForZero yet? You can try it for free here:

      That could be a great way to stay motivated and track your progress. Good luck!

  • Sue k

    Be warned about agreeing to the automatic payment option. Yes you save .25% on interest. The agreement you set up with the loan servicer, however, allows them to take whatever amount they wish. My normal payments are about $500/mo. In July, Edfinancial decided to take $2,300 from my account. I only had $800 in the account at the time. It was an error on the servicer’s part. It took me three months to clear up. I was stuck with hundreds in overdrafts. This had happened 2 years ago also. I thought I’d set up a max cap with my bank. I didn’t realize that the max cap only lasted for one year and had to be renewed annually. Edfinancial customer service rep advised my not to continue with automatic withdrawals as, “these things happen frequently’

    • Benjamin Feldman

      Oh wow, Sue, I’m sorry to hear about that! What an unfair and frustrating situation. It seems like Edfinancial should have paid for your overdraft fees since they were at fault. But this is a good warning for people who do choose to set up the automatic payments – be sure to also set up the max cap on individual payments and double check it every year. Thanks for your comment.

    • Michele Bolton

      Make sure anytime you allow auto payment deductions you have a separate account set up for that. I opened a savings account at the credit union with my employer. I have auto deductions from my paycheck for that account. This is totally separate from my checking account at another location.

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