No matter how much student loan debt you have, paying it off just isn’t fun. Sure, there’s a sense of accomplishment in watching the balance come down, but it’s hard to feel like you’re getting anything in return. Standard repayment plans can go on for decades. Its hard to plan for the future when a big part of your salary is allocated to making minimum payments on your student loan debt.
And holding on to student loan debt can have a major impact on those future plans. Surveys show over 34% of borrowers have delayed staring a family because of their debt, 73% have delayed saving for retirement, and 63% have delayed buying a home.
Looking for ways to pay off your student loans fast? You do have options. Start taking small steps today to improve your financial future.
Make More than the Minimum Payment
Whether you have an extra $20 available each month or an extra $500, start making extra payments now. The extra money goes straight towards the principal balance outstanding on your loan. This is huge when you want to pay off your student loans fast. Getting in the habit of making extra payments will give you some early wins and generate some momentum on your debt payoff journey.
Put Together a Financial Plan to Strategically Tackle Your Debt
The best way to tackle your loans will vary depending on your personal financial situation. Take into account the number of student loans you have, their interest rates, whether they’re private or federal student loans and whether they have variable interest rates. Your plan doesn’t need to be perfect, and there are no perfect plans, but you’ll benefit from taking the time to tailor it to the particulars of your situation.
You may choose to pay off the highest interest rate loans first. Or you may decide to tackle the smallest loans first, so you can knock them out fast. This tactic would frees up that cash to send larger payments to the bigger loans sooner. Or you may want to tackle private loans before federal loans, since they typically have less flexible repayment terms. We used a hybrid approach to pay off more than $100k in student loan debt.
Consolidate and Refinance Your Student Loans
You should research the pros and cons of consolidating and make sure it makes sense in your personal situation. If the answer is yes, it can be one of the best ways to decrease your interest rate. And a lower rate means more of each payment goes toward paying down the balance on your student loans. It can also help simplify your repayments; I didn’t consolidate and had 5 different payments to make per month, all with different due dates. It would have been a lot simpler to not have to keep track of all of those!
Put Any Cash Windfalls Towards Your Student Loan Debt
Do you receive cash gifts from family? Or an annual performance at work? Any time you receive a cash windfall, allocate all, or a portion of it to your goal of paying off your student loans faster.
Focus Your Efforts on Earning a Raise
What can you do to increase your annual salary? Do everything you can to ace your performance review and earn a raise, or build up your experience to look for a higher paying position. Being strategic about your career choices and dramatically increasing your income is one of the fastest ways to pay off your student loans.
Look into the Student Loan Interest Tax Deduction
Some student loans are eligible for a tax deduction. Depending on your income, you may be eligible to deduct up to $2,500 in student loan interest from your federal taxes. This helpful guide from the Motley Fool provides details. Paying attention to deductions like these is an easy way to pay off your student loan debt faster!
Cutting costs is usually one of the quickest and easiest ways to free up extra cash to increase your student loan payments. Check out this list of 105 Crazy Simple Ways to Save More Money for inspiration. It can be hard to stick to a bare bones budget long term, but you could try making one small change per week, or setting up challenges for yourself to make it interesting. How much faster could you pay down your student loan debt if you did one no spend month challenge per year?
List out your biggest expenses and brainstorm ways to dramatically reduce them. Could you take on a roommate, or move home temporarily? What if you sold your car and started taking public transportation? Can you cut back on your vacation budget? While you need to weigh the pros and cons for your personal situation, the relief you’ll feel when you are debt free may be worth the temporary discomfort of a less ideal living situation.
Make a Budget
If you don’t have a budget yet, it’s time to make one! When you’re working to achieve a big goal, like paying off your student loans fast, a budget is a key building block for success. Budgeting helps you gain control of your finances and achieve your goals. A budget also helps hold you accountable to your goals, build healthy financial habits, avoid additional debt, and improve your credit. Take action to increase your chances of success.
Get a Side Hustle to Earn Extra Cash
Most people, especially newly graduated students without the responsibilities of caring for children or elderly parents, have the time and bandwidth to hustle for a little extra cash. Think about your skills and the things you enjoy and find a way to supplement your income. Become a bartender, pick up some babysitting, or start your own small business. Increasing your income is one of the most powerful ways to pay off your student loan debt fast. A little hustle early on can save you years of struggle to pay off your student debt.
And bonus points for you if you choose a side hustle where you learn some new skills that can build out your resume or be utilized at your day job. Showing initiative, dedication and hustle will pay dividends in your life.
Sign Up for Interest Rate Deductions
Signing up for interest rate reductions is an easy way to save a little extra. Most student loan service companies offer a 0.25% interest rate deduction on federal student loans to people who enroll in automatic payments. Not only will this help keep your credit score strong by ensuring you won’t miss a payment, but you’ll save time and mental energy by not manually making the payment each month.
Make a Payment Every Two Weeks
This may sound silly, but it’s a small change that can make a big difference over time. By cutting your monthly minimum payment in half and sending in a check for that amount every two weeks, you’ll make a full extra payment each year. If you receive your paycheck every two weeks anyway, you likely won’t notice that you’re paying a bit more over the course of the year.
Check Your Employer Benefits
It’s not common, but some companies are offering student loan repayment assistance as an employment perk. If you’re deciding between offers, or looking to try something new anyway, targeting your job search at firms offering the highest compensation package, or most useful benefits can help you pay off your student loans faster.
Take a Moment to Celebrate Milestones
Paying of student loan debt fast takes a lot of determination and dedication. Make sure you’re taking time to celebrate the milestones along the way. Remembering how far you’ve come and using small rewards to make the process more fun will help you maintain motivation while you tackle your loans.
Have you taken steps to pay off your student loans fast? What’s worked best for you?