6 Smart Moves to Pay Off Your Student Loans Faster

Many college students take on debt, including student loans, to finance their higher education. 


Once that hard-earned degree is received, students then face two challenges simultaneously. First, they need to find a job and acclimate to the demands of full-time employment. Then, they have to start making student loan payments.


Those monthly loan payments can take quite a bit of your entry-level salary, so the sooner you pay off student loans, the better. Every time you can afford to make an additional payment against your loan, you’ll be reducing the amount of interest on the loan. So, doing everything you can to pay your student loans faster is a smart financial decision.


Here are six tips you can use to pay off your student loans faster.


1. Make a budget – and stick to it

Budgeting is a must – not just for student loan payments, but for good financial management. When you budget, you learn to live within your means and recognize when you’re overspending. That overview can help you keep from accruing additional debt. Budgeting also helps you to set aside money for savings every month.


When you have a budget with student loan payments in mind, you’re taking a two-pronged approach. First, you make sure you have enough money to cover that monthly payment. Next, you’ll know how much money you have leftover at the end of the month. You can put this money toward your student loan debt to reduce the overall number of payments, minimize interest paid, and eventually, pay that loan off more quickly.


Photo by Jp Valery


2. Apply any unexpected money against your student loans

If you’re lucky, you’ll receive some extra money over the year. You might get a tax refund. Or, perhaps your job’s pay structure includes an annual bonus. Maybe a family member gives you a generous cash gift to celebrate a special occasion.


Use this unexpected money smartly by applying it to your student loan debt. Any extra sum of money paid toward your debt can impact how much you end up paying – and how long those bills keep rolling in. While individually the amounts may be small, taken together, they can add up.


This approach can see you reduce your loan by a few hundred dollars – or more – each year, in addition to your regular monthly payments. 


3. Pay ahead whenever you can

On a similar note, paying aggressively reduces how long this student loan debt will be with you. You might not always have the extra cash every month to apply to your student loan beyond your required monthly payment. However, some months you might.


Maybe you just lived especially frugally this month, which left you ahead in your bank account. Or perhaps you’ve cut a monthly subscription or found cheaper car insurance. Whatever the case, put those savings against your debt. Use the extra cash to pay ahead on your next student loan payment.


For example, if your monthly payment is $400, but you have an extra $200 you can put toward your bill, do it. Over time, these extra payments will build up, which means you’re spending less time paying the loan and you’re paying less interest while doing so.


Another paying-ahead strategy involves paying your loan every two weeks. Simply split your monthly loan payment in half and pay that amount every 14 days. Ideally, you can align these biweekly payments with your paycheck so that the funds are always there. When you make payments every two weeks instead of monthly, you’ll make two extra payments each year, which means you pay off your loan faster.


4. Apply any raises against your debt

You’re a year into your first job out of college, and your employer is so pleased with your performance that you move into a new role – with a new salary to go along with it. While it can be tempting to use that raise to treat yourself, you can use it smartly, too. 


If you weren’t struggling on your previous salary, then keep living on it. Take your additional monthly income and apply it to your loan, month after month. Whether your raise was modest or substantial, this extra money put toward your debt cuts down on how much time you have to spend paying it. You’ll reap the financial gains when your debt is paid off earlier.


5. Refinance your student loans

Consider refinancing your student loans so that you can enjoy a lower interest rate that allows you to pay ahead. Refinancing isn’t for everyone, but it’s an option worth pursuing if you have a strong financial profile. A steady income, excellent credit score, and a clean history of payments can make you an appealing candidate to lenders for refinancing


You’ll need to consider a variety of factors beyond your monthly payment when deciding whether you should refinance, so work closely with lenders to weigh the positives and negatives. However, if you can secure a lower monthly payment at an interest rate you’re happy with, you will be able to pay your student loan off faster.


Photo by Annie Spratt


6. Snag a side gig

If you have the time and ability, consider getting a side gig and applying that money toward your student loan debt. 


For example, if you’re a full-time graphic designer, you might be able to find some freelance work to do on evenings and weekends. Perhaps you’re a teacher who can tutor students after school for extra income. Use this extra cash to add to your student loan payment every month, which will reduce the total number of payments.


Paying off your student loans faster is a smart financial decision. Start with a realistic budget and stick to it. Add a couple of these strategies to reduce the number of payments on your path to debt-free living.

The top student loan rates by your school

Written by