How to Pay Off Student Loans Faster | theSkimm

How to Pay Off Student Loans Faster

Published on: May 26, 2020fb-roundtwitter-roundemail-round
Student loan monopoly board

The Story

You took out loans to go to school so you could get a job...that’d help you earn enough to pay back your loans. How fun. Speeding up your repayment timeline can help you get off the hamster wheel sooner.

Yes, please.

Take a note from your resume and actually become “proficient in Excel.” Make a spreadsheet that lists out all your loans, balances, and interest rates. Add a column for where you got them: the federal gov or a private lender. That matters because they come with different benefits and repayment rules.

Related: Understanding Federal Repayment Options

Once you see it all laid out, think about whether your current repayment strategy is working. And if you’re making the highest monthly payment you can afford. That saves you from paying interest longer than you have to. And puts more money back in your wallet to spend on other things you care about.

What if I’m already paying as much as I can afford?

Time to make some changes to your budget. Maybe that’s downgrading (or canceling) a subscription, stepping up your grocery game or trading in expensive hobbies for free ways to entertain yourself. Once you’ve cut all you’re willing to cut, look for ways to put “extra” money toward the cause. Think: earnings from a side hustle, tax refunds, bonuses, and birthday checks.

Oh, and just say no to lifestyle creep. Aka spending more when your paychecks get bigger. Try to live on less than you earn, and throw the difference at your debt.

Got any other tips for paying off debt faster?

A couple more here:

  • Set it and forget it. Some lenders will give you a discount on your interest rate if you commit to automatic monthly payments.

  • Make bi-weekly payments. Giving your loan servicer two half-payments a month adds up to 26 – or 13 full payments – by the end of the year. Sneaky...and smart.

  • Run the numbers on refinancing. That’s when you pay off an old loan by getting a new one with terms you like better. Shop around for lower interest rates to make sure you’ll save. Then do a little more HW to make sure this move makes sense before pulling the trigger. 

  • Do some good. Some charities and nonprofits (AmeriCorps, Shared Harvest Fund, The National Health Service Corps) will help you pay down your student debt if you volunteer your time. Karma points for the debt-payoff win.

Related: What’s the Best Way to Pay Off Debt?

theSkimm

Student debt is the gift that keeps on accruing interest. Slow that down by speeding your payments up. Then spend your money on things for your future, not from your past.

Want more Skimm Money?

Say ‘hi’ to our weekly newsletter. Every Friday, we break down the news and info you need to make smarter money decisions.

I'm in