How to Pay Off Your Student Loans Faster

40 million American graduates now have student loan debt, and the graduates of 2014 were the most indebted class ever. The average amount of student loan debt last year? $30,000. Debt is like a millstone around one’s neck, and for graduates who choose to put their loans in forbearance instead of paying them off immediately, that millstone becomes heavier and heavier as interest accrues. There’s no magic remedy to getting out of debt, but savvy graduates will utilize the most effective ways to rid themselves of it as soon as possible. Here is a five-step plan on how to pay off your student loans faster.
How to Pay Off Your Student Loans

1. Make a Plan to Pay Off Debt

It seems obvious, but too many students treat their student loan bills as ironclad documents that cannot be adjusted, but you can reduce the amount of interest you have to pay by paying more on your loan each month. Creating your own customized payment plan will give you a much-needed sense of control, and monitoring your pay-off process will motivate you to stay the course. Take advantage of free online debt calculators, like the one at, to customize a plan. Enter the amount of your debt, your interest rate, loan fees, and loan term, and the calculator will give you a monthly payment while estimating the amount of money you must earn in order to make those payments. You can play around with the loan term to find a payment amount that works for you.

2. Monitor Your Progress

Out of sight, out of mind is the surest way to gather interest and late fees on your school loans. There are multiple programs you can utilize to monitor the progress of your school debt payment plan. Having a comprehensive view of your financial life will compel you to manage your finances better. Online programs like help you organize and keep track of your finances, from monthly income to utility payments, rent, and student loan payments. Seeing exactly where your money goes will help you form a budget that will enable you to save money in order to pay off debt faster. It also helps you to see where you are wasting money, perhaps through too many nights eating out or by paying toward a membership that you never use.

3. Make More and Spend Less

make more
This is a simple strategy that is too often ignored. Most people don’t get out of college making $60,000 a year, but able-bodied young adults are certainly able to get an extra part-time job. Get one that pays 12,000 a year on top of your regular job, and you will be able to pay off your $30,000 school debt in three to four years. Making more and spending less requires sacrifice, but short-term sacrifice has long-term pay-offs. Do you really need to go to Cancun for vacation? Or would a week at home, visiting a friend, or going camping suffice? Sure, spending $3.00 at Starbucks every morning may seem like small change, but brewing your own coffee can save you a couple of hundred dollars a year, not to mention a lot of time spend in the drive-thru. Take the extra cash you gain and pour it into paying off your debt. Making more payments toward your principal balance reduces interest and cuts down your loan term.

4. Employ Debt-Paying Strategies Proven to Work

You have to pay the total amount of your loan, but you don’t have to pay years and years of interest if you are smart.

Have multiple student loans? Institute the debt “snowball method,” where the smallest loan is paid off first. After the first debt is paid off completely, roll that payment amount on top of the minimum payment for your next largest debt. Your payments keep getting bigger and bigger, which means debt get paid off faster. If one student loan has a higher interest rate than another, pay that one off first, but employ the same “snowball” method (which still works, albeit less quickly) if you pay off larger debts first.

You can also move to a bi-monthly payment plan instead of a monthly payment plan. How does this pay your debt off faster? By making bi-monthly payments you make an extra payment on your loan each year. Choosing monthly automatic payments usually reduces your interest, which is an alternative to the b-monthly payment plan.

5. Invest in Order to Pay Off Student Loans Sooner

It seems counter intuitive to invest before you’ve even paid off your student loan debt. But since the average annual return on a 60/40 portfolio comes at a much higher percentage than student loan interest rates, lower-risk investing options can pay off big in the long run. Instead of taking the extra money you accumulate through “making more and spending less” and putting it directly toward your student loan payments, save it in order to invest it (while continuing to make regular payments on your student loans, of course.) Do your research, consult a professional if necessary, and figure out an investment plan that will help you speed up your debt-reduction process. For those uncomfortable with the idea of investment, apps like and offer extremely low-risk ways to pay down debt.

This is a plan that works for almost anyone. Institute these five steps, and you will be out of the red sooner, and can actually enjoy the income made possible by that expensive college education.

Leave a Comment