How to pay off your student loans faster

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Millions of Americans end their higher education journey with student loan debt. Each year, the collective deficit reaches new heights, currently sitting at over $1.7 trillion as of December 2023. In a competitive job market that values degree-holders, more students are turning to student loans—at more significant amounts. 

Unfortunately, student loans can remain long after graduation. Many students sign up for loans without fully understanding how large their payments will be or how the loans will affect their credit. Outsized monthly bills can put young graduates at risk of making payments late or missing them entirely, which may further affect their financial position. 

There’s no quick, magic solution to eliminate your student loan debt. However, options are available that can help you pay off student loans faster than you would by just sticking to the repayment plan automatically assigned to you. Here are seven tips that may help you repay your student loans in record time. 

1. Consider your repayment plan options

If you have a federal student loan, you’ll automatically be enrolled in the Standard Repayment Plan. This plan spreads your payments over a period of up to 10 years and comes with the least amount of interest. For this reason, if you can’t afford to make extra payments on your student loan, this may be a good option for you. 

Still, it can be helpful to consider other repayment plans. An Income–Driven Repayment Plan will take 10 to 15 percent of your discretionary income monthly and spans between 20 and 25 years. If your loan isn’t paid off in full at the end of this period, the remaining balance is forgiven. This can be a suitable option for those with low incomes. 

There are other options as well, such as the Graduated Repayment Plan and the Extended Repayment Plan. The Graduated Repayment Plan is a 10-year loan with payments that increase every two years, so it’s ideal for people who expect their income to grow over time. The Extended Repayment Plan allows individuals to take 25 years to pay their student loan, assuming they owe a minimum of $30,000. 

Take the time to consider your current income, your expected income growth and the total interest you’ll pay with each repayment option. Determining which plan is right for your situation can make your payments more manageable and might help you repay your loans faster. 

2. Start making payments before you graduate

If you have a subsidized federal student loan, the government covers your interest while you’re in school and for a six-month postgraduation period. But if you have an unsubsidized loan, interest starts accruing the day you receive your money. This means that while you’re in school, your student loan debt is growing. 

Consider making payments on your student loan while you’re still in school. If the payment can cover even your monthly interest, it will make a significant difference when you graduate. 

A word of caution: contact your lender before making any early payments. Some private lenders charge a fee if you pay early, which could have you spending more than you owe. 

3. Apply early payments to the principal

Making extra payments is a simple way to reduce your payoff time. Reducing your principal balance shortens the loan period and decreases the amount of interest accrued. However, many student loan lenders will automatically apply early payments to interest or the following month’s bill, neither of which works to pay your loans off faster. 

To ensure your extra payments have the desired effect, contact your lender and specify the payments should be applied to the principal amount. While you’re on the call, take the time to verify that you won’t be charged a prepayment fee for paying early. 

4. Pay more than the minimum

Just because you picked a repayment plan doesn’t mean you’re limited by a monthly payment. If you ever find yourself with extra money—such as tax refunds, gifts or side jobs—consider putting it toward your student loan. 

You can also try to make payments twice a month instead of monthly, a strategy homeowners often apply to their mortgages. A biweekly payment plan means you’ll pay slightly more per year than those with a monthly plan. This puts you even closer to full repayment with every bill. It also reduces the amount of accrued interest, so you’ll pay less in the long run. 

5. Apply for student loan forgiveness

Certain individuals may be eligible for student loan forgiveness programs. These include Teacher Loan Forgiveness, Military Forgiveness, Public Service Loan Forgiveness and similar versions run by state governments. 

Each of these programs has different qualifying factors but usually requires that you make regular payments while working for a specific employer for a given duration. For example, the Public Service Loan Forgiveness Program requires that you complete 10 years’ worth of payments while working for a nonprofit or public sector employer before your remaining balance may be forgiven. 

Loan forgiveness programs can be a pleasant exchange for years of hard work. But it’s important to note that you shouldn’t rely on them entirely, as qualification is no guarantee. 

6. Consider refinancing or consolidating

Refinancing and consolidating are both valid options for those looking to pay off student loans faster. Keep in mind that these options may not be ideal if you have federal loans, as they may invalidate existing protections. This can leave you ineligible for certain repayment plans and unable to participate in forgiveness programs. With that said, here’s a quick breakdown of refinancing and consolidating for your consideration. 

Student loan refinance

If you have a healthy credit score, you might be able to refinance your student loan at a better interest rate. When you refinance, your lender looks at your credit and income level before determining the loan interest rate you qualify for. 

Good credit can lead to an interest rate lower than your current one, which can save you a lot of money in the long run. And if your credit continues to improve, you can refinance again and get a better rate each time. 

If your credit is less than stellar, you might still be able to refinance with the help of a cosigner. Your cosigner’s healthy credit will allow you to qualify for a better interest rate. Then you can focus on fixing your credit. 

Student loan consolidation

If you have multiple student loans—which usually means a mix of private and government—you can consolidate them into one. When you consolidate your loan, you typically get an equal or overall lower interest payment than what you were paying before. This way, you can reduce your total loan costs and achieve repayment faster. Plus, you only have to worry about making one monthly payment, which is easier to manage and thus reduces your risk of missing payments. 

7. Set up autopay

With many lenders, signing up for autopay gets you a slightly lowered interest rate. The added benefit of this option is that your payments are never missed or late. The lower interest rate leads to a faster payoff, while the lack of missed payments means your credit score will stay intact. 

Pay off student loans faster with a solid financial plan

Student loans can help you get the education of your dreams and might open up a world of new career opportunities. However, these benefits don’t come without cost.

Many people are surprised to find out just how long it’ll take to pay off their student loans. But this timeline isn’t set in stone. With the right strategy, you can pay off student loans faster than expected. 

The most crucial step is to make a plan and stick to it. This advice applies to all other areas of your finances—like your credit, savings and budget. With a plan, you can take charge of your finances and stay on track to meet monetary goals. 

If you already have a student loan repayment strategy, take the time to reassess it and ensure it’s still right for you. And if you don’t yet have a strategy, now’s the time to come up with one.

At Lexington Law, our team can help you keep your finances on the right track. Check out our credit service to get started today. 

Note: The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.