Student Loan Debt: 15 Simple Ways To Pay Off Your Student Loans Faster And Strategically In 2022

How to pay off your student loan debt? How do people pay off student loans fast? Here are 15 steps to follow to settle your student debts.

Key Notes

  • Know how much you owe to whom it’s owed, and what your monthly payment and interest rate are for each loan.
  • Find the best repayment schedule—one that’s either fast or slow—for your situation.
  • Consider making payments during your grace period—toward the total loan amount or at least the interest due. Note that interest on student loans from federal agencies and within the Federal Family Education Loan (FFEL) Program has been temporarily suspended until May 1, 2022.
  • Look into payment options that can whittle down your debt, such as paying more each month or making bi-monthly payments, setting up autopay, and applying windfalls such as bonuses, tax refunds, or cash birthday gifts to the principal.
  • See if consolidating or refinancing your loans will lower your interest rate and speed the payoff of your loans.
Student Loan Debt: 15 Ways To Pay Off Your Student Loans Faster And Strategically In 2022

It’s all joy when you go for a student loan to pay for your college or graduate education but the saddest of these joys is when it is about that time for you to pay off your student loan debt.

If you borrowed money to pay for school, your first question might be how best to pay off your student loans. The short answer is that there’s no magic bullet, but there are definitely things you can do to make paying back education debt easier.

Part of providing for yourself after graduation may include repaying student loans, which can be a major responsibility. In fact, statistics on student debt show 7 out of 10 graduates hold student loan debt, with an average debt of just under $30,000. Student loan debt reached an all-time high of $1.61 trillion in 2021, so you’re not alone.

A growing segment of the economy is devoted to helping Americans figure out how to pay off student debt, and there’s a lot to learn.

If you’re like most borrowers, you likely want to find the fastest way to pay off student loans. Paying off your loans quickly will help you save money on your student debt and achieve other goals like buying a car or saving for retirement.

If you want to get out of student loan debt but aren’t ready to full, the most effective way to pay off student loans fast is to pay more than the minimum payment in any way you can. The more you pay down the principal balance, the less you’ll pay in interest overall.

You can do it by paying a little extra each month. Making extra payments, along with your regular monthly payments, may reduce the total amount you pay for your loan or help pay your student loan off faster.

You don’t need to make an extra payment every single month to pay down your student loan faster—do it whenever your budget allows. The easiest way to do this is to make a one-time payment online, by phone, or by mail.

Paying extra will also reduce the Current Amount Due shown on your next billing statement(s). Even if there’s no required amount due on the billing statement, continuing to make payments will reduce your Total Loan Cost.

Note: If you’re enrolled in auto-debit or have requested the pay-ahead feature for your loans to be turned off, the Current Amount Due will not be reduced in the following billing period(s).

Fortunately, there are several key strategies for tackling student debt fast. TheVibely has gathered 15 ways to pay off student loans fast, along with some key details on how to decide which debt to pay first.

Student Loan Debt: 15 Ways To Pay Off Your Student Loans Faster And Strategically In 2022

Before we dive into the points, there is some information about student debt loans you should know. At the end of this article, you will learn;

  1. What is considered a student debt?
  2. To understand student debt
  3. How student debt is paid off

What Is Student Debt?

Student debt is money owed on a loan that was taken out to pay for educational expenses. Rapidly rising college tuition costs have made student debt the only option to pay for college for many students. In the United States, most federal student loan debt was serviced by Sallie Mae, a publicly-traded company, until its loan portfolio and loan services were spun off in 2014 to a new entity, Navient.

Understanding Student Debt

Student debt is typically incurred when a student uses loans to cover the portion of tuition that has not otherwise been paid for through their own assets, grants, loans taken out by parents or guardians, or by scholarships. While it is possible for students to save money to put towards the cost of higher education, the escalating price of that education at many institutions increasingly narrows the plausibility of covering such costs without some form of financial assistance.

Especially for advanced degrees, student debt can escalate rapidly with the compounded price of curriculum, textbooks, and other associated costs ever on the rise. While there is an expectation that students will pursue careers and jobs that will offer them the means to repay students over time, there are no guarantees they will immediately find such employment after graduation.

The upside of student debt is that by borrowing money to obtain a degree, it may be possible to earn significantly more or to pursue a more personally fulfilling career, making the debt financially or emotionally worthwhile. The downside of student debt is that some students incur debt but don’t actually graduate, and some students take on more debt than they can comfortably pay back given their career choice.

Another downside of student debt is that most people incur it at a young age, before they may fully understand the implications of their decision. In addition, student debt differs from other types of debt in that it typically cannot be discharged in bankruptcy except in cases of undue hardship.

How Student Debt is Paid Off

Working while in school, obtaining scholarships, and going to a public, in-state university can minimize the need for students to take on debt to finance their education. Graduates who work in public service professions for a specified number of years and who make a minimum number of debt payments may be eligible to have some or all of their student debt forgiven if the debt is in the form of a direct student loan from the federal government.

Graduates with federal student loan debt who qualify for special repayment plans, such as income-based repayment, may also have the balance of their student debt forgiven after making payments for 20 to 25 years, depending on the program. Student employers may be contacted by a collection agency about student loans.

Student Loan Debt: 15 Ways To Pay Off Your Student Loans Faster And Strategically In 2022

How do people pay off student loans fast?

1. Know What You Owe
2. Pay More Than the Minimum
3. Evaluate Student Loan Repayment Options
4. Use the Grace Period to Your Advantage
5. Consider Consolidating or Refinancing Student Loans
6. Pay Your Loans Automatically
7. Pay Extra and Be Consistent
8. Apply ‘Found Money’ to Loan Balances
9. Look Into Forgiveness and Reimbursement Programs
10. Try Biweekly Payments
11. Work for an Employer With Repayment Assistance
12. Avoid Extended Repayment Terms
13. Utilize Tax Deductions
14. Make Lump Sum Payments
15. Join the Military

1. Know What You Owe

The first step in repaying student debt is knowing what you owe. If you haven’t done this yet, take time to figure out:

  • The total amount you owe on all of your loans
  • Which student loan servicers you owe money to and the amount for each loan
  • Which of your loans are federal and which are private
  • The minimum monthly payment for each loan
  • The interest rate for each loan

Once you’ve done this, you can move on to the next step, which is choosing a repayment plan.

2) Pay More Than the Minimum

Paying more than the minimum and putting the extra money toward reducing your principal balance is the fastest way to become debt-free.

This strategy lowers the remaining amount due and, because interest is calculated on your remaining balance, reduces total interest owed.

You can set up an automatic monthly payment for more than the minimum to ensure you always pay a little extra. You can also make extra money you earn, such as a year-end bonus, and apply it to your loan balance.

3. Evaluate Student Loan Repayment Options

How you repay your loans depends on three things: the type of loans you owe, how much you can afford to pay, and your money goals.

“Financial goals are different for everyone,” says Joe DePaulo, CEO, and co-founder of College Ave Student Loans. “Some may want a longer repayment plan that allows more flexibility in their monthly budget, while others may opt for a repayment plan that allows them to pay off their student loans as quickly as possible.”

There is a range of student loan repayment options to consider. If you need flexibility and you owe federal student loans, you might look at an income-driven repayment plan. There are several choices that calculate your monthly payment based on your income and household size and allow you more time to repay your loans than you’d get on a standard 10-year repayment plan.

On the other hand, if you want to repay your loans as quickly as possible, you might want to stick with a repayment plan that has the shortest term. The trade-off is that you’ll have a higher monthly payment. The best way to evaluate loan repayment options is to use a loan repayment calculator, such as the one offered by the Department of Education.

Income-driven repayment plans can offer loan forgiveness after a set number of years, but any forgiven loan balance may be treated as taxable income.

4. Use the Grace Period to Your Advantage

Whether you have a grace period and how long it lasts with private student loans depends on the lender. The grace period is the time frame in which you aren’t required to make payments on your loans.

With federal student loans, the grace period typically lasts for the first six months after you leave school. With private loans and unsubsidized federal loans, keep in mind that interest is still charged during your grace period and will be capitalized—added to the total amount you owe—after the grace period ends.

One way to make the grace period work for you is to make advance payments against your loans. Paying down some of the principal means less interest that accrues later. At the very least, try to make interest-only monthly payments in the grace period to cut down on what you owe.

Note that interest on student loans from federal agencies was temporarily suspended until May 1, 2022, which should help reduce the total amount you owe when you graduate. As of March 30, 2021, this relief was also extended to loans in the Federal Family Education Loan (FFEL) program.

 Even with federal loans, it still makes sense to try to pay down federal loan principal during this period.

5. Consider Consolidating or Refinancing Student Loans

Consolidating and refinancing offer two ways to streamline student loan repayment. With debt consolidation (or student loan consolidation), you combine multiple loans together at an interest rate that reflects the average rate paid across all of your loans. This can be done with federal student loans to merge multiple loans (and monthly loan payments) into one.

Refinancing is a little different. You’re taking out a new loan to pay off the old loans, so you still end up with one monthly payment. But if that new loan has a lower interest rate compared to the average rate you were paying across the old loans, you could save some money—provided you don’t extend the term. One thing to note about refinancing private student loans is that you’ll need good credit to qualify, which may necessitate bringing a cosigner on board.

Be very careful to avoid student loan scams, which are particularly prevalent if you try to refinance your loans or investigate loan forgiveness.

You can refinance federal and private loans together into a new private student loan, but doing so will cause you to lose certain federal loan protections on your federal loans, such as deferment and forbearance periods.

6. Pay Your Loans Automatically

Late payments could hurt your credit score. Scheduling your loan payments to be deducted from your checking account automatically each month means you don’t have to worry about paying late or damaging your credit.

You could also score some interest rate savings if your lender offers a rate discount for using autopay—federal loan servicers and many private lenders do. The discount may only be a quarter of a percentage point, but that can make a difference in how quickly you pay off the loans over time.

7. Pay Extra and Be Consistent

One thing that can slow down your student loan payoff is paying only the minimum due. Joshua Hastings, the founder of the personal finance blog Money Life Wax, was able to pay off $180,000 in student loans over a three-year period by taking a focused approach, which included paying extra on his loans every month.

If you’re able to pay extra, you may want to target one loan at a time while paying the minimum on everything else. The question is, do you use the debt snowball method or the debt avalanche?

“When deciding which student loan to pay off first, it’s best to go with the one that can free up cash flow quickly. That way you can have more money to throw at the next loan,” Hastings says. “As you grow your cash flow, it’s a good idea to transition to the high-interest loans.”

8. Apply ‘Found Money’ to Loan Balances

Found money doesn’t necessarily mean the change you find between your couch cushions. But it does include money that isn’t budgeted for as part of your monthly income. Using found money is another way to gain traction with student loan repayment. This includes:

  • Tax refunds
  • Rebates
  • Annual salary bonuses
  • Income earned from a side job
  • Cash gifts you receive for birthdays or holidays

You can apply these amounts to your loan principal to take out a chunk of your debt in one go. Other opportunities to use found money to pay down loans quickly include inheriting money from relatives or receiving a settlement as part of a lawsuit.

9. Look Into Forgiveness and Reimbursement Programs

Public Service Loan Forgiveness is designed to offer student debt relief for students who pursue careers in public service. You make a set number of payments while working in a public service job and the remainder is forgiven.

If you don’t qualify for loan forgiveness, you may be able to get help with your student loans through your employer. Talk to your HR department about whether student loan reimbursement is available as an employee benefit and what you need to do to qualify.

In some circumstances, a debt relief company can assist you in negotiating lower payments or even partial debt reduction.

The American Rescue Plan passed by Congress and signed by President Biden in March 2021 includes a provision that student loan forgiveness issued between December 30, 2020, and January 1, 2026, will not be taxable to the recipient.

10. Try Biweekly Payments

Another method you can try with paying off student loans is switching from monthly to biweekly payments. Similar to making biweekly mortgage payments, this tactic means you’ll have to make one extra loan payment per year. You’ll need to talk to your loan servicer to find out whether automatic biweekly payments are an option, but if not, you may be able to make additional principal payments at any time through your online account access.

The upside of making extra biweekly payments yourself, versus automatically, is that you can make the payments when it fits your budget and skip them if there’s a month when you don’t have the extra cash.

11) Work for an Employer with Repayment Assistance

Employer student loan repayment assistance is growing in popularity as a workplace benefit. Employers who offer this benefit pay a certain amount of money towards employees’ student debt each month. Amounts vary, but typically employers offer around $100 to $300 monthly.

When you work for a company that offers this benefit, keep paying the minimums yourself and use the extra funds from your employer to pay down the balance more quickly.

12) Avoid Extended Repayment Terms

Many federal student loan repayment options, including income-based plans, extend the time to pay off your loan.

While this can make your monthly payment lower and help in times of financial hardship, it’s best to avoid extended plans if your goal is to pay off your loans faster. You’ll pay more in interest when you stretch out your repayment period, and it will take years longer to become debt-free than if you stuck with the standard plan.

13) Utilize Tax Deductions

For most student loan borrowers, you can take a tax deduction of up to $2,500 annually for student loan interest. When you take this student loan interest tax deduction based on the actual amount of interest you pay, it reduces your Adjusted Gross Income (AGI), so you pay less in taxes.

However, if your income exceeds $70,000 as an individual or $140,000 if you are married filing jointly, you lose part of the deduction. And you lose the full deduction if you make at least $85,000 as an individual or $170,000 if married filing jointly.

14) Use Extra Cash to Make Lump Sum Payments

LendEDU survey found that over half of student borrowers who are able to pay off their student loans in one to five years made at least one lump sum payment of at least $5,000, making this one of the best strategies for paying off student loans fast.

When you come into some extra money for example from a tax refund, don’t spend the cash. Instead, put the funds towards paying off your student debt with extra payments or a larger payment. This will reduce the principal balance you owe, so it will reduce your interest and the outstanding amount you have to pay back.

15) You Can Join the Military

If you join the military with some student loan debt, you may be able to pay it off using the GI Bill or another form of relief, such as military student loan forgiveness.

Typically, you’ll need to commit to a certain number of years in the active military to get help with your debt. Research some of the different programs to find out requirements and explore your options.

The Bottom Line

Tackling your student loans proactively is key to paying them off sooner rather than later. There are plenty of ways to manage your debt more effectively, but the worst thing you can do is nothing.

“If you find you’re having difficulty affording your federal or private student loan payments, don’t ignore the problem or assume there are no options,” DePaulo says. “Reach out to your loan servicers to discuss your situation and try to create a plan to get back on track.”

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