How to Pay Off Student Loans Fast

Paying off student loans quickly allows you to enjoy the benefits of a college education while minimizing your time in debt. Lenders will be satisfied with the minimum monthly payment. However, making more frequent or higher monthly payments can result in paying less interest and freeing up your budget for other goals—like saving money. 

Here is your guide to how to pay off student loans fast. 

12 best strategies to pay off student loans quickly

If you’re eager to start paying off your student loans, explore these 12 techniques to find the best way to pay off student loans for you:

What our expert recommends

Jim McCarthy

CFP®

Create a budget. Then, prioritize loans with the highest interest rates and pay more than the minimum. Consolidating federal loans into private loans is not the best option for many borrowers.

Repayment strategy	Best For
Pay more than the minimum	Borrowers who have extra cash to spare
Refinance your student loans	Borrowers with high APRs and lengthy loan terms
Make biweekly payments	Borrowers who work side hustles and can make the extra payment
Pay off high-interest loans first	Borrowers who have multiple student loans
Take advantage of interest rate reductions	People who can qualify for lower APRs
Create a budget	Borrowers who rarely track their expenses and progress toward long-term goals
Work for an employer with repayment assistance	Borrowers who work with employers that offer these programs
Avoid extended repayment terms	People who can afford the monthly payments on their current loan
Use tax deductions	People who don’t itemize their tax deductions
Make lump-sum payments	People who have extra money or received an inheritance
Use loan forgiveness programs	Borrowers who are eligible for them
Join the military	Individuals who are in the military or want to join

1) Pay more than the minimum

Paying more than the minimum and putting the extra money toward reducing your principal balance is a fast way to become debt-free. This strategy lowers the remaining amount due and, because interest is calculated on your remaining balance, reduces the total interest owed.

How it works

Here’s an example of how paying more than the minimum can shorten student loan repayment. Assume you owe $30,000 at a 6% interest rate with a 10-year repayment period. 

Monthly payment	Payoff time	Interest paid
$333	120 months	$9,967
$433	85 months	$6,899
$533	66 months	$5,296

As you can see, a monthly payment of $200 extra can cut your payoff time nearly in half. You’d also save over $4,600 in interest. 

What you need to know

Setting up automatic monthly payments for more than the minimum ensures you always pay a little extra. Enrolling in autopay might give you an additional benefit through an interest rate discount. 

Just be sure your lender applies your payment to your principal rather than advancing your due date.

Pros and cons

Pros

• Get out of debt sooner

  Making additional payments toward the principal will reduce your balance faster than the minimum payment.

• Less interest

  Since these payments go toward the principal, you’ll save in interest.

• Accountability

  Setting a goal to pay more than the minimum each month can inspire you to stay focused on growing your income and trimming your expenses.

Cons

• Less cash for other expenses

  You will have to allocate cash toward your student loan that could have gone toward other costs.

• You may need a side hustle

  Some borrowers have to embark on a side hustle to keep up with living expenses while paying more than the minimum.

• Fewer investments

  You won’t be able to invest this money into assets like stocks and real estate that can grow your wealth.

2) Refinance your student loans

Refinancing involves getting a new loan at a lower interest rate. If you keep payments the same or increase them but reduce your interest rate, you’ll pay less in interest in the long term. And more of your payment will go toward reducing the principal balance with student loan refinancing.

How it works

Once again, assume you have $30,000 in loans at 6% interest with a 10-year repayment term. You refinance to a new loan at 5%.

Here’s what your monthly payment, payoff time, and interest paid would look like with different repayment terms. 

Monthly payment	Payoff time	Interest paid
$318	120 months	$8,184
$380	96 months	$6,461
$483	72 months	$4,787

Choosing a shorter repayment term would get you out of debt at the fastest pace and save you the most money in interest. However, it would mean a higher monthly payment. 

What you need to know

You give up important protections on federal student loans by refinancing, such as the ability to use an income-driven repayment plan, and you need to qualify for a new loan based on your income and credit score. You might need a cosigner for approval if you have less than perfect credit or no credit. 

If you want to learn more about refinancing, you can check out our guide to the best places to refinance student loans.

Pros and cons

Pros

• Lower APR

  Some refinances can help you secure a lower APR.

• Get out of debt sooner

  A shorter loan term means you’ll pay off the principal sooner.

• Less interest accumulation

  Interest accumulates the most for lengthy loans due to amortization. A refinance into a short-term loan reduces interest.

Cons

• You will lose federal benefits

  Federal benefits do not carry over if you refinance into a private student loan.

• Fees

  Refinancing involves loan origination fees and other costs.

• Higher monthly payments

  A shorter loan guarantees higher monthly payments, and you may also get a higher APR.

3) Make biweekly payments

Instead of paying your loan monthly when the payment is due, you can divide your required payment in two and pay it every two weeks.

How it works

Biweekly payments may not save you a lot of money on interest, but they can help you pay off your loans faster. 

Here’s an example of how biweekly payments might affect your repayment of $30,000 in student loans at 6%. 

Monthly payment	Payoff time	Interest paid
$333	120 months	$9,967
$167 biweekly	108 months	$8,967

Essentially, you’d get out of debt one full year faster just by making this small change in how you pay. 

What you need to know

This little trick helps you pay off your student loans faster because you will end up making 26 half payments, which amounts to 13 months’ worth of payments instead of the 12 you would have paid with once-a-month payments. 

Pros and cons

Pros

• Get out of student debt faster

  The extra payments will trim your principal faster.

• Less interest

  Each extra payment reduces your principal before interest can accumulate.

• Flexibility

  You don’t have to commit to bi-weekly payments each month if you endure a short-term financial obstacle.

Cons

• Less money for other expenses

  You won’t have as much cash available for an emergency expense if you make two payments per month.

• Consistency

  You have to stay consistent with bi-weekly payments for them to impact your student loan balance in a meaningful way.

• Less wealth accumulation

  The extra money you put toward student debt payments can’t go into a stock portfolio.

4) Pay off high-interest loans first

Some of your student loans may charge interest at a higher rate than others. If you can pay those more expensive loans with higher interest rates first, you’ll save more on your total interest.

How it works

Assume the $30,000 you owe is split between three loans. You have a $20,000 loan at 5%, a $10,000 loan at 9%. Here’s how much interest you’d pay with each one, assuming a 10-year repayment period:

• Loan A for $20,000 would cost you $5,455, with a $212 monthly payment
• Loan B for $10,000 would cost you $5,201, with a $126 monthly payment

Even if the second loan is half the amount of the first, you’re still paying almost the same amount in interest. Throwing everything you have at the second loan could help you pay it off faster while saving money. 

For example, doubling the monthly payment would knock six years off the repayment time and save over $3,000 in interest. 

What you need to know

While you’ll need to pay the minimum on every loan, putting any extra cash toward your highest-interest loans first helps pay them down faster. 

That leaves loans with lower interest rates to accrue interest for a longer period than those with the highest rates. If all of your loans have higher rates, refinancing could help bring them down. 

Read More

Which Student Loans to Pay Off First

Pros and Cons

Pros

• Reduce your monthly interest payments

  Trimming high APR debt will reduce your monthly payments.

• Prioritize the most expensive debt

  Getting this debt out of the way makes the lower APR debt more manageable.

• Approach your debt with a plan

  Knowing how you will allocate extra cash toward your loans can feel empowering.

Cons

• Limited upside: If all of your loans have high APRs, this strategy will only produce marginal benefits.

• Not enough cash: Some people won’t have enough cash at the end of the month to make additional payments toward high-interest debt.

• No small wins: Some borrowers prefer to pay off small accounts first to build up a string of small wins.

5) Take advantage of interest-rate reductions

Many student loan servicers provide a deduction on interest if you set up autopay. Some also reduce interest after you’ve made a certain number of on-time payments.

How it works

The most common interest rate reduction is a 0.25% reduction for enrolling in automatic payments. So, how much is that really worth? 

Here’s another example to illustrate your projected money and time savings. 

Loan terms	Monthly payment	Interest paid
$30,000 at 6% over 10 years	$333	$9,967
$30,000 at 5.75% with autopay discount over 10 years	$329	$9,516

This strategy assumes you’re following a standard 10-year repayment plan. However, if you were pairing rate discounts with other extra principal-only payments or biweekly payments, you could get out of debt much sooner. 

What you need to know

Interest rate reduction programs vary among lenders, so find out your options for getting your lender to reduce your rate. And remember, even a slight interest rate reduction can make a big difference if you’re dealing with $100K in student loan debt.

Pros and cons

Pros

• Lower monthly payments

  A lower interest rate ensures that you will make lower monthly payments.

• Multiple ways to save

  Opening a checking or a savings account with the lender may result in a discount.

• It makes other strategies easier

  Lower monthly payments can make it easier to initiate bi-weekly payments or pay more than the minimum.

Cons

• Qualifying

  Not everyone is eligible for an interest rate reduction.

• Your rate may be low already

  While it’s good to have a low APR, it also means you may have a difficult time finding ways to reduce your interest.

• Automatic payments

  You typically have to enable automatic payments to qualify.

6) Create a budget

With a budget that includes student loan repayment, you’ll be more mindful of where your money goes and can plan to put more money toward paying off student loans early so you can eliminate debt faster.

How it works

To create a budget, track your spending to see where you’re going overboard. Budget for necessities first, such as rent and food. Then work money into the budget for extra student loan payments before allocating for your wants.

If you have irregular income, you may want to create a baseline budget that covers your bare minimum expenses. You can use an average of your monthly income for the past six to 12 months to figure out how much you realistically have to commit to student loan repayment. 

What you need to know

Budgets are only effective when you’re sticking with them. If you’re not checking in with your budget regularly, you could be setting yourself up for failure regarding loan repayment. For help following a budget, consider using a student loan app.

Pros and cons

Pros

• Track your finances

  It’s important to stay on top of your income and expenses, and a budget lets you do that.

• Trim your expenses

  If this is your first time creating a budget, you will likely find many opportunities to cut costs.

• Stay focused on long-term goals

  Creating a budget can help you prioritize long-term goals and avoid impulsive purchases.

Cons

• Complexity

  It can take a lot of time to find the best budgeting tools and track your expenses.

• Budgets don’t change your income

  While a budget can help, you may still need a side hustle, even after reducing costs.

• It takes time

  Budgeting doesn’t result in seismic transformations. You have to be consistent with a budget to save money and make higher monthly loan payments.

7) Work for an employer with repayment assistance

Employer student loan repayment assistance is growing in popularity as a workplace benefit. The type of benefits you can take advantage of can vary, depending on what your company offers. 

How it works

The ways that employers can offer student loan repayment assistance include:

1. Signing bonus. If your employer offers a signing bonus for student loans, you’d get a lump sum when you start your job that you could apply to your loans. 
2. Recurring direct payments. Some employers make direct payments to loans on behalf of eligible employees. Payments may occur monthly or annually. 
3. Retirement savings incentive. To encourage employees to enroll in workplace retirement plans, some employers may offer a benefit arrangement that can help you pay down your loans faster. 
4. Vacation time swap. Companies may also allow employees to cash in their accrued vacation time and apply the amount to their loan balances. 

What you need to know

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 faster.

Pros and Cons

Pros

• Free money

  Your employer is essentially giving you free money to cover student loan payments.

• Incentivizes higher monthly payments

  This program encourages borrowers to make higher monthly payments since employers match them dollar for dollar.

• It’s an extra perk

  A repayment assistance program is just another reason to choose one employer over another.

Cons

• Your employer may not have one

  This program isn’t available everywhere.

• It may require switching jobs

  You might have to leave the security of one job and pursue a less secure job somewhere else to find this type of program.

• You may lose out on other benefits

  You may be losing out on 401(k) matches or a similar perk if you use a dollar-for-dollar matching program for student loans.

8) Avoid extended repayment terms

Many federal student loan repayment options, including income-based plans, extend the time to pay off your loan. Instead of a 10-year term, for instance, you may have 20 to 25 years to pay off your loans. 

How it works

Choosing a longer repayment term can lower your monthly payment but add to your interest paid. Here’s another example showing the anticipated cost of a longer repayment term on a $30,000 loan at 6% interest.

Monthly payment	Payoff time	Interest paid
$333	120 months	$9,967
$215	240 months	$21,583.04
$193	300 months	$27,987.13

As you see here, a longer repayment term can mean less out-of-pocket to pay each month. But it can skyrocket the total amount of interest you’ll pay. 

What you need to know

Extended repayment can make your monthly payment lower and help in times of financial hardship. Choosing a longer term with an income-driven plan can also help you qualify for Public Service Loan Forgiveness. 

However, avoiding extended plans is best 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.

Pros and cons

Pros

• Get out of debt sooner

  Keeping your current term ensures that you pay off the loan sooner.

• Not overextending your loan

  One extended repayment term can lead to another and keep you in debt longer.

• Less interest accumulation

  Interest doesn’t have as much time to accumulate if you stay the course.

Cons

• Losing loan forgiveness

  You need an extended repayment term to qualify for loan forgiveness.

• You can put yourself through extra financial stress

  Extended repayment plans reduce monthly payments. Avoiding this plan can increase your financial stress by preserving the current monthly payment.

• Risk falling behind on payments

  It’s worse to miss monthly payments than it is to extend your loan.

9) Use tax deductions

For most student loan borrowers, you can take a tax deduction of up to $2,500 per year 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.

How it works

The student loan interest deduction is an above-the-line deduction, meaning you don’t need to itemize on your tax return to claim it. Each January, your lender or loan servicer should send you a Form 1098-E showing how much interest you’ve paid. You’ll use this to claim the deduction on your taxes. 

What you need to know

If your income exceeds $75,000 as an individual or $155,000 if you are married filing jointly, you lose part of the deduction. You lose the full deduction if you make at least $90,000 as an individual or $185,000 if married filing jointly.

Pros and cons

Pros

• Quick savings

  Tax deductions don’t take much effort and let you save money.

• Itemization is also an option

  You can itemize your student loan interest payments if your tax deductions would exceed the standard tax deduction.

Cons

• Income limit

  The IRS has income limits for claiming the student loan interest deduction.

• It’s not the best method

  While you’ll save money with a tax deduction, it’s available to you anyway. You’ll pay student loans faster with the other strategies.

10) Use extra cash to make lump-sum payments

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

How it works

When you come into extra money—such as a tax refund—you can apply the funds to your student debt in one single payment or several smaller payments. This will reduce the principal balance you owe if you ask your lender to apply it to the principal rather than the interest and fees. 

For example, say you have $30,000 in student loans at 6%. You come into a $12,000 windfall from an inheritance which you decide to put toward your debt. You’d cut your repayment time by nearly five years and trim nearly $7,000 off the interest. 

What you need to know

Certain types of lump sum payments you receive may be taxable to you. For example, if your employer hands out a $5,000 bonus to you and your coworkers at the end of the year, that money would be treated as supplemental wages and be subject to tax. 

Pros and cons

Pros

• Trim your principal

  You can use the extra money to reduce your loan’s principal.

• Get out of debt sooner

  Any extra payments can minimize how long you stay in debt.

• Flexibility

  You don’t have to commit to bi-weekly payments and can use the lump sum for other expenses if needed.

Cons

• It’s not always feasible

  Not everyone can accumulate enough money to make a lump sum payment.

• Short on cash

  If you make a lump sum payment, you won’t have as much cash for an emergency expense.

• No investments

  The lump sum you use to trim your student loan balance can’t go toward stocks and other assets.

11) Use loan forgiveness programs

Student loan forgiveness allows you to get part of your debt canceled, typically after making a certain number of payments or meeting other eligibility requirements. 

How it works

If you work in a qualifying public service job, you may be able to get your debt forgiven after you make 120 on-time payments. After about 10 years, you can have your remaining balance forgiven, which allows you to become debt-free much faster. 

You’ll need to enroll in an income-driven repayment plan to qualify, but that could reduce your payments to $0, depending on how much you earn. You could also qualify if you’re enrolled in the 10-year Standard Repayment Plan.

As long as you’re employed by a qualifying employer any $0 payments would still count toward your 120-payment total. 

What you need to know

Public Service Loan Forgiveness has strict criteria, so know the rules if you want the government to forgive part of your debt. You may be eligible for other student loan forgiveness programs, too; just be sure to read the fine print before pursuing one of these options.

Read More

Does Debt Relief Help with Student Loans?

Pros and cons

Pros

• Pay less than what you owe

  Student loan forgiveness programs absolve you of your remaining balance.

• Several choices

  The federal government offers multiple opportunities to have your student loans forgiven.

• Make lower monthly payments

  You don’t have to worry about bi-weekly payments or making a lump sum payment if you know your debt will eventually be forgiven.

Cons

• Eligibility

  Not everyone is eligible for student loan forgiveness programs.

• It takes a while to receive forgiveness

  You may have to work in the same field for more than a decade to receive forgiveness.

• Factors outside your control can stall your progress

  Getting laid off from a job that makes you eligible for a loan forgiveness program can prolong your path to student loan forgiveness.

12) Join the military

If you join the military with 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.

How it works

Your options to get student loan relief from the military might include:

• Qualifying for public service loan forgiveness
• Department of Defense (DoD) loan repayment
• Student loan discharge for disability

Military members can also qualify for interest rate reductions and rate caps, as well as special deferment periods. 

What you need to know

You’ll often need to commit to a certain number of years in the active military to get help with your debt. Loan repayment assistance may require you to forgo your G.I. Bill benefits. Research programs to find out requirements and explore your options.

Pros and cons

Pros

• Get a job with the U.S. military

  Working with the U.S. military can open career opportunities in the future.

• Other benefits

  Military veterans get several benefits, such as VA loans and affordable life insurance.

• Get your student loan covered: The military will pay for your education if you qualify.

Cons

• Eligibility

  You must be in a specified Military Occupational Specialty that qualifies for repayment.

• Not everyone wants to serve

  For some people, this military student loan repayment program is perfect. However, not everyone wants to join the military, especially during a war.

• Less flexibility

  You may be assigned a base or have to leave your family for an extended period of time.

How long does it take to pay off student loans?

The average time to repay undergraduate loans, specifically federal loans, is 20 years. If you took out additional loans for graduate school or a professional degree, your repayment period can more than double. Private student loan repayment times are more difficult to track, as repayment terms aren’t standardized the way they are for federal loans. 

The Standard Repayment Plan for federal student loans has borrowers pay off their loans over 10 years. So why might it take some borrowers much longer to clear their loans? There are a few reasons and it often depends on the borrower’s situation. 

Here’s what to know about student loan repayment: 

• Opting for deferment or forbearance can temporarily suspend payments, but it extends your loan payoff debt. 
• Enrolling in an income-driven repayment plan can extend repayment from 10 years to 20 or 25 years. 
• Taking on additional loans for graduate school can leave you with more debt to repay.
• Choosing a longer repayment term for private student loans can lower your monthly payments but leave you indebted for longer. 

If you’re considering how to pay off student loans faster, it helps to know the details of your loans first. Specifically, that includes whether you have federal or private loans, repayment terms, and interest rates. Those details can give you a framework for deciding if it’s feasible to pay off student loans faster based on your budget. 

Also, remember that the goal is a little different if you’re interested in public service loan forgiveness. Instead of trying to pay your loans off as quickly as possible, you’d enroll in an income-driven repayment plan and make the 120 qualifying payments that are required. 

Read More

How to get out of student loan debt ASAP

What is the best way to pay off student loans?

The best strategy for how to pay off student loans fast is the one that fits your budget and timeline for becoming debt-free. For instance, that might mean a combination of:

• Paying more than the minimums
• Enrolling in automatic payments
• Paying biweekly
• Applying tax refunds to your loan balance

Certain options, such as Public Service Loan Forgiveness or military loan forgiveness, have a narrower scope and won’t work for everyone. The same is true of employer student loan repayment assistance. 

Evaluating your budget and financial situation can help you decide which of the above methods you can apply. You may also find it helpful to estimate your monthly payments and interest savings with some of the different options using a student loan calculator. 

Break your budget into “must-haves” or needs versus “nice-to-haves” or wants. Look to reduce, suspend, or eliminate items in the “nice-to-have” category to create extra cash to pay off loans.

Jim McCarthy

CFP®

How to stay motivated while paying off student loans fast

Paying off student loans is a long-term journey. Making bi-weekly payments and using other strategies can get you out of debt sooner, but it will take several years before you’re debt-free. 

People who stay motivated and consistent throughout the process can end up achieving their long-term financial goals. These tips will help you stay on track:

• Set milestones: You can set mini milestones toward paying off your loan. For instance, a borrower who owes $20,000 can set goals for when they want to have their balance at $15,000. They can then set another milestone for when they want to have their loan below $10,000.
• Celebrate your progress: Take the time to acknowledge your progress. Writing journal entries about the process can feel empowering when you compare where you were with where you are now.
• Keep the end goal in mind: Think about how your life will be different once you pay off the student loans. Keeping this vision front and center can help you stay committed to paying off your student loan fast.
• Pick up new hobbies and side hustles: Adding a side hustle to your schedule will result in extra income. Even if you don’t have enough time to pick up a side hustle, you may want to add a new hobby to your lifestyle. Hobbies can motivate on their own. Progressing with a hobby can inspire you to progress in other areas, such as paying off your student debt.

Mistakes to avoid when paying off student loans quickly

While it’s good to pay student loans fast, a few obstacles can show up if you don’t stay on top of other expenses. These are some of the common mistakes to avoid when you are in a hurry to pay off student loans.

• Not budgeting effectively: Making additional payments toward your student loans will get you out of debt sooner, but it comes at a cost. You’ll have less money in your emergency savings account to use for other expenses. Budgeting effectively can help you stay on top of student loans and other expenses.
• Missing payments: Making extra payments can give you a false sense of security that you paid the minimum monthly payment. For instance, a person who makes bi-weekly payments may accidentally think they’re ahead of schedule when they’re really behind on payments. Furthermore, those bi-weekly payments can leave you vulnerable if your income takes a hit.
  Using retirement accounts to pay off student loans: Taking money out of your retirement account too early will result in additional fees. You’ll also miss out on compounded portfolio growth. It’s not worth it to pull funds from your retirement accounts to cover student loan payments.
• Ignoring refinancing opportunities: Some refinances let you secure lower APRs and reduce your monthly payments. It’s a good idea to monitor these opportunities while paying off your student loans.

Additional resources

Here are additional resources for those looking to speed up the time it takes to pay off their loans:

• Should you pay off student loans with your 401(k)?
• How to pay off medical school debt
• How to use a HELOC to pay off student loans
• Why you shouldn’t advance your due date on student loans
• Student loan repayment options

FAQ

How long does it take to pay off student loans on average?

The average person takes 20 years to pay off their student loans. However, this amount varies for each individual, and making extra payments will make you debt-free sooner.

What is the fastest way to pay off student loans?

The fastest way to pay off student loans is through a large lump sum. Choosing a short loan term and making extra payments each month will also make you debt-free sooner.

How can I pay off my student loans faster?

You can pay off your student loans faster by making additional payments toward the principal. Some people make bi-weekly payments while other borrowers opt to make large lump sum payments a few times per year.

How can I reduce the time it takes to pay off my student loans?

You can get a shorter loan term and make additional payments to reduce the time it takes to pay off your student loans. You’ll still be making monthly payments for several years, but staying consistent will make you debt-free sooner.

How long does it usually take to pay off student loans if I make extra payments?

You can save several years of time by making extra payments. The amount of time it will take depends on your current loan, how much extra cash you pay each month, and other factors.