How to Pay Off Student Loans in 5 Years

If you’re burdened with hefty student loan payments, you’re not alone—more than 45 million people in the United States have student loan debt, and the average debt load is around $37,338. 

Repaying nearly 40K in debt is no easy task, even with a long repayment term. But it can be done, and many people opt to pay off their student loans early to save on interest. While standard federal loan repayment plans have 10-year terms, it’s possible to pay off your debt much quicker, depending on your situation. 

Here’s what it would take to repay your student loans in five years, how much you’d save by doing so, and some unconventional strategies to help you pay off student loans fast.  

In this guide:

• Understand your debt
• Create a 5-year repayment plan
• Budget to accelerate repayment
• Choose the right repayment strategy
• What if I can’t pay off my student loans in 5 years?
• Make sacrifices and stay disciplined

Understand your debt

The first step in developing an accelerated repayment schedule is understanding how much you owe, your loan rates, and terms. Chances are, you likely have federal student loans, but you may also have private student loans if your federal loans didn’t cover everything. 

Here’s how to determine what types of loans you have and your loan servicers:

• Log into studentaid.gov using your FSA ID. 
• Call 1-800-4-FED-AID if you need additional assistance. 
• Review your monthly statements. 
• Check your credit report at www.annualcreditreport.com for loan servicer information.

It’s also important to understand your interest rates and how interest accrues on your loans, as this could help you determine which loans you want to repay first. Generally, federal student loans have lower rates than private student loans. Paying off higher-rate debt first could help reduce your total interest payments. 

Many types of federal student loans let you defer payments until after you graduate, but interest typically accrues on your balance while you’re in school. 

Thus, if you don’t make interest payments in school, you could end up with a larger balance than you initially borrowed upon graduation. A larger balance may take more time to repay. Private lenders may or may not offer a deferment option.   

Expert question: Why is it so important to understand your interest rates and how your interest accrues when making decisions about student loans and their repayment?

– Crystal Rau, CFP

The interest rate is your cost to borrow the funds in the first place. The higher the interest rate, the more you pay to borrow those funds, so it is important to understand the actual cost of what you will pay over the life of the loan. 

if you have other debt, the primary goal shouldn’t be just to pay off the student loans as quickly as possible. The primary goal should be to pay down your overall debt in the most efficient way possible. 

If your student loans have a lower interest rate than credit cards or personal loans, you may want to pay the minimum on those while you pay extra on the debt with a higher interest rate. It all depends on your primary motivator, as everyone’s situation differs.

Create a 5-year repayment plan

Once you understand how much you owe and your rates, it’s time to formulate a repayment plan. Remember that everyone’s situation is different, so set realistic goals for yourself. 

Paying off your student loans in five years might be possible, or you may need to apply a different strategy, depending on your financial situation and outstanding loan balance. 

Here are some examples of what a five-year repayment plan could look like for a loan with a 5.5% rate. The following numbers and ranges are estimates, and using a student loan payment calculator can help you tailor them to your situation. 

How to pay off $100k in student loans in 5 years

If you have $100k in student loans and your goal is to repay them over five years, here’s how much you’ll pay in the following scenarios. Note that these monthly payments are very high, so it may not be feasible to repay your debts over five years. 

Scenario 1:

Equal monthly payments over five years

• Total monthly payment amount: $1,910
• Total interest payments over loan term: $14,607

Scenario 2:

Graduated monthly payments over five years

• Total monthly payment range: $1,234 – $3,704
• Total interest payments over loan term: $19,088

Scenario 3: 

$200 extra payment each month

• Total monthly payment amount: $2,110
• Total interest payments over loan term: $13,003.01
• Total repayment term: four years, six months

Scenario 4: 

$3,000 extra payment each year 

• Total monthly payment amount: $1,910
• Total interest payments over loan term: $12,275
• Total repayment term: four years, three months

How to pay off $80k in student loans in 5 years

Scenario 1:

Equal monthly payments over five years

• Total monthly payment amount: $1,528
• Total interest payments over loan term: $11,686

Scenario 2: 

Graduated monthly payments over five years

• Total monthly payment range: $988 – $2,962
• Total interest payments over loan term: $15,270

Scenario 3:

$200 extra payment each month

• Total monthly payment amount: $1,728
• Total interest payments over loan term: $10,125
• Total repayment term: four years, five months

Scenario 4: 

$3,000 extra payment each year 

• Total monthly payment amount: $1,528
• Total interest payments over loan term: $9,942
• Total repayment term: four years, one month

How to pay off $50k in student loans in 5 years

Scenario 1:

Equal monthly payments over five years

• Total monthly payment amount: $955
• Total interest payments over loan term: $7,303

Scenario 2: 

Graduated monthly payments over five years

• Total monthly payment range: $618 – $1,852
• Total interest payments over loan term: $9,544

Scenario 3:

$200 extra payment each month

• Total monthly payment amount: $1,155
• Total interest payments over loan term: $5,861
• Total repayment term: four years, one month

Scenario 4: 

$3,000 extra payment each year 

• Total monthly payment amount: $955
• Total interest payments over loan term: $5,252
• Total repayment term: three years, 10 months

How to pay off $30k in student loans in 5 years

Scenario 1:

Equal monthly payments over five years

• Total monthly payment amount: $573
• Total interest payments over loan term: $4,382

Scenario 2: 

Graduated monthly payments over five years

• Total monthly payment range: $370 – $1,112
• Total interest payments over loan term: $5,727

Scenario 3:

$200 extra payment each month

• Total monthly payment amount: $773
• Total interest payments over loan term: $3,109
• Total repayment term: three years, seven months

Scenario 4: 

$3,000 extra payment each year 

• Total monthly payment amount: $573
• Total interest payments over loan term: $2,630
• Total repayment term: three years, one month

Budget to accelerate repayment

You’ll likely need a budget makeover to make your early repayment goals come to fruition, but the good news is that small savings wins can add up a lot. That, coupled with an enjoyable side hustle, could make it easier to pay off your student loans in five years. 

In addition to using a budgeting app to help keep your spending on track, here are some steps to take to help you come up with extra cash each month.

Action	Estimated monthly savings
Negotiate your cable and internet bill	$25
Cancel streaming services you don’t use	$20
Use coupons or free coupon apps	$20
Switch to a high-yield savings account	$25
Turn down your thermostat	$10

Consider pairing these simple actions with a side hustle you’ll enjoy. Some potentially lucrative side hustle options include:

• Delivering meals and groceries
• Walking dogs or pet-sitting
• Driving for a rideshare service
• Renting your car with a car-sharing service
• Renting your storage space on a storage marketplace
• Selling items you don’t use online

Choose the right repayment strategy

With most traditional repayment schedules, you pay a set monthly payment based on your principal balance and interest rate. However, federal student loans come with several different repayment options. 

Note that certain options have longer terms, so they may not be the best choice if repaying your loans in five years is your goal. 

• Standard repayment plan: Fixed monthly payments that allow you to pay off your loans in 10 years.
• ​Graduated repayment plan: Monthly payments that increase every two years and allow you to repay most loans in 10 years.
• Extended repayment plan: Fixed or graduated small monthly payments that allow you to pay off your loans over 25 years.
• Income-driven repayment plans: Variable monthly payments based on your income and family size, with repayment terms of 20-25 years. Any remaining student loan balance is forgiven after that. 

When choosing among these repayment options, it’s important to look at your current situation and what your life and income may look like two or three years later, says Crystal Rau, CFP. 

“A career path can vary depending on whether you hit the ground running, are climbing the career ladder, or plan to work in residency for several years,” says Rau. “Using the calculators on the studentaid.gov website and running the various scenarios can help you better grasp what is right for you.”

You could also refinance your student loans if you want to modify your repayment term, but finding a low-rate refinance could be challenging in a high-interest-rate environment. 

You’ll sacrifice certain perks when refinancing federal student loans with a private lender, including the option to change to an income-driven repayment plan. 

How to pay off private student loans in 5 years

Private student loans typically come with higher rates than federal student loans, so prioritizing paying those off early could help you save substantially in interest cost. If you’d like to pay off your private student loans in five years, taking the following steps could help you reach your goal: 

• Understand your student loan debt.
• Rework your budget to account for a higher monthly payment.
• Pick up a side hustle.
• Consider refinancing to a shorter-term loan with a low rate if your current rate is high.
• Set up automatic payments, which often result in a small rate discount.
• Make extra payments each year with your tax return or another windfall. 

How to pay off federal student loans in 5 years

The process for repaying your federal student loans in five years will look similar to the process we’ve outlined for private student loans. But depending on your chosen career, you may also want to look into loan forgiveness options, like Public Service Loan Forgiveness (PSLF). 

You must work in a qualifying public service role to be eligible for PSLF. But if you do qualify, your remaining loan balance is forgiven once you’ve made 120 (or 10 years of) monthly payments. 

This may not work for those intent on repaying their federal loans in five years, but it’s worth considering if you’re eligible for it. You’ll need to be on a certain repayment plan to qualify for PSLF. Eligible repayment plans include:

• Standard repayment plan
• Saving on a Valuable Education (SAVE) plan
• Pay As You Earn (PAYE) repayment plan
• Income-Based Repayment (IBR) plan
• Income-Contingent Repayment (ICR) plan

What if I can’t pay off my student loans in 5 years?

If you’ve run the numbers and repaying your student loans in five years isn’t realistic, you might aim for a seven- or ten-year payoff instead. Choosing an accelerated repayment schedule that works better for your situation may still save you hundreds or thousands in interest costs over your loan terms. 

Here’s a quick look at how much you could save by paying off your loans in seven or ten years. These examples assume you took out a $30,000 loan with a 5.5% rate.

Seven-year repayment vs. 10 years:

	Seven-year repayment	10-year repayment
Monthly payment amount	$573	$326
Total interest payments	$4,382	$9,069
Total loan cost	$34,382	$39,069

Ten-year repayment vs. 20 years: 

	10-year repayment	20-year repayment
Monthly payment amount	$326	$206
Total interest payments	$9,069	$19,528
Total loan cost	$39,069	$49,528

Make sacrifices and stay disciplined

Depending on your situation, your goal of repaying your student loans early may be within reach, but you’ll likely need to make sacrifices and stay disciplined to achieve it. Fortunately, several digital tools exist to help you stay on track. 

• Bill negotiation tools:
  • BillCutterz 
  • BillShark
  • Trim
  • Truebill
• Budgeting apps:
  • Goodbudget
  • Mint
  • Simplifi by Quicken
  • You Need a Budget (YNAB)

Paying off your student loans in five years is an ambitious goal, especially if you have a large outstanding loan balance. 

But understanding your debt, making a plan, reworking your budget, picking up an enjoyable side hustle, using the right tools, and staying the course could help you free yourself from student loan debt ahead of schedule.