Updated
Apr 05, 2023 Student loan debt is an obstacle to the life you want to be living. I know that firsthand. I graduated with approximately $25,000 in student loan debt across multiple loans, and I wanted to pay it off as soon as possible.
The shortest repayment plan for federal student loans—the standard plan—lasts 10 years if you make the required minimum payments. And with an extended repayment plan, you could be making payments for up to 30 years.
Letting your student loan payments linger this long could delay other goals you want to accomplish, like buying a house or starting a family. If you want to complete student loan repayment quickly, here’s how to do it in five years.
In this guide:
My experience
Although I was working in my desired field after college, I was bringing home an entry-level paycheck at a mid-sized newspaper. If I wanted to pay off my loans early, I was going to have to get creative.
I started with great intentions. I was able to retire one loan early by becoming the queen of the side hustle. Bartending, dishwashing, proofreading, lawn mowing—you name it, I probably tried it.
Life had other plans for me, though. Having children, buying a house, and a receiving a cancer diagnosis in my 30s sidelined my attempts. Those experiences taught me the importance of getting ahead on your loans while you can.
They also taught me the importance of other budgeting steps, such as the importance of keeping an emergency fund in place, even while you’re paying off your student loans. You never know what life will throw at you, so be prepared.
>> Read more: How to Use a Zero-Sum Budget
How to pay off student loans in 5 years
If you want to pay off student loans in five years, it can be done. But you’re going to need a few things to do it: dedication, willpower, and a solid, consistent income.
Obviously, the amount of debt you have matters. Paying off $20,000 in five years is easier than paying off $40,000 or $60,000 in student loans.
But the amount of money you earn—and how you use that money—is just as important. Here’s how to approach paying off your debt.
First, some budgeting
Let’s say a hypothetical graduate—we’ll name him Bill—landed a good job after school and earns $60,000 a year—or $5,000 each month.
How much of that might he have left to apply to his student loans after paying his other bills each month? Let’s look at his expenses first:
| Bill’s monthly expenses | |
| Taxes | $1,166 |
| Rent | $900 |
| Health insurance and copays: | $400 |
| Transportation (auto loan, gas, and insurance) | $400 |
| Cell phone | $60 |
That leaves a little more than $2,000 per month for:
- Food
- Renters or homeowners insurance
- Utilities
- Debt repayment
- Savings
- Clothing
- Entertainment
- Travel
Bill is content to shop for clothes at thrift stores and eat noodles every week to funnel more money to his student loans. If he can keep all his other expenses to about $1,000 a month, he’ll have approximately $1,000 a month to pay toward student loans—likely well above his minimum payment.
How to pay off $40,000 in student loans in 5 years
If your student loans carry a 5% interest rate, you could pay off $40,000 in five years if you made a monthly payment of $755, according to our student loan calculator. That’s well within Bill’s careful budget.
How to pay off $60,000 in student loans in 5 years
With this much debt, you’d have to be aggressive to meet your five-year timeframe. At 5% interest, you would have to make a $1,132 monthly payment.
This could be possible for our friend, Bill, but it would take some extra discipline.
Any medical problems he would have to pay for out-of-pocket could derail his chances. So could socializing too much at restaurants, taking a nice vacation, or even going on a lot of dates and picking up the tab.
On the other hand, if he replaces his cell phone plan with a budget carrier, uses his A/C less frequently, and swears off unnecessary shopping, he might be able to swing it.
How to pay off $70,000 in student loans in 5 years
With this level of debt, you would have to pay $1,321 each month to pay it off in five years.
That’s not impossible for Bill with his $60,000 income, but it may require some changes. Maybe he could give up his car and use the bus or a bicycle to get around. That would free up nearly an extra $400 per month.
How to pay off $80,000 in student loans in 5 years
If you owe $80,000 at 5% interest, you would have to cough up $1,510 a month to pay off your student loans in five years. This aggressive pay schedule could be challenging to maintain.
Bill may be able to do it, though, if he makes some other changes. He could find a side gig to increase his income or take in a roommate to reduce his housing costs.
He could also use any future salary increases, bonuses, and tax returns exclusively for debt payoff.
But at that level of debt, depending on your income, you’re probably going to need to save money on the bigger expenses, like living costs, if you want to pay it off in five years.
Tips to pay off your student debt faster
If you’re serious about making this work for you, here are a few tips that can help anyone pay off student loans fast.
Get serious about your budget
If you’re going to pay off your loan early, you’ll need an ambitious but realistic budget. The 50/20/30 budget is useful as a first budget, because its rules are broad.
However, you should look for places to optimize this budget if you want to pay off your student loans faster.
Keep yourself accountable by sharing your budget with a close friend—ideally one who has their own debt to pay off. They’ll give you a reality check when they see you overspending.
Look for ways to save money
As you can see from our friend Bill’s experience, there are many ways to save money if you’re looking for them:
- Grab grocery bargains when you can by looking for sales or buying in bulk.
- Don’t be afraid to shop at thrift stores.
- Plant a vegetable garden to save on groceries—even if you live in the city, you can use window boxes that sit right in your kitchen.
- Walk or ride your bike instead of driving. And always choose the bus or subway over Uber.
Look for discounts
With many private student loan lenders, you can score a 0.25 percentage point reduction to your loan interest rate if you sign up for autopay. The bonus to using this method is you won’t have to remember to send money when your bill is due, which eliminates your chance of late fees.
Check with your loan servicer for any other discounts it may offer.
You might also be able to score a discount on your student loans or other financial products if you remain loyal to one bank or lender.
For example, SoFi offers a loyalty discount for borrowers who use more than one of their products, which include personal loans, private student loans, and student loan refinancing.
Refinance your loan
If you have a good credit score or someone who would be willing to cosign with you, you may be able to refinance your student loans with a private lender.
If you have multiple loans to pay each month, student loan refinancing can streamline things for you—you’ll only have to make one payment each month.
But the real benefit is the fact that you may be able to lock in a lower interest rate, which could save you hundreds or even thousands over the life of your loan. You may qualify for a better rate if your income or credit score has improved since you first took out your loans.
But remember: If you opt to refinance federal student loans, you will lose the opportunity for income-driven repayment, student loan forgiveness, deferment, and other protections that come with federal loans. This might not be a concern if you’re trying to pay off your loans in five years.
Make multiple payments each month
Typically, your student loan interest accrues every day. So if you make two payments each month instead of one lump sum, you could prevent some of that interest from capitalizing each month and increasing your debt.
This is easy if you’re paid twice a month. Just determine how much of each paycheck you can afford to allocate to student loan payoff, and set up automatic payments for that amount a day or two after your first paycheck lands each month.
Then make a second manual payment after you receive your second paycheck.
And there’s a secret bonus to this strategy: If you’re paid every other week, instead of twice per month, you’ll receive 26 paychecks in a year. This means that you can make a full month’s extra payment at the end of the year without even noticing it.
Take up a side gig
When it comes to paying off debt fast, every penny counts. If you can find a way to earn $50 to $100 more a week, you can dedicate more money to repaying your student loan debt and get years ahead of schedule. And who knows? You might even discover a new career path.
When I was working side gigs to pay off my loans early, it was sometimes unnerving stepping outside of my comfort zone. It was also hard to go to a second job after my full-time job ended each day.
But, on the bright side, I learned new skills and met great people. And that extra money in my bank account added up quickly.
Side gig ideas
While having a specialized talent, like writing, carpentry, or photography skills, may earn you a higher payday, even a minimum wage side gig will help you reach your goals faster.
You can do work online, such as graphic design, transcribing, or writing. The nice thing about online jobs is you are often in charge of your schedule. If you want to do them at midnight in your pajamas, that’s up to you.
If you want a job that gets you out of your home, you can sign up to be an Uber driver or cash in on your handyman skills through an app like TaskRabbit.
If you don’t want to commit to anything long-term, perhaps you can work in retail over the holiday season while stores are in need of more part-time help.
Look for a job with employer student loan benefits
Some companies offer student loan payments to employees as a workplace benefit. It’s not widely available yet, but if you can find it, it can help you repay student loans early, provided you use it correctly.
The key to using this perk is treating that benefit as an extra amount to put toward student loans, not as your sole payment. If your employer gives you $250 each month to be used toward student loans, you should make your regular payment out of your income just as you would normally.
Apply for student loan repayment grants
Don’t forget to pursue free money, too. If you can find grants to pay off student loans, apply for as many as possible to get ahead of your debt.
Should you pay your student loans with a credit card?
If you’re nearing that five-year mark and want to wipe out any remaining student loan balance fast, you might be considering putting your student loan debt on your credit card.
While this will help you eliminate one debt line item and potentially earn you some rewards points, you may just be taking on riskier debt. Credit cards carry higher interest rates and come with none of the protections you’ll get with federal or even private student loans.
The only instance where this might make sense is if you can qualify for a new credit card that offers a 0% intro APR. But even in this case, you should proceed with extreme caution.
Lenders and credit bureaus don’t mind a healthy amount of student loan debt, but revolving credit card debt is a big red flag that can haunt you for years.