Nobody likes paying off debt, and student loans can last a very long time. If you are dedicated to paying off your debt, however, there are strategies you can use to pay off your debt quicker and reduce the amount you owe.
Have a strategy – Everyone has a different strategy to pay off student loans: some prefer to pay off debt with the highest interest rate first, while some target the loans with the smallest balance first. Having a strategy in place for paying off your debt will help you keep on track and feeling accomplished as each loan is paid in full.
How to Pay Off Student Debt Quickly
Pay more than minimum
This one seems obvious, but paying more than the minimum payments will reduce the overall amount you owe and help you pay off your loans faster. Try paying a little out of each paycheck so it feels more manageable. Be specific with your lender when you make extra payments that you want the extra applied to the balance, not future payments.
Refinancing can decrease interest rates, which means more of your payment is going toward the balance, not interest. Bonus: all your loans can be consolidated into one payment.
Put any extra funds towards your loans
This could include your tax refunds, money given to you by family members during the holidays or birthdays, or any bonuses at work. While it can be tempting to splurge on a vacation or new clothes when you have some extra cash, putting at least some of it toward your student loans can reduce the amount you owe significantly.
Don't fall for repayment programs
Although it can be tempting to take any option that allows you to lower your monthly payments, this generally increases the length of time you will have to pay on the loan. You will also pay more in interest, increasing the total amount you have to pay back.
Cut your budget
If you can't increase your income, your next best bet is to trim your budget to allocate more money to student loans. For example, cut out cable and switch to a streaming service or avoid going out to restaurants every week. Keep in mind you won't have to go without these extras forever – but giving them up in favor of paying off debt will be better for you wallet in the long run.
Set up automatic debit
Not only will you never miss a payment or have to pay late fees, many loan servicers offer a discounted interest rate if you have automatic payments set up. These are small savings, but they can add up in the long run.
Take advantage on your taxes
If you are making student loan payments, you likely qualify for student loan interest rate deductions on your federal taxes. You can deduct up to $2,500 each year for interest paid on all student loans, both private and federal.
Student loan debt does not have to last forever if you buckle down and work toward paying off your loans faster. Although it may feel like a burden now, just think how great it will feel when you pay off that last loan bill.