The average college graduate leaves school with over $37,000 in student loan debt. With low entry-level salaries and high minimum monthly payments, it’s no wonder the student loan delinquency rate is 11.2%.
Getting rid of the burden of student loans as quickly as possible can give you more freedom and peace of mind. Although paying off your debt early might seem impossible, it can be done.
Borrowers who paid off their loans years ahead of schedule — whom we call student loan superheroes — gave us their best tips. Here’s how they tackled their student loans and how you can too.
1. They cut their spending
If you’re serious about paying off your student loans early, the first habit to cultivate is creating and maintaining a budget. By eliminating unnecessary expenses and trimming your spending, you can dedicate more money to debt repayment each month.
Kaysie Garza had an entry-level job that paid $30,000 per year. Since she had a relatively low income, budgeting was key to paying off her loans. By renting the cheapest apartment she could find and furnishing it with free castoffs from Craigslist, she was able to pay off $30,000 in student loans in just 19 months.
If you need help getting started, check out the ultimate guide to budgeting for beginners.
2. They make lifestyle changes
There’s only so much you can trim from your budget. If there’s nothing left to cut, you might need to make drastic lifestyle changes to achieve your goals.
For Kate Dobie, that meant moving overseas and teaching in China. Although the pay was low, other perks made the job worth it.
“The school took care of my room and board, and I managed to find freelance tutoring jobs that paid very lucratively,” said Dobie.
With the school covering her living expenses, she was able to dedicate the majority of her salary and freelance income to debt repayment. Within two years, she paid off her $40,000 student loan balance.
Although moving overseas might not be for you, you can make other lifestyle changes to save a substantial amount of money. Consider moving in with your parents, getting a roommate, or selling your car to free up more cash flow. It might be inconvenient, but making sacrifices now can help you later.
3. They boost their income
Another habit of student loan superheroes is their use of side gigs. There are limits to how much you can cut from your budget, so boosting your income is key. You might not be able to make more money at your full-time job, but launching a side hustle can help you increase your earnings.
Jessica Elberfeld left school with over $113,000 in student loan debt. Her payments were so high that she extended her repayment term to 20 years. Although she’d always dreamed of working in the music industry, she realized her income wouldn’t be enough to pay off her student loans.
She switched careers and picked up a side gig working at a restaurant. With her new salary and side hustle income, she was able to pay $2,000 a month toward her student loans. By making extra payments, she paid off her debt in seven years rather than 20.
If you want to earn extra cash, here are some of the best side hustles to get you started.
4. They use every windfall strategically
Jacob Wade had over $37,000 in student loans, and he used every windfall to pay down that debt.
“Any windfall, any extra paycheck, any birthday money, if it wasn’t allocated towards something, let’s put it towards those loans and knock it down,” Wade said about his strategy.
With this approach, he was able to pay off his student loans three years ahead of schedule.
If your budget is tight, extra money is hard to find. However, you can accelerate your student loan repayment by allocating your windfalls — such as tax refunds, birthday gifts, or bonuses at work — toward your loans.
5. They refinance their loans
Finally, refinancing can be a helpful tool to pay down your debt faster. If you have a high-interest student loan, you could end up paying thousands more than you borrowed in interest over the length of your loan.
When you refinance your student loans, you take out a new loan to pay off the old ones. The new loan has different repayment terms, such as a lower interest rate or shorter repayment period. If you qualify for a lower rate, you could save hundreds or even thousands of dollars.
William Weaver found out about the value of refinancing himself. When he graduated with nearly $50,000 in student loans, he became focused on paying off that debt as quickly as possible. He researched his refinancing options to find out how to lower his interest rate. Thanks to his good credit and steady income, Weaver qualified for a refinancing loan with LendKey.
“I refinanced for a shorter loan period, to release a cosigner, and to get a much lower interest rate,” said Weaver. “The amount saved over the life of the loans was in the $10,000-plus range, thus making the need for refinancing urgent.”
You can use our student loan refinancing calculator to find out how much you’d save by refinancing your loans.
Stay focused on your goals
Conquering your student loan debt might seem daunting, but it’s possible to pay off your loans years ahead of schedule and save money. By adopting these five habits, you can successfully become debt-free.
If you’re ready to take charge of your loans and want to refinance your debt, here are the top student loan refinancing lenders.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Get real rates from up to 4 Lenders at once
Check out the testimonials and our in-depth reviews!
|2.56% - 7.40%||Undergrad & Graduate||Visit SoFi|
|2.57% - 6.32%||Undergrad & Graduate||Visit Earnest|
|2.58% - 8.12%||Undergrad & Graduate||Visit Lendkey|
|2.80% - 7.02%||Undergrad & Graduate||Visit Laurel Road|
|2.54% - 6.65%||Undergrad & Graduate||Visit CommonBond|
|2.90% - 8.34%||Undergrad & Graduate||Visit Citizens|