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 2020!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.66%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.99% – 5.34%4||Undergrad & Graduate|
|1.97% – 8.54%5||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|Check out the testimonials and our in-depth reviews! |
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 11/13/2020 student loan refinancing rates range from 1.97% to 8.54% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay.