Most student loans give you 10 years to pay them off, but who wants to make loan payments for an entire decade?
I paid off my student loans in two years, so I’m proof that anything is possible. Most people won’t get them paid off that fast, but getting out of debt five years after graduation is a reasonable goal. Even if five years doesn’t work for you, you can certainly learn how to pay off student loans faster by following some simple tips.
1. Get on a budget
Paying off student loans early doesn’t have to cripple your lifestyle, but you might have to give up some shopping sprees. Or even hold off on the next “treat yo’ self” day until your loans are paid off.
If you don’t already have one, it’s time to start a budget. Whether you have an irregular income or want to keep things simple, there is a budgeting method that will work for you. By avoiding spending on frivolous wants that you’ll enjoy today, you’re robbing your future self of opportunities. Student loans suck up more money than just the balance you’re paying off. Getting out of debt early can save you thousands of dollars in interest. And once you’re out of debt — then it’s time to treat yourself.
2. Automate your payments each payday
If you’re paid bimonthly or biweekly (or even weekly), you’re in a great position to get out of debt early. Split your monthly student payment in half and pay it automatically each payday. This saves you a little money in interest and gets you in a good habit of making regular payments.
People who are paid every other week get 26 paychecks each year. That is two more paydays than your regular monthly payments require. This gives you a full extra payment each year. Sure, it isn’t cutting your debt in half, but every little bit will help in paying off student loans early.
3. Increase your payments
Once you start paying your student loans twice a month rather than once a month, your income and expenses are on the same schedule. You don’t have to save up for a big payment once each month, it just happens automatically.
Because you’re already used to living without that money, it doesn’t cramp your budget or feel like you’re making huge payments. That is a big psychological win in your quest to debt freedom. But if you really want to know how to pay off student loans faster, you have to pay more than the minimum.
Every month or two, increase your recurring automatic payment for your student loans. Whether it is $10 extra per payday or $100 extra, every dollar counts. When I was paying off my student loans, I went so far as to pay a full student loan payment each payday. I was making two or three full payments each month and my student loan balances were falling fast.
4. Put bonus income toward your loans
Every once in awhile, you might get some bonus income. Because you’re used to living on your regular budget, that extra income from a bonus, tax refund, or gift can go right toward your student loans. You won’t miss the money because you were already living without it.
Whether it’s $5,000 here or $2,000 there — it all adds up. Just like the extra payments you make each payday, you’re taking steps to rapidly reduce your loan balance. Early payments save you money on interest every single month and help you pay down your loans faster.
5. Don’t lose focus
It can be tempting to buy the new iPhone or splurge on a shopping spree, but each big purchase you make delays your debt freedom date. Stay focused and be aggressive with extra payments. The sooner you’re out of debt, the sooner you can keep all of those dollars for yourself. If you work hard and pay off your student loans in five years, you will be in great shape for a successful financial future.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 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 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% 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 Month/Day/Year, 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 08/21/18. 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@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 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.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 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.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|