9 Steps For Paying Off Student Debt in Only 5 Years

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

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When the average person leaves school with federal student loan debt, they have 10 years to pay back their loans under a Standard Repayment Plan. But with interest charges, you would end up paying thousands more than you borrowed in the first place.

The average 2016 graduate had $37,172 in student loan debt. If you had Perkins Loans at 5% interest, that means you’d pay back more than $47,000, with over $10,000 of that being interest. But if you accelerated your repayment and paid off the loans in five years, you’d pay just $4,800 in interest.

How to pay off student loans in 5 years

Use a student loan prepayment calculator to find out how much extra you need to pay on your loans each month to pay them off in five years. On a 10-year plan with the above example, you’d pay about $400 a month. To pay it back in five, you’d need to boost your payments to a little over $700.

Cutting your repayment term in half can save you thousands over time, but finding the extra cash for payments isn’t easy. Using these nine tips, you can create a comprehensive plan for paying off student loans early and becoming debt-free.

1. Establish your goals

To stay motivated, think about your personal and financial goals. If student loan debt is holding you back from starting the business you dreamed of or buying a home, that can be a powerful motivator.

Print out a picture or symbol of your goals and tape them next to your computer or on your credit card to remind you of what you’re trying to achieve.

2. Build a budget

The most important part of your repayment plan is your budget. If you don’t have one, you have no idea how much money is coming in or going out, or how much extra cash you can allocate to your student loans.

Sit down and list all of your set expenses, such as rent, utilities, car payment, student loan payment, groceries, insurance, and other recurring costs. Include everything you spend money on regularly, so you can get a full picture of how much you spend each month relative to your income.

3. Cut expenses

Once you have a budget in place, identify areas where you can cut back to free up more money for your student loan payments. Bring up your latest bank statements and credit card bills to identify your spending patterns and recurring charges. Common areas to cut back on include:

  • Gym membership: While you may love your fitness classes, they can be pricey. For example, a monthly membership at OrangeTheory costs up to $110 a month, while a month at Planet Fitness is just $10. To be more cost efficient, you can run or walk outside for free. You may be more limited, but you can still get a great workout without spending a dime.
  • Eating out: Many people are surprised by how much they spend eating out at restaurants. But a lunch here and there when you’re tight on time at work can add up. Brown-bagging it and cooking at home can help you save.
  • Groceries: In the U.S., 40 percent of the food we buy goes to waste. That’s money you’re literally throwing away. Meal planning and buying food consciously can reduce how much you spend at the grocery store.
  • Coffee: Your Starbucks habit can cost you. A tall latte is $3.45, and that daily treat adds up. If you get a latte every work day, you’re spending about $70 a month just on coffee. Deciding to make coffee at home more often can save you money every month.
  • Clothes: Calculate how much you’re spending on clothes each month — you may be shocked. Cutting down to replacing items when they’re worn out and buying only a couple of items each season can dramatically improve your budget.

4. Rethink your living arrangements

While you may love the idea of getting your own studio or cute one-bedroom, it might make sense to reevaluate your living situation. As of 2015, the average gross rent was $1,021 a month. That’s a lot of money that could go towards your debt repayment.

If your parents or relatives would allow it, living with them while you pay off your debt can be an excellent strategy. Even if your family charges you rent, it’s likely going to be cheaper than an apartment complex’s prices. You can save a substantial amount of money on rent and apply that to your student loans, helping you pay them off much faster.

If living with family isn’t an option, consider getting a roommate. Splitting the cost of utilities and rent can make a two-bedroom apartment much more affordable. In addition, if you can work together to buy things like groceries or housing supplies, you can reduce your expenses even more.

5. Increase your income

While budgeting and cutting expenses are smart steps, there’s only so much you can eliminate. If you’re wondering how to pay off student loans in five years, boosting your income is an important step. While earning more money might sound impossible, you might be able to get an increase either at your full-time job or start a side gig.

If you’re doing good work at your job and are contributing to the company, asking for a raise can be an easy way to boost your salary. Approximately 40 percent of people who ask for a raise get one, so it’s worth speaking up if you don’t feel your compensation is adequate.

If a raise isn’t an option or you want to boost your income even more, a side hustle can help pay down your debt. Whether you deliver packages, walk dogs, or shop for groceries, there are lots of ways to earn extra money on your own schedule.

Another factor to consider is your current job. While you may love your current gig, if the salary is not enough for you to manage your expenses and pay off your debt, it may be worth transitioning to a new job in a higher-paying industry. It’s a tough decision, but it can pay off in the long run.

6. Look for grants and assistance programs

There are some grants and repayment assistance funds available to help borrowers pay back their student loans. Particularly if you’re a teacher, nurse, or medical professional, you might be able to find programs that will eliminate some or all of your debt.

While the federal government and non-profit organizations may offer student loan aid, also check with your state. Some areas offer programs for professionals in particular fields or simply for living and working in the state. Check out our student loan repayment grants guide or use student loan repayment search tool to find a program that can accelerate your debt payoff.

7. Check with your employer

A growing number of employers are establishing student loan repayment assistance programs for their workers. As both a recruitment and retention initiative, helping employees repay their student loans can improve company morale and reduce stress.

When looking for a new job, student loan repayment aid can be a huge benefit. Ask potential employers if they have a program set up 0r ask your current boss if the company would be willing to look into it. Many startups and small businesses are adding student loan programs to compete for top talent.

8. Consider refinancing your loans

If you are laser focused on becoming debt-free within five years, one approach that can help you accomplish your goal is refinancing your loans. If you refinance, you’ll work with a private lender to take out a new loan for the amount of your current federal or private ones.

The new loan will have a different interest rate and repayment term than your old loan. If you have good credit and steady income, you could get a significant interest reduction, which can help you save thousands over the length of your repayment term.

While refinancing can also lower your monthly payment, sticking with your current payment — or adding to it — can help you pay off your debt even faster. However, think carefully about whether or not refinancing is for you. By refinancing your federal loans, you give up certain benefits like access to income-driven repayment plans or deferment options.

To make an informed decision, use a refinancing calculator to find out how much you could save and how much faster you can pay off your debt.

9. Treat yourself

While you’re working towards paying off your debt in full, it’s easy to feel deprived or exhausted by all of your hard work. That’s why it’s so important to set up small, achievable milestones along the way. When you meet those little goals, reward yourself with something affordable that refreshes you.

For example, you could celebrate every time you pay off $5,000 of your debt. Take a hike in the park with friends, indulge in a lazy day complete with Netflix-binge, or open up a nice bottle of wine. Little treats can help you feel motivated to help you see your plan through.

Becoming debt-free

If you’ve been trying to come up with a plan on how to pay off student loans in five years, know that it is achievable. If you’re diligent about both your spending and earning potential and you approach your student loans strategically, you can pay off your loans years earlier than planned.

Ready to take charge of your debt? Sign up for our free app to manage your loans and find repayment plans or refinancing offers that will work for you.

Interested in refinancing student loans?

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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.