How to Pay Off $30,000 of Student Loans in 3 Years

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College is expensive. It probably won’t surprise you to learn that the average graduate leaves school with more than $29,800 in student loan debt.

It’s a difficult situation to be in. Few students pay off these loans within 10 years. Even former President Barack Obama didn’t pay off his student loans until he reached his 40s.

This long time frame is a problem; the longer it takes you to pay off that debt, the longer it will be before you start building your financial foundation.

If you want to retire your student loans in three years, here’s a five-step plan that can help do just that.

1. Take an oath
2. Refinance your debt
3. Repay the most expensive debt first
4. Do the math
5. Increase your monthly payments

1. Take an oath

I know you are reading this because you are fired up about getting out of debt, and that’s great. But believe me, when all your friends are packing up the car to go to Vegas for the weekend or making plans to go skiing next month, that fire in your belly just might fizzle out.

You can pay off your debt fast, but to do so, you and everyone in your household will have to be committed to the process. Some people can pay off their loans without making any big changes to their lifestyle. But most people find they need to do things a little differently if they want a very different (and positive) outcome.

That’s why the first step is to promise yourself that paying off your student debt is a priority and you are going to get it done in three years or less. Unless you are 100% on board with this plan, it’s going to be hard to keep going when things get a little uncomfortable.

Are you willing to sign on? Great. Let’s go on to the next step.

2. Refinance your debt

The next thing we want to do is cut back the interest you currently pay for the debt you already have. That way, more of your payments will go toward the principal rather than interest charges.

If you have good credit, you could qualify for a lower interest rate by refinancing your student loans. When you refinance, you work with a private lender to take out a new loan to pay some or all of your current student loans. The new loan will have completely different repayment terms than your old one, including interest rate, minimum monthly payment and length of repayment.

Although you can refinance both federal and private loans, there are some downsides to refinancing federal loans. You’ll lose out on certain protections and benefits, such as access to income-driven repayment plans. However, if you’re focused on getting out of debt as quickly as possible, refinancing can be a smart way to achieve your goal.

If you decide that it’s for you, compare offers from multiple refinancing lenders.

3. Repay the most expensive debt first

Now that you’ve done all you can to reduce the interest rates on your loans, it’s time to use some fancy footwork to get out of debt faster. The idea is to use as much money as you can to pay down the principal rather than wasting it on interest that only makes your creditors rich.

You did some of that already in the step above by refinancing to your lowest rate possible. Now, you can take this idea to the next level by using the debt avalanche method to pay off your loans.

With this approach, you tackle the debt with the highest interest rates first. To get started, list all of your loans and their interest rates. Continue making the minimum payments on all of them, but put any extra money you have toward the loan with the highest rate. For example, let’s say you have the following loans:

  • $10,000 federal student loan at 4.45% interest
  • $5,000 private student loan at 9.00% interest

At 9.00% interest, the private student loan is the most expensive form of debt you have, so it makes mathematical sense to try to pay that one off more aggressively. Paying it off ahead of schedule will help you save more money in the long run.

If, on the other hand, your finances are limited, you might want to build some momentum by paying off loans that have smaller balances first. In that case, compare the avalanche and snowball repayment methods.

4. Do the math

At this point, you’ve rearranged your debt and debt payments to optimize the power of your dollars. And you’ve also organized your financial life in a big way.

These are big wins, and you’ve accomplished a great deal. Still, taking these steps might not be enough to shave seven or more years off your debt schedule.

To do that, you have to gather a little more information. The first step is to calculate how much money you’ll need to pay off your debt in three years.

Let’s keep things simple and assume you owe $30,000, and your blended average interest rate is 6.00%. If you pay $333 a month, you’ll be done in 10 years. But you can do better than that.

You can use our student loan prepayment calculator to estimate that you’d need to pay $936 each month to put those loans out of your life in three years.

Doing the math is the easy part, but coming up with that extra cash is tough. That’s where our next step comes in.

5. Increase your monthly payments

You can earn money for debt repayment by either spending less, earning more or doing a bit of each. This step is harder than the previous four, but it’s not impossible.

Go through your bank and credit card statements for the last three months. Circle each item you can live without for the next three years. If it’s an ongoing expense that you really don’t need, such as an entertainment subscription, cancel it right away. If you see a pattern of unnecessary spending, like dining out or expensive vacations, make immediate adjustments.

If you have already cut back to the bone, think about ways to earn more money. One of the best ways is to launch a side hustle, where you can make extra cash on your schedule. Working just a few hours a week can bring in hundreds of dollars each month, which you can apply to your debt repayment.

The most important thing is to stay focused. Celebrate your progress even if you can’t get this done in three years. You’ll be amazed at how good it feels to see those debt balances melt away. Once you get a little success under your belt, it will be easier to find additional ways to apply more money towards your debt.

Andrew Pentis and Kat Tretina contributed to this report.

Interested in refinancing student loans?

Here are the top 6 lenders of 2021!
LenderVariable APREligible Degrees 
1.89% – 5.99%1Undergrad
& Graduate

Visit Splash

1.99% – 5.64%2Undergrad
& Graduate

Visit Earnest

1.99% – 6.84%3Undergrad
& Graduate

Visit CommonBond

1.91% – 5.25%4Undergrad
& Graduate

Visit Lendkey

2.25% – 6.53%5Undergrad
& Graduate

Visit SoFi

2.17% – 4.47%6Undergrad
& Graduate

Visit PenFed

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 Feburary 1, 2021.


2 Important Disclosures for Earnest.

Earnest Disclosures

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.


3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for LendKey.

LendKey Disclosures

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 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.


5 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: 1. Fixed rates from 2.99% APR to 6.99% APR (with AutoPay). Variable rates from 2.25% APR to 6.53% 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 2.25% APR assumes current 1 month LIBOR rate of 0.12% plus 2.38% 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. See eligibility details. 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. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi. *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.Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

6 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are 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.