How to Pay Off Student Loans Fast in 10 Easy Steps

Hear me out if paying off your college loans seems far away or entirely impossible. You’ve got this.

Let’s start with some ground rules. I don’t have any secret life hacks or magic tricks to help you get rid of everything in 30 days. It won’t happen overnight, just like it didn’t happen with me. It took a lot of perseverance to reach five feet and six inches.

However, you may eliminate your student loan debt by following these ten actions.

I’m not going to lie to you: paying off your student loans requires time, effort, and sacrifice, but it’s entirely feasible! Years ago, I was able to pay off my $36,000 in student loan debt in about 18 months by following these identical procedures! The sooner you pay off your debts, the sooner you can start living life on your terms. So, let’s get started!

Make a budget.

This is a game-changer, guys. If you haven’t already done so, now is to create and stick to a budget. A monthly budget that starts at zero will show you exactly where your money is going and where you may save money. (I’m referring to the late-night dollar menu here.) Calorically and financially, those Beefy Fritos Burritos can add up!)

When you keep to a budget, you might even discover “extra” money you didn’t realize you had, which is better than expecting to find $10 in your old high school windbreaker jacket. You’ll see quick results when you start putting extra money toward your student debt each month!

Our free budgeting app, EveryDollar, makes budgeting simple. You may even make a budget line item for each student loan you’re repaying. You’ll be able to see your progress as you continue to pay down your student loans, and it’ll feel great.

Find out when you’ll get paid.

Use our Student Loan Payoff Calculator to enter your monthly payment, loan balance, and interest rate for each student loan. If you maintain making minimal payments, you’ll see when each loan will be paid off. Don’t be alarmed if you don’t like what you see first. To show what occurs if you focus on paying more than the minimum, skip to point #3.

Make a more significant payment than the minimum.

This one is undoubtedly familiar to you. You won’t get anywhere fast if you merely make a minimum payment each month. With the interest you’re accruing, you might not be breaking even! You’ll be able to attack the amount you owe faster if you make higher installments. Start experimenting with the Student Loan Payoff Calculator to see how quickly you can pay off your loans by making extra payments.

Consider the following situation:

• Let’s pretend you have $38,792.1 in student loan debt, which is the average amount of debt for a graduate. (That number might be made up of numerous loans, but we’ll pretend it’s all one loan for this example.)
• With a 5.8% interest rate (the industry average) and a 10-year loan term (which is hugely usual), your minimum monthly payment would be $426.78.2.
• Your final repayment amount would be $51,489 due to interest, which is $12,697 more than your original loan! Yikes. That’s a disaster.
• However, suppose you choose to pay just 20% more than your minimum payment each month ($85.36). Your monthly payment would be $512.14, which means you’d pay off your debt in around eight years and save $2,794.04 in interest (plus over two years of your life)! That’s a lot better.
• You might pay off your debt even faster if you paid 20% extra than the minimum monthly payment (I like that plan even better). Do you see what I mean?

However, if you pay more than the minimum monthly payment, the student loan servicers may apply the difference to the following month’s payment. The due date will be pushed back, but you will not pay off your debt faster. Tell your loan servicer to maintain the due date for next month and apply the extra funds to your existing loan debt.

Perhaps you’ve heard of biweekly payments, in which two payments are made each month. I’d only recommend doing this if you’re paying off a single debt, and the extra payments encourage you to work even more complicated. Otherwise, using the debt snowball strategy, I want you to pay off each loan one at a time, from smallest to largest. (I’ll go over this in further detail in point #5.)

All of this is to say that if you’re having difficulties making the minimum payment each month, you may believe that paying more money is a pipe dream. Keep it in mind.

Make some sacrifices financially.

Remember how I mentioned sacrifice before? Is it possible to say no to late-night fast food? This is where it becomes useful.

Examine your way of life. What extras have you been carrying around that you can get rid of? Goodbye, cable subscription. See you later, posh subscription boxes. Finding a roommate might potentially decrease your housing costs in half. Is there a guest room in your house that isn’t getting much use these days? That thing is for rent! Consider how quickly you could pay off your debt if your housing costs were drastically reduced.

Consider selling some items you no longer require. Examine your closet, garage, and storage to see what you might be able to sell on eBay, Facebook Marketplace, or Craigslist. Then sum up how much you spend each week on eating out. Instead of paying $7 for an oat milk latte, make your own at home.

Instead of spending $10–20 on lunch, eat leftovers (they’re not that awful) or a meal plan for the week. Get smart at the supermarket. There are tonnes of inventive methods to save. But it all starts with a willingness to make some short-term sacrifices in exchange for long-term benefits.

Use the debt snowball to pay off student loans.

The debt snowball strategy has helped many individuals get out of debt, and it may also be used to pay off student loans. First, list all of your loan debts (private loans, secured loans, unsecured loans, you name it) in order of smallest to highest balance. Begin by paying down your smallest student loan balance. Pay off that initial obligation with any additional cash you have while paying the minimums on everything else.

Move on to the second-smallest debt after you’ve paid off the first. Add everything you put toward the first balance to the second balance’s minimum. Move on to the next debt and repeat the process until you’re debt-free.

You might be thinking to yourself, “No way, this will take forever!” Could you not get it mixed up? Most people who commit to this strategy pay off their debt in 18 to 24 months! Isn’t that nearly forever? Working the debt snowball strategy is one of my favorites since you can feel the progress when each student loan is paid off. Getting those lesser debts paid off first will provide you with several easy wins and keep you motivated to have those higher student loans paid off as soon as possible!

Just be sure not to keep the additional payment money as you pay off each debt. Continue the momentum by putting that money toward the next loan payment.

Pay down your school loans with every rise and tax refund.

When most people earn a raise, what do they do? They breeze past it as if it were nothing. Then they ask why they didn’t feel like they got a raise.

Put your additional money toward paying off your college loans as you advance in your job and receive promotions. Do not relocate to a larger home. Do not purchase a new vehicle. Purchase no designer threads. Also, don’t get a new smartphone. You were already living without that extra cash, and you can continue to do so for a bit longer.

Now is not the time to change your way of life. You can do it later when you don’t have any responsibilities! Make significant progress towards your student loan debt with your increased income.

Your tax refund is no different. How many people do you know who spend all of their “free money” on new furniture, clothes, or a 55-inch flat-screen television? One more deposit into the bank account, and a small voice in your head screams, “Treat yourself!”

Here’s a reality you might not know: your tax refund isn’t free money from the government. They’re simply returning your money to you because you overpaid them.

They were sitting on your money for a year, earning zero percent interest! If you truly want to spoil yourself, apply the refund toward paying down a large portion of your student loans!

A passive income can help you earn more money.

If money is your primary concern, consider taking on a part-time job in the evenings or weekends to help you save money rapidly. Then put that extra money toward your student loan debt! Numerous side hustle opportunities are available, ranging from Uber driving and food delivery to puppy walking and house sitting. I drove for Lyft and Uber while paying off my student loans and did freelance marketing work to help pay them off even faster.

And don’t make an excuse that “I don’t have time for another job.” If you have time to hang out with your pals, read through Instagram, or watch Netflix, you also have time to earn some money.

Remember that the extra work will not last indefinitely. You’re just trying to get serious about getting rid of your student loan debt so you can go on with your life.

Don’t expect your school loans to be forgiven.

Okay, this one is grating on my gears. I’m sure someone convinced you that getting student debts was no big problem because you could get them forgiven later.

However, student loan forgiveness isn’t exactly a dream come true. To begin with, there are numerous prerequisites to complete to be qualified under the current scheme (like working in a public service job for ten years). Even then, there’s no promise of forgiveness.

Recently, there’s been much more talk about the government wiping out all student loan debt.

That would be fantastic, but don’t count on it. Biden, after all, spent a lot of time talking about that beautiful student loan relief. He’s already canceled roughly $3 billion in student debt. That may not seem like much until you consider that the federal student loan debt currently stands at $1.57 trillion (as of summer 2021). Listen carefully: Politicians often make hollow promises. It makes no difference who is in the White House. You are accountable for managing your finances and debts.

If it makes sense, restructure your student debts.

Before you rush into the arms of an overly enthusiastic lender, keep in mind that refinancing student loans is not for everyone. Someone would be lying if they told you that this is the best approach to paying off student loans. But that doesn’t rule out the possibility of refinancing.

When you refinance, you give all of your debts to a lender who pays them off for you—federal, private, or both.

A refinance aims to get a lower rate and payment terms, which means you’ll pay less each month to one lender for a shorter period rather than more money for a longer length of time to one or more lenders.

Even better if you can remain to pay the same amount you were before you refinanced. Because you’re putting more money toward the principal each month than before, you’re avoiding paying additional interest. Plus, if you have other debt and your newly refinanced student loan, you can accelerate your debt snowball even quicker once you’ve paid off that student loan. (Return to #5 for a crash course on debt snowballs!)

But keep in mind that you’re upgrading to receive a better rate and conditions. If you’re not being provided that, don’t refinance. It’s a terrible bargain. Do your study and read the fine print, or you may find yourself even deeper in debt.

Keep yourself motivated, and you’ll pay off your student loans quickly!

I’m not here to chastise you for taking out college loans in the past. I’m not a bully. But I want you to know how powerful it is to be debt-free. There’s no need to pay off your student loans for another five, ten, or even twenty years. You can do more with your money when Sallie Mae’s name isn’t on it every month. Consider how many Beefy Fritos Burritos you could get with that extra cash.

Start with our 64-page quick read, Destroy Your Student Loan Debt: A Step-by-Step Guide to Getting Rid of Student Loan Debt. The Step-by-Step Guide to Paying Off Your Student Loans More Quickly. Then sign up for a free trial of Ramsey+, which gives you access to information that will guide you through your debt-free path and provide you with the tools you’ll need.

Remember that the only magic in this is you and your willingness to work hard. But it’s well worth the effort. You’re deserving of it. Continue to fight the good battle (and the odious debt!).