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14 Creative Ways to Pay Off Your Student Loans Faster

Last updated 08/12/2017 by

Julie Bawden-Davis
This student loans guide includes ways to pay your student loans faster without hurting your credit. Commit to implementing at least three of these methods. You’ll be surprised how much you can save.
Most graduates would agree that student loans are a financial burden they want to get rid of as soon as possible. Unless you figure out how to pay your student loans faster, you’ll be making payments for at least a decade.
The standard loan repayment period for student loans is 10 years. However, you could do it in less than 10 years with the right approach.
Wouldn’t it be nice to say goodbye to student debt and hello to financial freedom? Imagine what you could do with the money you’re currently spending to pay off your student debt.
Here are 15 creative ways to pay your student loans more quickly. The more methods you try, the faster you’ll pay off your student loans.

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1. Make more than the minimum payment

Rick Pavia, owner and founder of the Cleveland Family Fun Directory, knows how to pay off student loans in five years. He advises, “Always pay more than the minimum, even if it’s only $10.”
He adds, “Extra payments reduce the amount you owe. This shortens the term of the loan and reduces interest.”
Paying more than the minimum also saves a lot of interest if you have a nonstandard repayment plan. Income-driven repayment plans, like REPAYE, can last 20 to 25 years.
“A $37,000 student loan with 6.8% interest over a 25-year repayment term would cost a borrower more than $76,000,” says Nick Sky, co-founder of the ChangEd app that rounds spare change from everyday purchases and makes additional student loan payments.
He adds, “Pay an extra $50 per month on such a loan, and you cut off eight years and save $14,000 in interest.”

2. Start paying while you’re still in school

If you start making payments on your student loans before you graduate, it will lower your overall balance and can shorten the repayment period, according to student loan servicer NelNet.
Making payments while you’re in school is especially helpful if you have unsubsidized loans. These are loans that charge interest while you’re in school. (Subsidized loans don’t start charging interest until you graduate).
If you don’t make interest payments on an unsubsidized loan when you’re in school, interest accumulates and is added to the principal. You’ll end up paying interest on top of interest.

3. Consolidate and refinance student loans

For private student loans, consolidation and refinancing are the same thing. With federal student loans, you can consolidate them into a Direct Consolidation Loan offered by the Department of Education. The latter does not include private student loans.
Private and federal student loans can only be consolidated together through a private lender.
Regardless of which route you take, the goal is the same: to lower your interest rate and monthly payment. By doing so, you’ll be able to pay off the loan’s principal balance faster.
Refinancing your student loans through a private lender can result in a much lower interest rate. It also offers more options for you to create an affordable payment plan.
However, if you choose to include your federal loans, you’ll give up certain privileges and perks. Some of these perks include loan forgiveness programs and income-driven repayment plans.

4. Get a job that offers student loan forgiveness

If you work full-time for the government or a nonprofit organization, you might be eligible for the Public Service Loan Forgiveness Program. This allows you to make 120 monthly payments and have the remaining balance forgiven.
If you’re a teacher, the deal can be even sweeter. If you teach full-time for five years in certain schools, you could be eligible for forgiveness of up to $17,500 on your federal student loans. The Teacher Loan Forgiveness Program was created to encourage people to enter the teaching profession and stay in it.

5. Join a company that offers student loan repayment benefits

To recruit and retain top talent, some of today’s employers help graduates repay their student loans.
Corporate student loan repayment programs will take some of the weight off your shoulders. Not only will it reduce the total amount you’ll end up paying; it will also free up some money for you to use on other things.

6. Use unexpected Money

Rather than spend surprise funds– like a tax refund or work bonus– on something frivolous, put it toward your student loans. You’re not going to miss money you didn’t expect to have in the first place. Think of it as a contribution toward financial freedom.

7. Make bi-weekly payments

Pay your student loans every two weeks, and you’ll make an extra payment a year. This may also lower the overall amount of interest you pay. Split the monthly amount in half and pay twice a month. Smaller payments also make it a little easier to pay.

8. Use raises to pay student loans

When people begin making more money, they start spending more as well. Rather than raising your expenses, direct the extra funds toward your student loans.

9. Invest in real estate

Real estate investor Brian Davis recommends “house hacking” to help you pay off your student loans. He and his partner offer a free mini-course on earning passive income at
Davis explains, “The strategy isn’t complicated. You buy a multifamily property, move into one of the units, rent out the other(s), and let the renters pay your mortgage. Use the savings on housing for your student loans.”
If you own your home and have a spare bedroom, rent it out and use the money to pay off your loans faster.

10. Supplement your income with a side job

If your schedule allows for it, get a side job in addition to your regular job. Use all the money you make from your side job to pay off your student loans.
In this gig economy, the options for side jobs are nearly endless. “Turn your free hours into money-making opportunities,” says financial planner Douglas A. Boneparth, co-author of The Millennial Money Fix and president of Bone Fide Wealth.
He adds, “Ideally, choose a side hustle involving something you love to do. Sites like Upwork and Fiverr let you take your talents to the marketplace. You can also drive for Uber or Lyft.”
Having a separate income that goes directly to paying off your student loans will make everything a little less stressful. It’ll be easier to afford your normal, everyday living expenses since you’ll have extra money that you can dedicate solely to getting out of debt.
And it will reduce the amount of time it takes you to finally become debt-free.

11. Spend less

The smartest way to pay off student loans is to trim your budget and use the savings. Learning to save money helps you become a better money manager, which ultimately improves all of your finances.
Some good options for saving money include cutting out expenses you can do without. For instance, limit how often you dine out and buy new clothing. Rather than getting the latest cellular phone version, opt for an older model.
To determine the best areas to cut, track your expenses for a month.

12. Use a mortgage refinance

You may be able to refinance your home to pay off your student loans. This option works if you own a home and have sufficient equity. It can result in substantially less interest and lower payments, making it easier to pay off your loans more quickly.
The downside is that you’ll lose student loan financial hardship benefits. You also risk losing your home if you’re unable to pay.

13. Take advantage of automatic enrollment

Some federal student loan service providers offer a 0.25% interest rate reduction when you sign up for automatic payments. The savings are small, but every little bit adds up. Automatic loan payments also help you avoid costly late or missed payments.

14. Save on taxes

When you have student loans, you may be eligible for the interest deduction on your federal taxes. Deductions are allowed if your modified adjusted gross income (MAGI) is less than $80,000 per year or $160,000 if filing jointly.
This student loan deduction can reduce the amount of your taxable income by $2,500. Use the interest savings to pay toward your student loan.

The bottom line

Student loans can weigh you down, but you have many options to pay them off faster. Many of these tactics are helpful on their own. But try several methods at the same time, and the results can be even more powerful.
Before you know it, you could be making your final student loan payment. Check out SuperMoney’s Student Loans Reviews page to begin that journey.

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Julie Bawden-Davis

Julie Bawden-Davis is a widely published journalist specializing in personal finance and small business. She has written 10 books and more than 2,500 articles for a wide variety of national and international publications, including, where she has a weekly column. In addition to contributing to SuperMoney, her work has appeared in publications such as American Express OPEN Forum, The Hartford and Forbes.

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