Pay Off Student Loans Quick with these 5 Tips

You did it! You finally graduated from college, but now you need to worry about the process of paying off all your student loans.

If you ask me, student loans are one of the WORST debts to pay back. Lots of people don’t even know what they’re signing up for when they get student loans. 

Most students have a part time job or no job at all. They take out huge amounts of loans that will take them years to pay back.

All they know is they want to go to school for a degree they’ll hopefully use one day.

I’d like to warn people not to get student loans PERIOD. Work and pay cash as you go. Apply for every scholarship you qualify for. Go to community college for as many classes as you can, until you absolutely have to go to a university for your remaining credits.

However, chances are if you’re reading this post, you already have student loans and you’re trying to dig your way out from under them.

Student loan repayment plans generally begin 6 months after graduating from college. 

Here I’ll walk you through some tips and tricks we learned along the way on how to pay off your loans as fast as you can.

Set up a payment plan

Setting up a minimum payment under a repayment plan is super beneficial. In doing so, you’re almost guaranteed a lower monthly payment amount.

We set my husband’s student loans on an income-driven repayment plan. The payment amount is set based off your income and family size.

At the time, we were paying off other debts in our debt snowball. We were aiming to make the smallest payment possible while we worked our way up to the higher dollar debts in our debt snowball.

We weren’t yet married when we did this repayment plan so we were able to attest only for my husband’s income at the time, making the minimum payment smaller. 

The government already puts federal student loans under a 10-year payoff plan, unless your specify otherwise.

Although income-driven repayment plans are known to extend the length of your payoff timeline, we were looking for the lowest monthly payment. We knew as soon as we paid off the other smaller debts, we’d be able to chunk on bigger payments in the months to come.

Take a look at those bigger payments we were able to make!

Make additional payments CORRECTLY

Make certain that any extra payments above your payment plan amount is going strictly to the principal balance of your student loans. 

Some student loan companies like to apply additional payments to your next month’s payment. This isn’t helping you! 

You want to pay down the principal amount of your loan as fast as you can because in the process, it lowers the amount of interest you pay. 

My husband had a student loan he’d been paying on that was originally $9,500 with a 6.8% fixed interest. When we finally finished paying it off, it totaled $13,348.46 because of the interest applied.

It didn’t take us long to realize the more PRINCIPAL PAYMENTS we made, the less the interest accrued.

Look at some of these screenshots I found from when we were in the midst of paying the last part of this loan off. As you can see, we were at the end of our debt snowball plan. We were making multiple payments each month far beyond the minimum agreed repayment plan amount.

Once we started heavily focusing our attention on the principal payment, we paid this final loan off in 5 MONTHS! Yes, you did read that right. It only took us 5 months to pay the remainder off!

That’s the significance paying extra on the principal amount can have on your student loan.

Think of it this way: the smaller your principal loan, the less interest you pay!

Pay extra with any money you find

It’s sad to see hard earned money go to something as silly as a loan, but the faster you can pay it off, the faster you can enjoy your financial freedom!

If you get a raise, use that extra money to throw on your student loans. Receive an annual bonus? Put it on your student loans! Even if you sell clothes, have a little side hustle or freelance, use that money to pay down your loan!

Try to make it fun! Make rules like every other $20 bill you get must go towards your student loans.

Here’s a fun example: let’s say you owe $10,000 with a 4.5% interest rate. By paying an extra $100 every month, you’d be debt-free more than five years ahead of schedule, if you were on a 10-year repayment plan!

Pay biweekly

Instead of paying your full monthly payment, pay half of your payment every 2 weeks. You can use biweekly student loan calculators like Nerd Wallet’s to see how much you’ll save.

Much like paying biweekly on your mortgage, paying biweekly on your student loans will add an extra payment per year without you even noticing!

Not only would you make an extra payment per year, but you’d end up paying your student loan off faster in the process!

The results are in!

Implementing these 5 tips into paying off your student loans will drastically reduce the amount of time and money you spend!

No one said it would be easy, but consistency is key. 

Always pay your student loans on time and follow the tips I shared above and you’ll be on your way to student loan freedom!!!!