Student loans generally come with set repayment schedules, usually 10 or 20 years. But if you want to get out of debt faster than that, you’ll have to find ways to make more than the set monthly payment. Of course, some borrowers struggle to make even the minimum monthly payment — in that case, the most important thing is getting an affordable payment and accelerating the repayment timeline if it makes sense. But if you think you can commit to aggressively paying down your education debt, here are some ways to do it.
Get to Know Your Student Loan
Before you start making an ambitious plan to be debt-free, make sure you understand what you’re working with. Do you have federal student loans or private student loans? Fixed or variable interest rate? What’s your current repayment plan? And how much do you have to pay each month to stay current on the loan? Once you’ve gathered all the basic information about your loans, you can start making a plan to repay them more quickly. (You can get all the details about your federal student loans on the National Student Loan Data System or through your lender, if you have a private student loan.)
Find Ways to Budget for a Higher Student Loan Payment
Current students can cut down on their debt by making payments before they enter repayment — at the very least, paying the interest while your loans are deferred (meaning you’re not required to make payments while you’re enrolled at least half-time) can help you save a lot. Any interest your loan has accrued while you’re in school will be added to your principal balance upon entering repayment. That’s called capitalized interest. (If you’re not familiar with that concept, make it a goal of yours to learn. April is Financial Literacy Month, and the sooner you understand basic financial concepts, the better prepared you’ll be succeed in managing your money after college.)
While finishing school may feel like a good reason to upgrade your lifestyle, it’s smart to keep your standard of living where it was when you were a student (or even lower it). It’s easy to spend away your entire paycheck, and it certainly isn’t going to help you get out of debt. Minimize the cost of your regular bills by living with roommates and consider cutting out extras like cable or a gym membership (or at least research inexpensive alternatives). Whether it’s an extra $10 or $100, trimming your budget and putting that extra money toward your student loan debt can help you pay it off faster. By not changing your repayment plan, you have the flexibility to go back to making the regular monthly payment, if money gets tight.
If you make prepayments (another term for paying more than the minimum installment payment), make sure they’re applied properly. Give your loan servicer clear instructions that they’re to apply the extra payment to the principal and that you’re paying extra, not merely making future payments early. If they don’t apply the payment correctly, you may not be getting the benefits you think you are by making a larger monthly payment.
Get a Side Gig
If there’s no wiggle room in your budget based on your current paycheck, think about finding supplemental income. You could drive for a ride-hailing service, use your crafting hobby to sell goods online, tutor in your favorite subject — there are dozens of options, so it’s up to you to decide what you have time for and what you’d enjoy adding to your workload. The extra cash can help you tackle your student loans.
Refinance Your Student Loans
You may be able to get a lower interest rate on your student loans by refinancing them through a private lender. However, if you have federal student loans, you’d be giving up a lot of repayment flexibility and the possibility of qualifying for loan forgiveness if you refinance them with a private loan. You’ll also need good credit to qualify for a low rate. If, after you’ve done research and shopped around, you decide you want to refinance, you could save money and get out of debt faster by opting for a shorter repayment term or a lower interest rate than what you currently have.
Look for Loan Repayment Assistance
Some federal loan borrowers can qualify for loan forgiveness because of their work, like teacher loan forgiveness or public service student loan forgiveness. Ask your financial aid office or student loan servicer for guidance on what loan forgiveness programs you might qualify for. And when you’re on the job hunt, think about negotiating for student loan repayment as part of your benefits — a lot of companies are offering that these days.
By being smart about your student loans and understanding that you have a couple options to pay them off quicker, you may be able to shave off some stress in your college life. Just remember to take full advantage of the previous strategies and work hard towards your career path to make it all worth it!
Christine DiGangi is Deputy Managing Editor – Engagement for Credit.com, covering a variety of personal finance topics. Her writing has been featured on USA Today, MSN, Yahoo! Finance and The New York Times International Weekly, among other outlets.