April 5, 2021

How To Pay Off Student Loans Fast

How To Pay Off Student Loans Fast

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It takes borrowers years — and sometimes even decades — to finally pay off their student loans for good.

In fact, a 2019 study from New York Life found the average respondent reported taking 18.5 years to pay off their student loans, starting at age 26 and ending at 45.

Your student debt payoff trajectory has a lot to do with your specific circumstances: the size of your balance, your interest rate, income and your other monthly expenses. But there are some steps that borrowers can take to speed up the process.

Below, Select outlines three tips for paying off your student loans fast — plus what to consider before you throw yourself all in to paying off this balance well before your loan term ends.

1. Pay more than the minimum amount due

Perhaps the most obvious, but paying more on your student loans is the most effective way to get rid of them fast.

Whether it’s paying $20 or $100 more each month, every bit over the minimum payment helps to really make a dent in your debt. If you haven’t spent your third stimulus check yet, or you’re expecting a tax refund this year, you could put those windfalls of cash toward your student loan debt. Just make sure when you make extra payments that you select the option for the funds to be applied toward your loan principal.

How to increase your income so you can pay more than the minimum

If you don’t have the extra cash right now to afford increasing your monthly student loan payments, but you’re determined to make paying off your balance a priority, consider taking on a side hustle and funnel that extra money toward principal-only payments. These days, it’s easier than ever to make some extra cash.

Use apps like TaskRabbit or websites like Craigslist to find quick gigs that you can do in your spare time.

With spring cleaning season upon us, consider reselling any of your old items online through Facebook Marketplace, offer to clean your neighbor’s house or help with their landscaping as we head into summer.

Have a particular knowledge of a certain topic? Explore tutoring virtually from your home through online services like Chegg Tutors. Online tutoring can also come in the form of teaching skills like crafting, cooking, music, language and fitness lessons. Check out resources like Skillshare for a variety of different teaching options and Verbalplanet if you want to be a language tutor online.

From the comfort of your home, you can also get paid to take consumer surveys online through sites like Survey JunkieSwagbucks and Vindale Research.

2. Sign up for autopay to get an interest rate deduction

Enrolling in autopay with your student loan servicer is a no-brainer: This guarantees you’ll never miss a monthly payment (which is important for building up your credit score), and most loan servicers will even offer an interest rate discount of 0.25% when you sign up for automatic payments.

While an 0.25% reduction may seem small, it’s a considerable amount of savings over time when you’re spending years paying off your student loans. Any decrease in your interest rate will help you pay off your loans faster because it lowers the overall cost of your loan.

3. Refinance your student loans

What to consider before paying off your student loans early

It’s not always a good idea to pay off your student loan early. Some financial goals should be a higher priority, such as saving or paying down higher interest debt.

Make sure you can check the following boxes before accelerating your student loan debt payoff:

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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