The 9 Fastest Ways To Pay Off Student Loans, According To Experts

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Your student loans can take big chunk out of your budget every month, especially when you’re just starting out on your own, making it much tougher to save for a house, build your retirement savings, and work toward other financial goals. It isn’t unusual to still be stuck with student loan debt well into your 30s or longer either.

Learn: 10 Ways To Pay Off Your Student Loans in One Year
Also: Women and Student Loan Debt by the Numbers: Why It’s Concerning to Experts

You may have had some respite from your loan payments during the past two years, when the federal government paused student loan payments and interest because of the challenging financial times. But payments are scheduled to resume on May 1, 2022, so now is the perfect time to prepare.

If you’re doing OK financially, it may be a good time to make a plan to pay off your student loans even faster. Taking advantage of special programs, breaks and strategies could end up saving you thousands of dollars in interest and shave years off your student loans. To make it happen, consider the following steps — straight from the experts.

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Reassess Your Repayment Options

Now is a good time to run your numbers through’s student loan repayment simulator to find out about your repayment options and terms based on your loan balance and income. You can use this tool to find out about income-driven repayment plans, which can reduce your monthly payments based on your income but also extend the term of your loan.

You can also find out about options for paying off your loans faster. Choosing the repayment plan with the highest monthly loan payment you can afford will pay off all the loans more quickly and save you the most money on interest, said Mark Kantrowitz, a financial aid expert and author of “How to Appeal for More College Financial Aid.” Just be careful that the amount fits within your budget without causing you to land in other types of more-expensive debt.

See: When Is It Time To Talk To a Financial Advisor About Student Loans?

Sign Up for Autopay

When you have your monthly loan payments automatically transferred from your bank account to the lender, you’ll make the payments without having a chance to spend the money on anything else. Your lender may also reduce your interest rate by 0.25% to 0.50% if you sign up for autopay, said Kantrowitz. This can help psychologically, too, when you don’t have to think about those payments every month. Contact your lender to sign up.

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Add Extra Money to Your Highest-Rate Loans

Make a list of all of your student loans and their terms and interest rates. Pay extra toward your highest-rate loans whenever you can, either by boosting your monthly payments or adding a lump sum whenever you get extra money, such as from a tax refund or bonus.

“Let the lender know that it is an extra payment and not an early payment of the next installment,” said Kantrowitz.

You can use the student loan repayment simulator to see how much of an impact increasing your payment or adding a lump sum can have on the payoff date and total amount paid with interest. Consider squeezing some extra money out of your budget to boost your payments for several months. This could mean giving up some expenses over the short term to get out from your student loans faster, but will help you end up in better financial shape over the long term. After you pay off the first loan, use some of the extra money to boost your monthly payments to the next loan on your list.

Make Payments While You’re Still in School

If you have a subsidized federal student loan, the government pays the interest on the loan while you’re in school and for a six-month grace period afterwards. If you have an unsubsidized loan, interest will accrue while you’re in school even if you aren’t required to make payments yet. Either way, making some payments while you’re in school, even a small amount, can make a difference over the long term.

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“Even if students and families are only paying down the loan’s interest, in-school payments will make payments more manageable after the student leaves school and help keep the total loan costs lower,” said Connor Peoples, a Sallie Mae spokesperson. Some lenders, like Sallie Mae, offer discounts for students and families who choose to make in-school payments.

Related: 2 Major Ways Student Debt Burden Is Robbing Women of Their Freedom

Refinance to a Lower Interest Rate If Beneficial

You may be able to reduce your rate and pay off your loans faster by refinancing, but you may be locked into a higher monthly payment that could become difficult to afford if your income changes, and you may not be eligible for some of the income-based repayment or loan forgiveness options in the future depending on how you refinance.

“The lowest fixed interest rates on a private refinance will involve a shorter repayment term, as short as five years,” said Kantrowitz. “The monthly loan payment will be higher despite the lower interest rate, because of the shorter repayment term, and your debt will be paid off sooner.” However, if the new rate is higher than most of the interest rates on your current loans, you may be better off not refinancing and instead accelerating repayment of the highest rate loan, he said.

He also said to be careful before refinancing federal loans into a private student loan. “This will save money only if the borrower has excellent credit or the federal loans are from several years ago when interest rates were higher,” he said. If you refinance federal loans into private loans, you could lose some special benefits of federal loans, such as longer deferments and forbearances, income-driven repayment, the payment pause and interest waiver, and options for student loan forgiveness, he said.

“Be aware of what you’re giving up by leaving the federal system” said Roger Young, thought leadership director at T. Rowe Price, who recently did a study comparing the student loan payoff options.

Discover: 4 of the Best Student Loan Refinance Companies

Take Advantage of Employer’s Student Loan Repayment Assistance Program (LRAP)

About 8% of employers offered these programs in 2019, according to a study by the Society for Human Resource Management. “The number is likely higher now because Congress passed legislation to make LRAPs tax-free through December 31, 2025,” said Kantrowitz. “Employers can provide up to $5,250 a year in student loan repayment assistance. A typical LRAP provides $100 a month toward an employee’s student loans.”

Reassess Public Service Loan Forgiveness

If you work for a federal, state, local or tribal government agency or an eligible nonprofit, then you may qualify for the Public Service Loan Forgiveness program on your federal student loans, which forgives the remaining balance on your loans after making 120 qualifying monthly payments. This program had been notoriously difficult to qualify for in the past, but on October 6, 2021, the U.S. Department of Education announced a temporary period during which borrowers may receive credit for some past periods of repayment that would otherwise not qualify. See its Public Loan Forgiveness page for more information.

Make the Most of Student Loan Tax Breaks

When figuring out how much you can afford to pay towards your loans each month, keep in mind that you may get back some money at tax time. For 2021 and 2022, you can deduct up to $2,500 in interest paid on eligible student loans. The size of the deduction phases out if your adjusted gross income was $140,000 to $170,000 if married filing jointly in 2021 ($145,000 to $175,000 in 2022) and from $70,000 to $85,000 for single filers and head of household. Married filing separately taxpayers can not take the deduction, said Mark Luscombe, principal analyst with Wolters Kluwer Tax & Accounting.

The interest deduction can only be claimed if the taxpayer has a legal obligation to make interest payments, which might be the parents or the student, he said. Someone who is a dependent on another person’s tax return may not claim the deduction. To be a qualified loan, the loan must be incurred solely for qualified higher education expenses, such as tuition, fees, room and board, books, and supplies and equipment, he said.

Incorporate Your Student Loan Payoff Into Your Overall Financial Plans

Even though paying off your student loans early can help you save money in interest over the long term, be careful not to jeopardize other parts of your finances. Student loan rates tend to be lower than other types of debt, such as credit card debt, so you want to avoid ending up in a situation where you pay so much toward your student loans that you land in higher-interest debt if your income changes or you have unexpected expenses. “Before accelerating repayment on your student loans, build or bulk up your emergency fund,” said Kantrowitz.

Also, don’t forget to continue contributing to any 401(k) or other retirement plan you may have at work, especially if you have an employer match, and other tax-advantaged savings opportunities. Step back and consider how you’re going to juggle all of those financial priorities.

“You have potentially multiple choices of things you can do when you have a little extra money,” said Young. “One that is risk-free is to pay down debt of different types. There is also putting more into retirement or putting it into a health savings account. There are a number of things you can do, but there is something nice about paying down your debt early.”

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About the Author

Kimberly Lankford has been a financial journalist for more than 20 years. As the “Ask Kim” columnist at Kiplinger’s Personal Finance Magazine, she received hundreds of reader questions every month about insurance, taxes, retirement planning and other personal finance issues. Her financial articles have also appeared in the Washington Post, U.S. News & World Report, AARP Magazine, Boston Globe, PBS Next Avenue, Bloomberg Wealth Manager and Military Officer Magazine, and her syndicated columns were published regularly in the Chicago Tribune, Denver Post, Baltimore Sun and other papers.
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