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5 Tips to Pay Off Student Loan Debt Faster

Jacob Maslow

Student loan debt has soared to over $1.5 trillion and is one of the key reasons for younger generations not being able to purchase a home. Paying off student loans is key to a debt holder’s financial freedom, but it’s not easy.

Nearly 25% of borrowers have over $50,000 of debt.

If you’re one of these borrowers and want to be able to pay off your student loan debt faster, utilize these tips to reduce your loan amounts.

1. Put Any Extra Money Your Earn Towards the Highest Balance Loans

You need to have a good understanding of your loans and all of the balances that you have. When you know the balance and the interest rates of the loan, you’ll want to pay off the loan that has the highest interest and lowest balance.

2. Understand Your Alternative Payment Plans

Every loan is different, and if you’re still in school, you’ll want to have a good understanding of the payment plans that are available.

“Before you take out any loan, make use of their planning tool to compare the different payment plans available to you. Doing so will enable you to see which payment plans can save you the most money,” suggests Scott Langdon from Money Task Force.

If you’re unable to pay your loans, you may want to consider:

  • Extended repayment plans that lower premiums and allows loan terms to be extended.
  • Applying for income-contingent repayment, which looks at your adjusted gross income and requires a 25-year payoff after which the loan amount is forgiven.
  • Applying for pay as you earn, which allows for up to 10% of your income to go towards the loans over a 20-year period if you are able to prove financial hardship.

3. Consolidate at a Lower Rate

You may be able to consolidate all of your loans into one loan with a lower interest rate. A lower interest rate and more favorable terms will be able to help you better manage your loan with a definite pay off period.

4. Repayment Assistance

A lot of companies are offering their employees repayment assistance as part of their benefits. These payments will go straight to your loans, and while they might not be substantial, they will definitely help you get your total balances down.

5. Use Your Taxes to Make Lump-sum Payments

When you receive your tax return at the end of the year, the right choice of how to spend your money is not to go out to eat and purchase a whole new wardrobe. You should take this time to put any windfalls or extra money towards your student loans.

Use your tax returns to pay off your loans quicker.

A lot of people are also choosing to find a side hustle that allows them to be able to pay off their debt faster. For example, a weekend job where all of the money goes towards your loan will work wonders.

You can also freelance or work online so that you can put any extra money that you earn directly towards your debt.