How to Pay Off Student Loans Fast

It’s time once again to celebrate St. Patrick’s Day, which means a lot of people have luck on the brain. Well, luck and green beer.

But if you’re one of the 37 million Americans making a student loan payment this month, you know it’s going to take more than a few four-leaf clovers to get out of debt any time soon. Wondering how to pay off student loans fast without having to win the lottery? Make your own student loan luck with one of these student loan repayment options.

How To Pay Off Your Student Loan Faster

1. Bump up the payments
Both private and federal student loans allow for penalty-free prepayment, which means that you can pay more than the monthly minimum or make extra payments without incurring a fee. Prepaying may sound painful, but the benefits can be huge. The more you do it, the less interest you spend over the life of the loan—and the sooner you’ll be done with your loans.

Let’s say you have a $100,000 student loan balance at a 6.8% interest rate and 10-year term. If you increased your monthly loan payment by just $100, you could pay off your student loans about a year faster


Every borrower’s situation is different, but you can do the math on your own loans with a student loan calculator like this.

One thing to note – prepaying is most effective when the extra cash is applied directly to your principal, rather than being earmarked for future payments. It’s best to check with your loan servicer to see what their policy is before increasing or adding extra payments.

How to get lucky: Commit to increasing your monthly student loan payment each time you get a raise, and put a percentage of every financial windfall toward your loan balance.

2. Shorten payment term

When you first graduated, you may have been tempted to choose the student loan repayment plan with the lowest monthly payments—which likely means you took an extended or graduated payment term on your federal student loans. If you’re ready to switch to a standard, 10-year term, your monthly payments will go up, but you’ll pay off student loans faster and potentially save money on interest.

How do you know when you’re ready to switch to a shorter term?

A standard student loan term (e.g., 10 years) typically:

1. Requires a higher monthly payment than extended term

2. Potentially saves more money on total interest than extended term

An extended student loan term (e.g., 25 years) typically:

1. Requires a lower monthly payment than standard term

2. Costs more money in total interest than standard term

How to get lucky: If you can afford a higher monthly payment, switching federal loans to a standard repayment plan can possibly save you money and help you pay off loans faster.

3. Recalibrate your rate
One of the best ways to pay off student loans faster is to lower the interest rate on your loans, which can only be accomplished through student loan refinancing.

When you refinance student loans, you’re typically given the option of a shorter or longer payment term, and the same general rules apply as above—the shorter the term, the higher your monthly payments—but the more you’ll potentially save on interest and the faster you’ll be done with your loans.

Need the numbers? Let’s take the same $100,000, 6.8%, 10-year term student loan from the example above and see what happens when you refinance to a 5%, 5-year term loan. Your monthly payment would go up by about $730, but you’d pay off your loans in half the time.


Refinancing student loans can be a great way to decimate your debt, but before refinancing federal loans check to see if any federal student loan benefits apply to you—those benefits don’t transfer to private lenders when you refinance.

How to get lucky: Find out if you qualify to refinance student loans, and if you can handle the bigger monthly payment, a shorter term may be your ticket to accelerating student loan payoff.


Make your own luck.

Neglecting to understand the various student loan repayment options can be just as foolish as waiting to win the lottery to pay off student loans, because you may be missing out on opportunities to speed up loan repayment and the potential to save money on interest. Essentially, leaving your loans to chance could mean leaving money on the table.

Rather than wait around for good fortune to find you, take a proactive approach by finding out if one of these three student loan repayment options could work for you.

If you are looking for additional resources on student loans, use SoFi’s student loan help center to get the answers you need!

Editor’s Note: This is an updated version of a post we originally published in March 2014. We welcome new comments and questions below


Pass on a little Irish luck today with a friend drowning in student debt (not beer).

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2 thoughts on “How to Pay Off Student Loans Fast

  1. Pingback: 3 Opportunities to Reduce Your Debt Burden

  2. Does the additional money paid on top of the minimum payment go directly to the principle?

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