SoFi

Paying off student loans fast is all about momentum and resourcefulness. Staying up-to-date on your payments—or ideally getting ahead of them a bit—can give you the motivation you need to tackle and clear your student loan debt as quickly as possible.
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When it comes to student loan repayment, there are two great ways to build momentum: prepaying (or paying more than the monthly minimum) and reducing interest rates (through student loan refinancing).

Here are five tips to help you build momentum, so you can pay back student loans faster and make your debt a distant memory.

#1 Learning the Benefits of Prepaying

When considering how to pay off loans fast, you may want to think about saving money on student loan interest by prepaying. That means to make payments in addition to your regular monthly payment.

Generally, there is no penalty for making extra student loan payments (check with your lender or loan servicer to verify this), and it can help you spend less on interest over the life of the loan.

If you haven’t started paying off your loans yet, you can use our student loan calculator to estimate your monthly payments. Then, you can determine how much you want to pay on top of that each month, to help pay off your student loans faster.

As a bonus, it’s amazing how motivating it can be to see your outstanding balance shrink more quickly than you planned by making more than your minimum payment each month.

An important note: Some lenders may apply the additional money to next month’s payment instead of deducting it from your student loan balance if you don’t specify where you want to apply your prepayments. If your goal is to save money on interest and be done with your loans sooner, ask your loan servicer if they can apply any extra payments to your loan’s principal instead.

#2 Taking Control of Your Spending

Prepaying sounds great, but where are you going to come up with that extra cash? You can start by taking stock of where your money currently goes.

Many of us have “leaks” in our spending that we barely notice—whether we’re springing for frequent takeout dinners or have auto-payments on magazine subscriptions that we keep meaning to cancel.

Try recording your daily spending in the notes app on your smartphone or using an app like Toshl , which can help give you better insights into where your money is going. Sites like Mint offer tools that can help you create a livable budget with room for the occasional splurge.

#3 Using Unexpected Windfalls to Grow your Proverbial Garden

Instead of treating a windfall like “fun money,” use it to get ahead on your debt. Whether you come into money through inheritance, you get a pay out from a stock you’d forgotten you owned, or your boss hands out a surprise bonus, try to put a portion of your surprise cash straight toward your debt.

And don’t just think small—see if you can apply at least 50% of any financial gifts, dividends, bonuses, and raises toward paying down your loans.

#4 Creating Another Income Stream

If your main job isn’t extremely demanding, you might consider adding a side hustle to help pad your debt payments. Sites such as Upwork can connect you with freelance work. If you don’t have the time or inclination to take on another job, you can consider becoming an Airbnb host .

According to recent analysis from SmartAsset , the average host can expect to cover 81% of their rent by listing one room in a two-bedroom apartment on Airbnb.

They also found that, in many cities, it may be possible to pay the entire rent on a two-bedroom apartment with around 20 days of bookings per month. That translates to sizable savings you can put toward your student loans.

#5 Lowering your Interest Rate

If you are a working graduate paying down high-interest student loans, student loan refinancing could be a powerful way to make a dent, if you qualify. For example, securing a lower interest rate can make a big difference in what you have to pay over time.

Bear in mind that if you have federal student loans such as Direct Loans and Graduate PLUS loans, refinancing them with a private lender like SoFi means you will lose certain benefits that come with them, such as access to the Public Service Loan Forgiveness program and income-based repayment plans.

However, some graduates may find they don’t need these benefits and that the cost-saving benefits—and faster payoffs—that can come with refinancing provide more value.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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Finding helpful programs to help your student debt can be overwhelming, especially if you already feel pressure from high monthly payments or loans that never seem to shrink. But there are many student loan assistance programs to give you more time to pay back your student debt, or lower your monthly payments for greater student loan relief.

Keep in mind, while extending your payback period or reducing your payments will help ease the month-to-month burden of your student debt, you might end up paying more overall due to interest on the loans.

Whether switching to a plan based on your income, extending repayment with the hope of forgiveness, or even refinancing your student loans, it’s important to run the numbers and see which plans you qualify for, and which could save you the most money in the long term.

The great thing about the different repayment options offered for federal loans is that you can apply to change plans anytime. So whether you’ve just graduated and are still looking for work, recently changed jobs, or just want to see if you qualify for a lower payment, here are some of the top student loan debt relief options.

Getting More Time to Pay Off Your Student Loans

The Standard Repayment Plan is the default student loan option; if you don’t opt into any other plan, you’ll pay off all of your debt after 10 years, or 120 monthly payments of a consistent amount. However, for many people, especially if you are just starting out in the workforce, this fixed payment can be very high, since it’s entirely dependent on your total debt and interest.

The first alternative repayment plan to consider for student loan relief is the Graduated Repayment Plan, which still keeps your payment timeline to 10 years, but starts out with lower payments at first and then, yes, gradually, increases the amount over time. You will end up paying more than under the Standard Plan, but if you are in a career where you expect a raise every two years or so, this might be a good option for you.

The average undergraduate student debt at graduation was $30,301 in the 2015 to 2016 school year. If you have more than $30,000 in outstanding student debt, you could also consider an Extended Repayment Plan, which increases your loan payoff period to 25 years instead of 10.

Payments can be fixed and stay the same, or graduated and increase over time, and your monthly payments will be lower than under the Standard Plan—possibly by up to half—since you are giving yourself more than double the amount of time to pay your loans off. If you need to make lower monthly payments and are OK with paying out more over a longer period of time, an Extended Repayment Plan might be the place to start.

Reducing Your Student Loan Payments Every Month

There are a number of income-driven plans, and each has its own quirks and qualifications, so it’s important to understand which one you want to apply for when you contact your loan servicer. These plans will make your monthly payment more affordable based on your income and family size. Most federal student loans are eligible for at least one income-driven plan .

Income-Based

Through an Income Based Repayment Plan, payments will be 10% or 15% of your discretionary income, depending on when you first took out your student loans. Any outstanding balance is forgiven after 20 or 25 years, but you may have to pay income tax on that amount. You must have a high debt relative to your income to qualify.

Income-Contingent

Payments will be either 20% of your discretionary income, or the amount you would pay on a fixed 12-year repayment plan adjusted to your income, whichever is less. Most borrowers can qualify for this plan, including parents, and outstanding balances are forgiven after 25 years.

Revised Pay As You Earn (REPAYE)

Payments are 10% of discretionary income, and outstanding balances will be forgiven after 20 years for undergraduate loans.

Pay As You Earn (PAYE)

Also makes payments 10% of your discretionary income, and caps at 20 years for forgiveness, but your payments will never more be than what you’d pay on the Standard 10-year plan. You must be a new borrower on or after Oct. 1, 2007 to qualify.

Income-Sensitive

Monthly payments will be based on your income, but your loan will be totally paid off in 15 years.

The important thing to remember about all of these plans is that you must reapply every year, even if your circumstances don’t change. If you are employed by the government or a not-for-profit and are seeking Public Service Loan Forgiveness (PSLF), you should repay your student loans under one of these income-driven repayment plans.

To apply for any of these plans, you have to talk to your loan servicer, which is everyone’s favorite task. You can find all of your federal student loans, and your individual loan servicer, by logging into My Federal Student Aid .

Once logged in, you can also check which repayment plans you personally qualify for by using the Federal Student Aid Repayment Calculator . Remember, it’s always free to apply for these student loan assistance programs.

One thing to note, Perkins Loan repayment plans are not the same as those for Direct Loan or FFEL Program loans, which are some of the most common student loans. You should check with your school for more information about repayment plans for a Perkins Loan.

Perkins Loans can also qualify for cancellation , based on certain employment as a teacher, nurse, military personnel, or employee of a volunteer service like the Peace Corps.

Still Having Trouble Making Student Loan Payments?

If you are already on an income-driven plan or have extended your repayment period and are still looking for greater student debt relief, there are other options to consider. There’s always picking up a side hustle, but it can sometimes feel like those extra bucks from babysitting or dog walking don’t make a big enough dent—and it’s easy to pocket that money, rather than put it toward savings or your loans.

Unless you get cast on a TV game show that will pay off your student debt, consider instead looking into certain employers that help pay off student loans, or even cities that offer financial incentives for you to live there.

Also, most loan servicers will reduce your interest by .25% if you sign up for automatic payments. On the average student loan debt of $30,000, say with 6% APR, reducing to 5.75% equals about $450 in savings on a Standard 10-year plan. Plus, making auto payments on your loans will help you incorporate it into your budget as a fixed expense which must be accounted for every month.

Reducing Your Debt Burden through Refinancing

Refinancing is another student loan relief option that works best if you have high-interest, typically unsubsidized loans and/or private loans not from the federal government. But keep in mind that if you refinance, some benefits of federal loans such as forbearance or qualifying for PSLF will no longer be available to you.

Refinancing and consolidation are often used interchangeably, but it’s important to know the difference. Student loan consolidation is the act of combining multiple loans into one new, often federal, student loan.

Student loan refinancing will get you a new loan entirely, at a new interest rate and/or new term, so you use that new loan to pay off your student loans. Then you pay back the new loan, which is no longer a federal student loan. Refinancing can potentially get you a lower interest rate, thereby making it easier to pay off your student loan debt.

About SoFi

SoFi offers student loan refinancing which can help you lower your monthly payments or shorten your loan term. Discover the different student loan options to see if refinancing could be a good option for you.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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