When a student starts college, the goal is to graduate with the best shot at success in life. But with outstanding student loan debt now totaling more than $1.3 trillion, many students start their careers putting hundreds of dollars a month aside to pay off student loans. That burden can force them to delay buying homes, cars, and even starting a family.
If student loan debt is part of your monthly budget, you may be looking for ways to pay off the remainder as quickly as possible. Once you’ve made the final payment, you’ll then have extra money each month that you can put toward other expenses or your savings. If you’re interested in paying down your student loan balance fast, here are a few things you can do.
Before you invest too heavily in determining how to pay off student loans, the quickest path to paying off any debt is to have it forgiven. For college graduates, that means finding a position that will pay off your loans. It may sound too good to be true, but some employers have found that loan forgiveness is a great job perk, allowing them to attract some of the best talent. Often jobs that offer the perk of paying off student loans are those that are difficult to fill, including positions with government agencies, teaching in low-income schools, and nursing in areas with shortages.
Another way to make a dent in your student loan repayment is to make more money. If a promotion or raise isn’t in your near future, this could mean working overtime, if your employer pays for it, or taking a second job. Although there are plenty of part-time jobs you can work for an hourly fee, there are also lucrative side gigs that will give you the flexibility you want. Through a simple internet search, you could easily find opportunities to make extra money on the side. Consider sites like Upwork, Fiverr, and TaskRabbit to get started. As your earnings come in, apply every dollar toward paying down your loans.
Make Extra Payments
Even a small amount extra each month can make a big difference when deciding how to pay back student loans. The faster you can pay down your principal, the less interest you'll be required to pay over time, which will give you extra money to put toward other debts or to invest in your future. Make sure you’re allowed extra payments and early payoff without a penalty since some loans have special requirements. There are calculators that can help you determine how much even a small extra monthly payment can help.
Sacrifice in Small Ways
A few small cutbacks in monthly spending can give you extra money you can put toward trying to pay student loans. Keep a budget and watch for ways you can shave money off your expenses. If you haven’t recently, shop around for services like insurance and cell phone service and see if you can save money by switching to a new provider. Put off taking vacations or going on shopping sprees until after your loan is paid in full. It will be well worth having figured out how to pay off student loans fast when you have extra money every month to put toward those luxuries.
Pay Off Smaller Debts
According to some financial experts, one of the best ways to pay off student loans and other debts is to first do away with smaller balances. If you have a credit card with only a $1,000 balance, for instance, paying that off will allow you to save the minimum you’re putting toward that debt each month. That minimum payment can then be put toward larger debts like student loans. You’ll also feel a sense of accomplishment once you’ve wiped out one or two monthly bills.
Don’t Live Alone
Although living alone may be the ideal, the truth is that staying at home with your parents may be just what it takes to get yourself out of debt. If you can’t live at home, or you’d prefer not to, consider moving in with one or more roommates. The reduction in monthly living expenses can give you just the extra money you need to put toward your student loan repayment. Once your loan is paid in full, you can consider getting your own place.
With any loan, refinancing can be the key to lowering payments to squeeze more money out of your monthly budget. You may also be able to reduce your interest rate, which will mean that more of each payment goes toward the principal. Over time, this puts you on a speedier path toward repayment. However, experts advise that borrowers beware of opportunities that consolidate their federal loans into a private loan, since you may lose the protections you had with public funding. If you do choose to switch to a private option when searching for how to pay back student loans, look for one that offers the same protections you’d have with a federal loan, such as deferment and income-based repayment.
Apply Your Tax Return
Each year, as you try to figure out how to pay off student loans, you’ll likely have unexpected extra income. One of the best sources of surprise money each year is your income tax return, which can be hundreds or thousands of dollars, depending on your situation. As soon as the funds are deposited, put the full amount toward helping pay student loans. If you combine this tactic with other ways of paying off student loans, you’ll quickly find your balance is on the decline.
Student loan repayment can be one of the biggest challenges young adults face. As you try to decide how to pay back student loans on a tight budget, look for small ways you can gradually reduce your balance. It may seem like it isn’t making much of a dent in your debt, but over time, those small measures will add up and soon you’ll find you’re paying off the final balance. Once you’ve achieved that goal, you’ll have extra money to put toward other expenses, savings, and investments.