Now more than ever, knowing how to pay off student loans fast is crucial to many families’ financial wellness.
After all, according to EducationData.org, students have borrowed a total of nearly $1.75 trillion last year to pay for college and other educational expenses. While this has helped families and students finance their education, it’s also put the responsibility of loan repayment front-and-center for students all around the world.
Like many challenges, paying off student loans fast is sometimes easier said than done. Fortunately, there are a few smart strategies that can help you repay your student loans fast and responsibly, all while completing your education on time and helping to build good credit history in the process.
Why Pay Off Student Loans Early?
Paying down your student loans ahead of schedule comes with several benefits. Not only will you clear the cloud of debt hanging over your pocketbook, you’ll also:
- Pay less in interest
- See positive impacts on your credit score
- Improve your debt-to-income ratio
- Enjoy increased financial freedom
Plus, if you get ahead now, you might have some wiggle room if you fall on hard times later.
How to Pay Off Your Student Loans – Fast
Paying off your debt quickly is an admirable goal. But getting there requires a little bit of research and the occasional dose of willpower.
Consolidate or Refinance Your Loans
If you’re interested in repaying your student loans quickly, you may want to consider applying for student loan consolidation or refinancing. While the terms may seem similar, the distinction is important:
- Student loan consolidation typically refers to combining your multiple student loans into a single student loan.
- Student loan refinancing involves getting a new interest rate on your existing student loan.
Depending on which route you select, you may need a certain income level or credit score to qualify. Refinancing could potentially net a better interest rate and monthly payment to boot!
Pay Extra Every Month
The simplest way to pay off your student loans early is to make extra payments. You can approach this from two directions: either by increasing your single monthly payment or making two payments every month. (Or both!)
Even if you can only afford a few extra bucks a month, the difference really pays off.
Slash Your Bills
Of course, paying extra every month is only possible if you have cash to spare. If finances are a little tight, you might consider cutting your budget by:
- Eating out fewer times a month
- Making your coffee at home
- Sticking with just one streaming service
- Substituting your gym workout with at-home alternatives
- Switching to a cheaper phone plan
But if that doesn’t get you where you want to be…
Increase Your Income
Believe it or not, there are several ways to increase your earning potential with minimal effort.
For instance, you might ask for a raise or apply for an upcoming promotion at your current job.
Or, if you have an in-demand hobby, such as crafting, coding, or even writing, you could offer your services to others – for a tidy fee, of course.
And for those with the free time to spare, you might even consider picking up a second job. Whether you want to get in on the gig economy, hang your shingle out as a freelancer, or deliver pizzas on Friday night, opportunities abound.
Paying Off Your Student Loans Fast is Hard Work – But Worth It!
Paying off your student loans can be a challenge, but it can also be among the most rewarding accomplishments of your life. If you can make it work, in addition to freeing up your finances and paying less interest, you’ll be able to enjoy the profound sense of financial freedom that comes with being debt-free.