1. Pay More Than the Minimum Amount Due
This one is pretty self-explanatory.
Paying more than the minimum amount you owe each month will allow you to pay off your student loans before the end of your repayment period.
Making more than the minimum payment reduces the total amount you owe, and because interest is calculated based on your outstanding balance, it also reduces the total amount of interest owed.
2. Refinance Your Student Loans
This can be especially helpful if you have private student loans.
Refinancing can save you hundreds of dollars in interest each month, allowing you to pay more towards your principal amount owed.
If you do successfully refinance, be sure to keep paying the same amount that you were paying with your higher interest loans – this will allow you to pay off your remaining student loan balance faster than if you just pay the new minimum payment.
Keep in mind that refinancing can have implications for certain federal loans, such as losing your Income-Driven Repayment plan.
It is also necessary to apply and be approved for a new student loan in order to refinance, thus it could temporarily impact your credit score.
3. Use Extra Cash to Make a Large Payment
When you find yourself with some extra cash (from a tax refund, birthday, year-end bonus, wedding, etc.), don’t go out and spend it.
While this is certainly tempting, you should instead use this extra money to make a large lump sum payment on your student loans.
Making a large payment will reduce the total amount you owe, thus also reducing the amount that you are paying towards interest, ultimately allowing you to pay off your student loans faster.
4. Pay Off High Interest Loans First
Your student loans aren’t all necessarily created equal.
Some of your loans may have higher interest rates than others, depending on various factors such as when you took out the loans, and what the current variable interest rate is if you opted for a variable rate through private student loans.
While you will still need to pay the monthly minimum on each loan you hold, putting any excess money in your budget towards the loans with the highest interest will help you pay down those loans faster.
This will leave your loans with lower interest rates accruing for a longer period of time, rather than the loans with the high interest rates racking up interest over the years.
5. Avoid Extended Repayment Plans
There are many federal student loan repayment options that extend your repayment term past the standard ten-year repayment period.
While this can be beneficial for those struggling to make their minimum monthly payment, such plans should be avoided if at all possible.
When you stretch out your repayment period you will end up paying more in interest, and of course, it will also take you longer to repay your loans than if you stuck with the standard ten-year repayment plan.