Learn how to pay off student loan debt fast with these creative strategies to get you out of debt in no time.
Strategies to pay off student loan debt Quickly
Student loan debt has become a huge problem for most Americans. And learning how to pay off student loan debt can seem impossible.
But it’s not.
I know because I went from over $34,000 in debt to PAID OFF in just a few years (that should have taken me until I was 55).
Today, over 45 million Americans have student loan debt. The average debt from student loans costs us around $400 a month. Some pay a lot more than that.
When I got out of Nursing School, I had over $65,000 of JUST student loan debt. I was also a new mom and living on my own supporting myself and my daughter. So my priority was to just survive.
I refinanced my loans to go over 25 years (instead of the normal 10) to lower my monthly payment. Which helped at the time. But then there I was, 10 years into it and still owed $35,000.
Something had to change.
I needed to find a way to pay off student loan debt once and for all.
Here’s How I Paid Off All My Student Debt Quickly
1 – Make a Budget
There’s a good reason why ‘create a budget’ is always at the top of every list involving financial advice.
Because it works!
When you create a budget, you know exactly where your money is going. You also can keep better track of it, know where to cut back, and find any extra money you didn’t know you had.
So sit down and start a budget. Include everything you can think of to add. The most important thing to do here in order to pay off your student loans is to find extra money in your budget.
Keep Reading: Budgeting Categories You’re Probably Forgetting About
2 – Pay More Than The Minimum
In any loan where you pay interest (student loans, mortgages, credit cards) it is always recommended that you pay more than the minimum if you can.
Any little bit helps. Even an extra $20-$50 a month can take a couple of years off your student loans. Anyone can find an extra $20 a month!
To truly pay off your student loan debt quickly, it’s recommended to pay at least 20% more than your minimum monthly payment. It may sound like a lot at first, but if you take the average monthly student loan debt of $400 a month, you are adding an extra $80.
Now that doesn’t seem too bad, does it? But that small $80 extra could literally take years off your loan payments… and hundreds if not thousands of dollars of interest saved.
3 – Decide How Important It Is To Payoff Student Loan Debt
How bad do you want to pay off your student loans and get rid of that debt? It really comes down to how bad you want it and what you are willing to do for it.
For me, it took my daughter starting kindergarten for me to realize… holy crap… if I don’t start paying off these loans, I’ll be paying for HER college the same time I’m still trying to pay off mine.
So I had to take a hard look at my budget and think about what I was willing to sacrifice to get rid of those student loans.
I love traveling, so I didn’t want to cut that budget (you still gotta enjoy life, right?). But could I do without my cable and my Sirius XM in my car? Absolutely.
4 – Try The Debt Snowball
Most student loans consist of several loans rolled together. But each one has a different amount and a different interest rate. Here is an example of my student loans before I paid them off:
You can see how my student loans are actually a total of 8 different loans. And they all have different balances and different interest rates. Some rates are nice and low like the 2.430% ones… and some are cringeworthy at 6.800%.
What I did was start with the smallest amount and pay that one off first. So that would be the second one, the 1-02 Stafford – Unsubsidized loan. With a nice small amount of $941.73, it was easy to pay off fast.
So each month, I paid my monthly payment, and then I would throw an extra $100 (if I could) towards that loan. It was paid off in just a few short months.
When that guy was gone, I took the extra $100 (PLUS the normal amount that would have done to that small loan which was $40) and put those both towards the next smallest loan. And so on.
Why didn’t I try to pay off the highest interest rates first? I’ll tell you exactly why in a little bit!
5 – Throw All Extra Money At It
So not only did I budget some extra money towards my student loans (an extra $100 a month on top of my normal $360/month minimum payment). But I also threw any extra money I could at it.
Sometimes I sold furniture I didn’t use anymore. That went straight to the student loans. Or if I got birthday money from my parents. When I got my tax refunds, I put some of that towards the student loans too.
Wherever I could find extra money here and there that I knew I wouldn’t miss, went straight towards helping me pay off student loan debt fast.
That stuff really added up and took a few more years off my loans.
6 – Get a Side Hustle
If you can’t find any extra money in your budget, then you might want to think about getting a second job. Even stocking shelves at Target for a few hours every week can bring in enough cash to really help pay off student loan debt fast.
If you’re a mom like me, then going out to get a job can be tough. Daycare costs a lot and you want to be home more.
There are tons of work from home jobs you can do to bring in extra income.
VIPkid lets you teach English online and earn up to $20 an hour. Or even thinks like Instacart and Postmates allow you to make quick extra cash (and your kid can drive around with you!)
7 – Refinance Options
If your student loans have high-interest rates, start looking for refinance options. There are plenty of companies out there that offer low rates for student loans. SoFi is one of them. You can even try places like Lending Tree.
What is considered a high-interest rate? Well, that depends a lot on you. If you have a horrible credit score and bad debt, you might not get a super low rate. But if you have a decent credit score, I wouldn’t pay anything over 5%. You can definitely find lower interest rates than that. Even if you need to get a personal loan from a bank.
(Side note: switching your student loans to a personal loan can save you a ton of money if you get a really low-interest rate. But then you might not be able to claim it as a deduction on your tax return. Consult a tax specialist before you do this).
8 – Consider Your 401K
Lets say you have absolutely no money to put towards your debt. And you have no way of earning extra money (you already work too much!). And you have a horrible credit score.
one option might be to look at your 401K. In some cases, you can take money out of your 401K to use towards a new home or even student loans. You can get this money tax free but you have to pay it back.
If you can use it to pay off your student loans completely, paying it back to yourself will be much easier with no interest tacked on.
Most investment companies can give you advice and walk you through this. I have my 401K with Fidelity and they have GREAT customer service and financial specialists who can walk you through everything you need to know.
I personally did not go this route, but it is an option!
9 – Change the Loan
So remember earlier when I said I paid off the smallest debt first and didn’t worry about the big interest rates? That’s because I had other plans for those big boys!
Stay with me here… this can seem complicated but it’s one of the best ways to pay off student loans fast!
Let’s look at my student loans again…
The smaller loans with small interest rates were something I didn’t want to touch. No one could give me a rate better than 2.430% (that’s super low!) so I left those guys with Navient.
But the higher interest rates, the ones at 6.800%, were killing me.
What I did was use my credit cards to pay these off. Hold on hold on! Let me explain!
I have a credit card that offers 0% interest for 12 months on balance transfers. So I took one of those high-interest loans and moved it onto my credit card with NO interest. In this case, the first loan was the 1-09 Stafford -Unsubsidized loan. It had the highest interest but the lowest loan amount.
Once that loan when on my credit card, I busted my butt to pay it off in that 12 month period. The money I saved from having no interest compared to the 6.800% I was paying with Navient… saved me literally hundreds of dollars.
So to review: I left the low-interest rate loans with Navient and one by one moved the high-interest loans to a 0% credit card to pay off faster.
* I only recommend doing this if you are on top of your monthly payments and super dedicated to paying off that credit card. You don’t want to get stuck with paying all that interest once the 12 months are up?
Any questions about this? Leave them in the comments below!
Can you pay off student loan debt Quickly?
It might take a lot of sacrifices and hard work and it won’t happen overnight. But you can totally pay off student loans fast with these easy tips. All you need to do is come up with a plan.
I’d love to know… what did YOU do to pay off your student loans?