10 Ways to Pay Off Your Student Loans Faster

Jon O'Donnell Updated on May 14, 2019

Working hard is good – but sometimes working smart is better. This saying applies to many situations, including eliminating your student loans. If you want to pay off your loans faster, you need to be strategic. It’s difficult to put a dent in your debt by just making minimum payments on high-interest loans. We’ve put together 10 tips to help you lower your interest rate, find extra cash, and make progress on reducing your balances quicker.

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1.  Take inventory

Start by getting organized. Most people have a general idea how much they owe, but it’s important to add up the total. Know which loans are federal and private. Figure out what the balances, interest rates, minimum payments, and payoff dates are on each loan. Lastly, know what the terms and benefits are. Are you eligible for (or using) any special payment plans, grace periods, deferment or forgiveness options? If so, will they expire in the future? The first step is getting all of this information together in one place.

2.  Consider refinancing

If you’re paying more than 4% interest, you’re probably paying too much. Many people assume the government gives students the best possible deal, but the U.S. Department of Education charges everyone the same interest rate – a one-size-fits-all percentage that has to account for borrowers who won’t finish their degrees or make timely payments. Graduates who are employed pose a much lower credit risk. If your credit score is 650 or higher, you are likely to qualify for much lower rates if you refinance with a private lender. If your own credit isn’t as strong as you’d like, consider getting a co-signer.

Refinancing federal loans with a private lender makes you ineligible for income-based repayment plans and loan forgiveness programs, but the interest savings might be worth it. Even a few percentage points can make a huge difference over the life of a loan. Figure out how much you could potentially have forgiven and weigh that against how much you could save by refinancing. A recent review by Comet found that people who consolidated with private lenders saved an average of $259 a month and $19,231 over the life of their loans.

3.  Embrace minimalism - for now

Short-term sacrifices can help you get out of debt much faster. Figure out what your essential expenses are and take a hard look at your big-ticket items, like housing. It might feel like a positive step to cut back on lattes, but you can often make better progress by cutting back on your bigger expenses first. While it may not be ideal to live with your parents or share space with roommates, doing that for a year or two could free up a lot of money for debt repayment. Once you’ve trimmed the big items, turn your eye to the small stuff – eating out, gourmet coffee, happy hours, travel, cable TV, clothing, etc. It’s easy to forget about recurring payments on your credit card. Cancel any services or subscriptions you don’t use. You also might be able to negotiate a lower rate on your internet and cell phone service by calling the company and threatening to switch providers if they don’t match their rival’s newest promotional offer. Get creative about finding free entertainment and bargain hunting. And remember, it’s not forever.

4.  Enroll in autopay

Most lenders offer a discount of 0.25% off your interest rate if you sign up for automatic bill pay. Enrolling not only saves you money, it also makes it much less likely that you’ll accidentally miss a payment or pay late.

5.  Boost your earnings

If you’ve been at your job for a while, consider asking for a raise. You can improve your chances by researching salaries in your industry and making note of anything you’ve done that has helped your company save or make money. Other ways to bring in more income include:

  • Turn your hobby into a side hustle. Whether it’s baking, doing yoga, DJ’ing, photography, dog walking, website design, or party planning - why not get paid for doing things you enjoy?
  • Sell stuff you no longer use. There’s no shortage of online classified buying and selling sites. Listing things you don’t use on eBay, Craig’s List, Facebook, Kijiji, or other sites can turn your clutter into cash.
  • Participate in the sharing economy. If you have a car or a spare room, consider driving for a service like Uber or Lyft, or hosting travelers through a site like Airbnb.

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6.  Make extra payments

There is no prepayment penalty with most student loans. If you pay more than the minimum or make an extra payment, the surplus amount is generally applied to the principal rather than interest. So any time you get a windfall – a tax refund, bonus, commission, inheritance – consider putting it toward your loans. It will have a big impact on your balance. You can also use gift-giving occasion like a milestone birthday, holiday, or wedding to let family and friends help by contributing to your loan payoff in lieu of gifts. Always apply extra payments to your highest interest loans first and double check your statement to make sure it was credited as an extra payment (all principal) rather than early payment of next month’s bill.

7.  Work for a company that offers student loan benefits

Increasingly, companies are offering student loan help as a perk of employment to attract millennials with in-demand skills. Firms offering assistance include Fidelity, Staples, Aetna, PricewaterhouseCoopers, and Penguin Random House among others. Benefits generally range between $1,200 and $2,000 a year.

8.  Move to a state that has student loan benefits

Some cities and counties are offering student loan incentives to attract college graduates to areas with declining populations or struggling economies. You have to apply and stay for a period of time – usually 5 years – but depending on your circumstances, you could earn up to $15,000 to go toward your student loans. Participating states include Kansas, New York, Tennessee, and Michigan.

9.  Sign up for UPromise and credit card rewards

Upromise has a free “Loan Link” program that awards you cash back for money you spend shopping online, booking travel, and dining out at specific restaurants. The program is sponsored by Sallie Mae and transfers your earnings directly to your student loans each month. The sums are small, but once you register, it’s effortless. And as long as you don’t change your spending habits, it’s free money. If your credit card has a cash back reward program, you can also choose to apply that money to your loans instead of spending it.

10.  Keep an eye on your credit score

As you build your credit history and progress in your career, your FICO score is likely to increase which could make you eligible for even lower interest rates. You can refinance more than once. If your credit profile improves, be sure to get a free quote to see if you can lower your rates even further.

What to do first?

At Comet, we’ve helped college graduates save over $200 million on their student loans. We’ve discovered that while there are many things you can do to get out of debt faster, the one that takes the least time and has the greatest impact is refinancing.

So how do you start? Pick at least three lenders and fill out their online applications. In most cases, it takes less than 5 minutes to get personalized quotes that you can compare side-by-side, and there’s no need to worry about the effect on your credit. The initial inquiry is considered a “soft pull” and has no impact on your score. The following lenders topped our 2017 rankings for best banks offering student loan refinancing, based on a comprehensive 23-point assessment including their interest rates, transparency, product offerings, track records, ease of applying, and customer service.

Find out how much you can save today here:

Published in: Paying Off

About the Author
Jon O'Donnell

Jon is a writer and marketer for Nitro who is passionate about bringing transparency to the student loan process along with providing families with the information needed to make smart financial decisions. He also just recently refinanced his student loans allowing him to pay them off 5 years faster all while saving an additional $152/month. As he continues to pay them off himself, he strives to help others do the same. Jon also has a long history of connecting people with educational opportunities to help them improve their careers and their overall personal finances. In his free time you can find him reading travel blogs and researching destinations around the world in search of his next adventure. Read more by Jon O'Donnell

Refinance and Save Today With These Lenders

#1 - Nitro Recommended View More Details

Earnest empowers people with the financial captial they need to live better lives.

  • APR: 2.27% - 7.59%
  • Minimum credit score: 650
  • Refinance up to $500K
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Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.

#2 View More Details

Operates in all 50 states; 2nd largest student loan refinancing lender

  • APR: 2.43% - 7.02%
  • Minimum credit score: 660
  • No refinancing amount maximum
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Visit Laurel Road View Loan Disclosure

Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.

Laurel Road Student Loan Refinance Review

  • National reach - Online lender that is available in all 50 US states, the District of Columbia and Puerto Rico.
  • No fees & the lowest rates in the space - Laurel Road is the most transparent about the rates they provide customers, and offer the lowest rates where it counts. Our customers will save more than $20,000 over the life of their loans on average. 
  • Customer service reputation - Laurel Road's customer service representatives are no rookies. With 19 years of experience on average, Laurel Road’s Customer Service team delivers an experience that is best in the industry. They work to build meaningful, life-long relationships with our valued customers to improve their overall financial wellness.
  • The stability & security of a bank - They are a division of Darien Rowayton Bank, a stable and secure FDIC-insured bank, regulated by the FDIC and the Connecticut Department of Banking.

Get your personalized, pre-approved rates in less than 5 minutes.

#3 View More Details

For every loan they fund, they contribute to the education of a child in need

  • APR: 2.27% - 8.24%
  • Minimum credit score: 660
  • Refinance up to $500K
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Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

CommonBond Student Loan Refinance review

  • Unemployment protections - If you lose your job or decide to go back to school, you can delay your payments for up to 24 months.
  • Social promise - For every loan they fund, they also contribute to the education of a child in need.
  • Hybrid loan option - Offerings include a 10-year hybrid loan with fixed interest for the first five years, and variable interest for the final five.
  • Referral bonus - For every friend you refer who refinances their loans with CommonBond, you’ll earn a $200 cash bonus.
  • Qualification - Borrowers must have graduated at least 2 years prior if they want to apply without a co-signer. And borrowers in 6 states – Idaho, Louisiana, Mississippi, Nevada, South Dakota, and Vermont – cannot currently refinance through CommonBond.

Get a personalized review of your refinancing options with CommonBond today.

#4 View More Details

Offers unemployment protection and career/coaching/networking

  • APR: 2.27% - 7.94%
  • Minimum credit score: 650
  • Refinance up to 100% of student debt
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Visit SoFi View Loan Disclosure

SoFi, which stands for “Social Finance,” was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. They set out to change the student loan industry and help borrowers like themselves to get lower interest rates. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.

SoFi Student Loan Refinancing Review

  • Low interest rates - For well-qualified borrowers, SoFi offers some of the lowest rates we have found.
  • Strong customer service - It has more than 350 customer service reps available to help applicants through process.
  • Career coaching and networking - Perks include career services representatives who can help you find a job or negotiate a higher salary. SoFi also hosts networking events, happy hours and educational lectures on topics like buying a home in major cities around the country.
  • Unemployment protection - Borrowers who lose their jobs through no fault of their own may apply for Unemployment Protection. If approved, SoFi will suspend their monthly SoFi loan payments and provide job placement assistance during the forbearance period. These benefits are offered in three month increments, and are capped at 12 months, in aggregate, over the life of the loan. Note that interest will still accrue while loans are in forbearance.

Find out what interest rate SoFi can offer you here.

#5 View More Details

Works with 300+ community lenders for higher approval chances

  • APR: 2.24% - 7.50%
  • Minimum credit score: 660
  • Refinance up to $300K
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Visit LendKey View Loan Disclosure

Connecting student borrowers to a network of over 300 community lenders with low interest rates. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

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  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 300+ community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#6 View More Details

Many ELFI customers save hundreds per month month and thousands over the length of the loan term.

  • APR: 2.80% - 6.69%
  • Minimum credit score: 680
  • No refinancing maximum amount
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Visit ElFi View Loan Disclosure

Education Loan Finance is designed to assist borrowers through consolidating outstanding education loans into one single loan that effectively lowers your costs of education and/or makes repayment very simple. Education Loan Finance - backed by the strength of SouthEast Bank - combines the benefits of traditional education loan refinancing with the superior products, service, and support found in the private market.

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Check out their low rates today to see how much you can save.

  • Get Your Rate. With Education Loan Finance's Find My Rate tool, you can complete a short application to receive a preliminary quote on your eligible rates and terms, all without affecting your credit score.
  • Apply in Minutes. Education Loan Finance's online application is fast and simple.
  • Outstanding Personalized Service. Our Personalized Loan Advisors specialize in student loan refinancing and help busy professionals find the option that's right for them.
  • Student Lending Experience: Education Loan Finance isn't a start-up company - we have a longstanding history and expertise in serving student loan borrowers.

Attractive Bonus and Referral Programs:

  • Education Loan Finance Fast Track Bonus**: Education Loan Finance's application process is streamlined and simple, and you can earn a $200 bonus just for closing your loan within 30 days of your initial application.
  • Education Loan Finance Referral Program**: Earn $400 for each new Education Loan Finance Client referred by you!
#7 View More Details

Special offers for medical resident and fellow refinance products

  • APR: 2.43% - 7.60%
  • Minimum credit score: 660
  • No Maximum when refinancing
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Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with new rates as low as 3.25% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

Comments

I reduced my student loan payment by $152 per month, by refinancing thru Nitro:

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