Finance Blog

Four Ways to Pay Off Student Loans Faster

Written by Bill Fay on February 25, 2014 in Credit  |   7 comments

Roughly 38 million Americans are still paying off their college loan debt, which totals more than $1 trillion. If you’re one of the many, here are four tips that can help you pay down your debt and move forward with your life.

student loansA diploma is supposed to open the door to thousands of possibilities, but for many college grads, student loan debt is making it nearly impossible to move forward.

Roughly 38 million Americans are still paying off their college loan debt, which totals more than $1 trillion, and students who graduated in 2012 and took out loans are carrying an average $29,400 in debt.

Student loan debt is postponing the American Dream for many grads

For many graduates, college loan debt has postponed their introduction into the economic mainstream. An American Student Assistance survey revealed that 75 percent are afraid to take out mortgages or car loans, while 30 percent said their debt has affected their choice of careers. Another 29 percent are postponing marriage, while 43 percent said they have delayed starting a family and 27 percent said they are struggling just to buy daily necessities because they’re worn down by student loan debt.

Fortunately, there are some steps you can take to get rid of the student loan albatross and get on with your pursuit of the American Dream.

Four steps to take to pay down your college debt

Not surprisingly, your plan should start with having a job. Nothing addresses debt better than a steady income. Once you have a regular paycheck, here are four steps that can help you pay down your student loan debt faster:

1. Organize your debt. It helps to know to whom you owe money and how much you owe them. Many student loans have several banks servicing them, so the $2,500 you received in your final semester may be divided among three or four banks.

To figure out which entity you’re paying, assess your credit report, which should list all of your creditors and where you stand with each one. You are entitled to one free report each year from each of the three nationwide credit reporting agencies through annualcreditreport.com. If you want to review your report more regularly, you can also purchase a credit monitoring product.

Another option is to talk to your college’s financial aid office for more details on who is servicing your loans.

Next, examine each loan to determine which have the highest interest rates and then focus on eliminating those first. It may also help to consolidate all of your loans so you’re making just one payment each month.

2. Set aside money from every paycheck. Loan payments are usually made once a month, or 12 times a year. However, people typically receive paychecks every other week, or 26 times a year, which is the equivalent of 13 monthly payments. If you set aside money from each paycheck toward your loans, you’ll already be one payment ahead of the game every year.

If you have additional sources of income, such as an annuity, treat these payments like your paychecks and set aside money for your loans. Putting a portion of other income toward your loans will speed up the repayment process even more. In addition, by prepaying your loans, you will reduce the amount of interest you will pay over the life of the loan.

3. Look into loan forgiveness. If you’re going to take a job in a certain profession, such as teacher, police officer, nurse, or social worker, you may be able to pay down your loans faster. For example, if you teach math, science, foreign languages, or special education for five years in a low-income school district, you could qualify for as much as $17,500 in student loan forgiveness.

There are also loan forgiveness programs for public service jobs—in government or private industry—in nursing, law enforcement, public service for the disabled or elderly, the public library system, emergency management, and public health.

In addition, if you join the military, the Department of Defense could waive a portion of your loan—or all of it.

4. Ask everyone to contribute. Tell anyone who might get you a birthday, holiday, or anniversary gift to save a trip to the store and instead send the money to you for your student loans. It sounds crass, but if you explain that helping eliminate student debt is the best thing that could be done for you, everyone should understand.

Getting out of student loan debt is difficult, but it’s not impossible. Be diligent about making payments, and put any extra money toward your loans. Eventually, you’ll be living debt-free.

Bill Fay is a business writer for Debt.org, focused mainly on stories about financial matters affecting families and small businesses. He has 30 years of experience working in newspaper, radio, and television.


  1. Anonymous says:

    Student loans are a part of society and culture today. One can not complete higher education without them. I think that there should be more opportunities for loan forgiveness, not just a select few. Better yet, if more scholarships and grants were available to not just undergrads but grads, then there wouldn’t be so much outstanding student loan debt. Just a thought.

  2. John says:

    Want to live debt free? Try a Total Money Makeover! With it my wife and I paid off $40,000 in student loans in 16 months making 60-75k! Now we are debt-free (except the house), for life! And our next house will be paid for with CASH.

    • Suzanne says:

      Hi John,
      My nephew recently graduated and we would be very interested to find out the process you and your wife went through to pay your loans and be almost debt free. Thanks

  3. CC says:

    There’s some good advice in the article.
    Definitely put aside money to pay your loans each paycheck and if possible, put aside extra money. I’d also set up an automatic payment. Federal loans I know will give you a small discount on the interest rate(s) for the loans that you pay with an automatic payment.

    As far as determining who you owe, you should know that! You signed for these loans, so you should know which are federal, private, through your school, etc. You should also receive some kind of notification from the lender letting you know when your first payment is due and your payment schedule. Don’t rely on a credit report/paid credit monitoring. By the time your loans show up on your credit report, you should know who your lender(s) is/are.

  4. Inquiring Mind says:

    At what age is student loan forgiven? I was told that after age 63, your student loan could be forgiven. Can someone respond to this

  5. Anonymous says:



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