Equifax

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.

7 comments

  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:

    I HAVE TRIED TO PAY OFF ALL MY DEBTS. EVERY TIMES I THINK I’M GETTING OVER THE HUMP, I FALL AGAIN DUE TO SOME KIND OF SET BACK. REALLY NEED SOME HELP!

    COLLEEN S.


Leave a Comment


Name :


Commenting guidelines

We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.

Some other factors to consider when commenting:
  1. Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
  2. All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
  3. We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
  4. Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
  5. Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
  6. Stay on topic. Your comment should be concise and pertain to the specific post in question.
  7. Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
  8. Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.

Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.


Credit Archive

Stay Informed Sign up for our FREE Equifax email Newsletter