How To Pay Off Student Loans Ahead of Schedule

Your student loan debt may feel like a burden you're eager to get off your plate. The good news is that it’s possible to pay off your debt sooner than your scheduled payoff date — meaning you can become debt-free ahead of schedule.

Here's a look at how to pay off student loans early, from finding extra money in your own budget to asking your employer for assistance.

1. Pay more than the minimum

One of the most effective ways to pay off your student loans early is to make more than the minimum payment required by your loan provider each month. Doing so not only cuts down on your repayment timeline — it also enables you to save on interest charges over time. 

If you decide to take this approach, make sure to tell your loan servicer to apply the extra amount you're paying to your principal balance. If you have multiple loans, also request that your extra payments get allocated to the loan with the highest interest rate first. Otherwise, you run the risk of your servicer applying your payment across all your loans, which can potentially slow down your debt payoff and increase your interest costs. 

2. Make biweekly payments

Another path toward paying down student loans early is to make payments biweekly, or every two weeks, instead of once a month. 

You likely won't notice a huge difference in your budgetary constraints with this strategy, but it’ll pave the way to making one full extra payment per calendar year. That's because when you make a payment every two weeks in a 52-week year, you'll end up making 26 half-payments in the year. This translates to 13 full payments, as opposed to the standard 12 on a monthly payment schedule.

Just a single additional payment per year might not seem like that big of a deal, but it can end up saving you on interest since you’re paying off your debt faster.

3. Look into refinancing

Refinancing may also help expedite the loan payoff process. When you refinance your student loans, you take out a new loan that replaces your existing ones. If you have strong credit and a steady income, this new refinance loan could offer a lower interest rate, which might cut down on your monthly payments and allow you to get ahead on loan payoff.

Another way refinancing could allow you to pay off your loans early is if you opt for a shorter repayment term. This might result in higher monthly payments, but you'll save on interest and end up paying back your loan over a shorter period of time.

However, if you have federal student loans, note that refinancing them with a private lender will cause you to lose federal protections and repayment options. Weigh the pros and cons to decide whether or not to refinance.

4. Stay on the Standard Repayment plan

While switching repayment plans could allow you to secure a lower monthly payment, sticking with the Standard Repayment plan for federal loans is likely your best bet for paying off your loans early. This plan has the shortest repayment timeline, at up to 10 years.

The amount of time it takes to repay your loans varies depending on the repayment plan. In comparison, if you switched to an income-driven repayment plan, your repayment timeline would extend up to 20 or even 25 years.

Starting in February 2024, the SAVE plan will offer eligible federal loan borrowers forgiveness after as few as 10 years of payments. This plan is likely the most affordable option for borrowers with low balances who originally took out $12,000 or less in federal student loans.

Related: How Long Does It Take To Pay Off Student Loans? 

5. Enroll in autopay

Signing up for autopay not only helps ensure you're making your payments on time, it can also help you secure a slightly lower interest rate. Many student loan servicers offer an interest rate reduction of 0.25 percentage points when you enroll in autopay. A reduced interest rate can make it easier to pay down your loan balance, and potentially pay it off early.

If you have federal student loans, you can sign up for autopay on your loan servicer’s website. For private student loans, contact your lender to see if it offers an autopay discount and how you can enroll. Just ensure your bank account balance has sufficient funds to cover these automatic debits so you don't get hit with an overdraft fee.

6. Pay interest during deferment periods

During periods of deferment, interest continues to accrue on most loans (except for subsidized loans). Any unpaid interest eventually gets tacked onto your principal loan balance at the end of the deferment period through a process called capitalization. 

When interest capitalizes, your principal balance increases and you become responsible for paying interest on this larger amount, which could significantly increase your monthly payments. That’s why, if your finances allow it, it’s a good idea to pay interest during periods of deferment to avoid having your loan balance grow.

Note that unpaid interest only capitalizes in certain instances. Specifically, it can accrue if you're repaying your loans under an income-driven repayment plan as well as during forbearance, which is an option if you can't pay your student loans. If you have unsubsidized loans, unpaid interest will accrue during school and your six-month grace period, as well as during deferment.

7. Use found money

Found money may sound like a magic trick, but if you take a look, you might be surprised at what you find. Any extra bit you can put toward repayment can translate to paying off your loans that much earlier.

You might consider looking for savings opportunities like canceling unused subscriptions or negotiating a bill, or you could find ways to increase the amount of money you're earning each month. Consider taking on a side hustle or requesting a raise at work to accomplish this. You could also designate any monetary gifts, tax refunds, or year-end work bonuses as extra funds to put toward your student loans.

8. Ask your employer for help

Seeking assistance from your employer can be a strategic way to speed up student loan repayment. Historically, educational assistance programs offered by employers were used to cover expenses related to tuition and supplies. Now, the scope of these programs has expanded to include directly paying for the principal and interest on employee student loans as well. 

This assistance is tax-free up to $5,250 per year per employee. Because of these tax benefits, more and more employers are offering student loan benefits to their workers. 

9. Look for ways to cut expenses

The less money you need to cover your expenses each month, the more you can put toward your student loan payments. Even if it's seemingly small, freeing up any amount each month for loan payments will add up over time — potentially allowing you to secure an early payoff.

In addition to canceling unused subscriptions and negotiating for lower bill payments, consider these other possibilities for savings:

• Reassessing your insurance rates
• Shopping secondhand
• Cooking in rather than eating out
• Getting a roommate to split living costs

What’s the fastest way to pay off student loans?

In most cases, the quickest path to student loan payoff is paying more than the minimum due each month. If you ensure the excess amount you pay goes toward the loan's principal balance, then you'll end up owing less interest over time. This can make paying off your loan balance go that much faster.

That said, you can also expedite your payoff timeline by incorporating other tactics alongside paying more than the minimum each month. For instance, refinancing may help you save even more on interest charges and potentially lower your monthly payments. But be cautious refinancing your federal loans, as you’ll lose access to forgiveness options and other federal benefits. 

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