Strategies to Pay Down your Student Debt Faster

Posted by Lindie Johnson on Jan 5, 2017 9:09:45 AM

For most college grads, student debt is a fact of life. It’s a monthly expense to be worked into your budget and you’ll quickly adapt, as everyone does, to the payment schedule. But hold on a second – just paying the bill isn’t all there is to paying down your student debt. You need to make sure you’re taking a smart, measured approach to your debt – one that will give you the best odds for paying it down quickly, without negatively impacting your finances in other ways. Here’s what you need to know.


  1. Organize by interest rate. Most grads, (and most debtors for that matter, regardless of age) approach their lowest balances first. It’s satisfying, after all, to zero a balance on a debt, and you’ll feel like you’re really getting somewhere. Here’s the secret: you aren’t. Prioritize your debts by interest rate, and tackle the high-interest loans first, even if those are the loans with the largest balances. Seems counter-intuitive, sure, but the savings you’ll reap are significant, and you’ll be able to take those savings and apply them to other loans if you’re smart in your approach.
  2. Tackle the principal. This is where most student borrowers go astray, and it’s an important, and hugely beneficial tip. Hit that principal as hard as you can. If you’re able to throw an extra 20, 50, or 100 dollars towards your student loan principal each month, you’ll make tremendous strides toward paying down that balance.
  3. Review your repayment options. If you have federal student loans, then you have several different repayment options to choose from, including standard, graduated, extended and a host income-driven plans. Your private loan repayment options may be more limited but it is worth asking your lender what is available. Most borrowers, especially fresh out of college, tend to gravitate towards the repayment plans that offer the lowest monthly payment. Don’t fall for that one – there are lots of ways to get ahead on your student loans, but making minimum payments isn’t one of them. Unless absolutely necessary, stick to the standard repayment plan. And if you can't make those payments, apply for income-driven repayment (see which is best for you by using the repayment estimator.) Then, make sure you’re enrolled in auto-payments. Typically, borrowers can expect a 0.25% reduction in interest rates for this simple change, and let’s face it – life is easier when you don’t have to worry about a monthly bill.
  4. Reduce your interest rates. Refinancing can lower your student loan interest rate. Just beware that you will lost any benefits on federal student loans if you refinance them. For that reason, you may want to keep them separate (once you refinance them in the private market, there is no going back!) and consider only refinancing private student loans or federal student loans with fewer benefits and higher rates (like the PLUS loan).
  5. Make a budget, and stick to it. Making sacrifices to pay off your student loans can seem really unfair, especially if you’ve just managed to land a job with a regular paycheck. But if you can cut corners, do. Use coupons. Cut bills by eliminating unnecessary services, like cable or cell/data extras that you don’t need. Throw in with roommates on expenses, and stick with that older car. Successful grads are often the ones that find ways to get out from under the burden of debt quickly and painlessly, not the ones who extend it needlessly.
  6. Use cash wisely. If you’re one of those lucky folks who winds up with a cash windfall, be smart about it. If you inherit some money, get a big bonus at work, settle an insurance claim or even (fingers crossed!) hit a good scratch ticket, that money should go towards your debt. What would your life look like if you didn’t have that 300, or 400, or 800 dollar/month student loan payment? You’d be free to do a LOT of things with your money. Get there faster by throwing cash at that debt as quickly as you can, not by resigning yourself to a lifetime of repayment.
  7. Consider a loan-forgiveness career path. Certain professions come with a huge extra incentive – student loan forgiveness. It doesn’t apply to all student loans, and the choices are very limited. But if you’ve ever considered a career as a public school teacher, non-profit employee, or public service provider, it may be time to take a second look. You could be looking at tens of thousands of dollars of loan forgiveness and a rewarding career. If you plan to take this path, avoid refinancing your federal student loans at all costs!

Managing your student debt takes minimal time and offers some pretty serious benefits. Hit your debt hard – you won’t regret it.

Want to figure out if student loan refinancing might be right for you? Download our guide. 

Download your free Refinancing Guide to find out if it is right for you.

Topics: Student Loan Repayment, refinancing