Pay Off Student Loans with these 5 Strategies

Over the last decade, the amount of student loans in America has surpassed that of auto loans and credit cards, climbing to a total of $1.47 trillion in 2018, according to research from the Federal Reserve Bank of New York.  That debt is shared by about 44.7 million Americans, or about 1 in 5, who carry student […]

BY The Team

Pay Off Student Loans with these 5 Strategies

Over the last decade, the amount of student loans in America has surpassed that of auto loans and credit cards, climbing to a total of $1.47 trillion in 2018, according to research from the Federal Reserve Bank of New York.  That debt is shared by about 44.7 million Americans, or about 1 in 5, who carry student loans. According to Experian, Americans with student loan debt owe an average of more than $35,000, an amount that has increased by more than 25% in the last five years.

With the amount of student loan debt rapidly increasing for the average American, more and more graduates are eager to pay off their loans quickly and early. After all, being in debt can take a bite out of your monthly budget, making it harder to afford the type of home and lifestyle that you studied so hard to achieve. It can also prevent you from building wealth while you are young.

So, how long does it take to pay off student loans? If you just make the regular payments, it can take 10 to 25 years or more to pay off your student loans. Many borrowers want to know how to pay off student loans fast so they can avoid paying interest in the long run. Below are five vetted methods for paying off your student loans quickly so that you can move on to other financial goals.

Strategy 1: Pay extra using the snowball method of debt repayment

The snowball method is a great way to pay off your student loan faster if you have extra income to throw into your recurring student loan payments. Imagine a small ball of snow rolling down a hill. As it rolls down the hill more snow sticks to the surface and the ball gradually gets bigger and bigger. Now imagine all that snow is money that you are using to pay off your student debt – building up more and more that you’ve paid off – and you can get a sense of why this strategy is so effective.

It works like this: Make your minimum monthly student loan payments and put any extra income that you have towards your student loan with the smallest balance.  Whether it’s $5, $50 or $500, this extra money will add up and before you know it that balance will be knocked out. Then you can start putting your extra funds towards your next biggest loan balance. 

Here’s an example: Say you have 3 loan balances of $2,000, $4,000 and $6,000 and a minimum payment of $120 for 10 years at an interest rate of 5% for each loan. If you added an extra $50 each month towards the smallest balance, you could pay off your balance 3 years and 11 months early and save more than $1,000 in interest. 

The one drawback of the snowball method is that you will be paying interest on your biggest loan balance the whole time, which could cost you depending on the interest amount. However, by starting with the smaller balance loans you will feel like you are making progress as you pay off each loan more rapidly than you would otherwise.

Strategy 2: Pay extra using the avalanche method of debt repayment

Instead of tackling the smallest balances first, what if you paid off the loans with the highest interest rate first? That strategy is known as the avalanche method, which can help you reduce the amount of interest paid over the course of the loan while also paying your loan off earlier. This can be more advantageous than the snowball method, depending on the interest rates you are paying on your loans.

Take the previous example of 3 loans of $2,000, $4,000 and $6,000. Let’s say the $6,000 loan has an interest rate of 6%, the $4,000 loan has a 4% interest rate and the remaining loan an interest rate of 2%. With the avalanche method, putting an extra $50 each month towards the loan with the highest interest rate, you could pay off your loan about 4 years and 10 months faster and save about $1,489 in interest. Applying the snowball method to this scenario, you would pay your loan off 3 months faster but pay an extra $417 in interest.

It is up to you to decide if it’s more important to pay off your loan faster or save more on interest. That preference will help you decide whether the snowball method or avalanche is right for you, but the difference will greatly depend on your loan balances, interest rates and repayment terms.

Strategy 3: Refinance your student loans

Another option for paying your loans off faster is to simply refinance your student loans. When you refinance your student loans you are essentially replacing your original lender and terms with a new lender and new terms. Often when you refinance your student loan balance for the first time, you will be switching from a government-backed loan to a private one. That means you’re giving up certain protections and benefits that come with federal loans, such as income-based repayment plans or public service loan forgiveness eligibility. 

However, if you are confident in your ability to pay back the loan, you can often refinance with a private lender for your desired term at a lower interest rate. For example, say you have an average interest rate of 6% on a total student loan balance of $50,000 with 8 years left. If you can refinance that same balance at an interest rate of 4% over 8 years instead, you could save more than $4,500 in interest. If you are willing to increase your monthly payment, you can be on schedule to pay off your loan even faster.

Some reputable student loan refinancing companies include major banks and credit unions, as well as Common BondEarnestSoFiLendKey and more. Different lenders have different eligibility requirements such as credit score or income requirements.

Strategy 4: Live below your means to pay off your principal

If you are having trouble coming up with extra cash to put towards your student loan payments, it might be time to consider living below your means. There are many ways to live below your means, but you could say it is a collection of habits that will result in having more income than expenses each month. 

Make a budget and follow it closely. If you find that you are going over on expenses each month and perhaps racking up credit card debt to make up the difference, then you are living above your means. 

To live below your means requires discipline and making certain sacrifices. Here a few tips that might help you get there:

  • Use coupons and take advantage of sales whenever possible.
  • Shop for clothes and furniture at thrift stores.
  • Cook more meals at home instead of eating out.
  • Carpool or take public transit.
  • Avoid premium subscription services like Spotify or Hulu.

By tightening your wallet for entertainment and other luxuries, you will find you have more money left over to pay off your student loan debt and achieve your goal of paying it off fast. For example, if you spend $20 eating dinner in a restaurant each week you could give that up and come up with an extra $80 for your monthly student loan payment.

Strategy 5: Get a side hustle to earn more money

If you’ve done everything you are willing to do to live within your means and still find yourself coming up short, then your other alternative is to make more money. While you have your regular job that you rely on to pay your bills, your side hustle provides an additional stream of income that you can use to support your financial goals. A side hustle can be providing services in the gig economy or pursuing a creative hobby or talent for pay. Generally, your side hustle should be something you are passionate about so that it doesn’t feel like you are overworking yourself and not tending to your needs.

Need some side hustle inspiration? Consider the following ideas:

  • Rideshare driver
  • Freelance writer or illustrator
  • Weekend restaurant job
  • Selling clothes or antiques online
  • Cleaning houses
  • Dog walker
  • Fixing computers
  • Tutoring
  • Music lessons
  • Prepared foods / private dinners
  • Personal trainer

There are many ways to make extra money outside of your regular job. This extra income could go a long way towards paying off your student loans early. If you wanted to make a big dent on your loans you could choose to dedicate part or all of your side hustle income to go directly towards your balance. 

For example: Take our original snowball method scenario of three loans. If you taught 4 piano lessons a month for $100 each ($400 total) and put that towards your student loans, you would pay off the $6,000 balance in just over a year instead of ten years. It is amazing how fast you can pay off your loans when you generate extra funds with a dedicated side hustle.


It may seem formidable, but paying off your student loan early is a matter of discipline, dedication and responsibility. Choose one or more of the strategies explained above based on your specific situation. You’ll want to start by choosing to follow either the snowball method or the avalanche method. To help you come up with extra money for payments, find a happy balance of living below your means and generating extra side money to further expedite your payoff date. Figure out how fast you want to pay off your debt, then you can calculate how much extra you need to make or save each month to meet your goal. If the payment amount is too aggressive, then temper your expectations and plan to take a little more time to pay off your loans instead.

Depending on your situation, you might decide that refinancing your student loan can help, but you might also be better off with your original loan. Either way, paying off your loan faster is possible by employing the right mix of techniques described here.