5 Tips For Paying Off Your Student Loans in 4 Years or Less

Follow their advice and you should be able to become debt-free, too

Apr 20, 2014 at 2:30PM

Graduation
Source: Flickr / Md saad andalib.

No one wants to begin their adult working life saddled with college loan debt – yet that is precisely the situation in which many graduates find themselves these days. If the thought of paying back four years' worth of loans over the next two decades makes your head spin, take heart. Others have been in your situation, and have managed to rid themselves of onerous student debt in only a few years.

Here is some of the best advice culled from a handful of stories from college graduates who were able to take control of a daunting financial situation and emerge victorious – and debt-free – in an amazingly short span of time.

Tip No. 1: Know your enemy
Apparently, it's astoundingly easy to graduate from college and have only the most rudimentary knowledge about your student loans. The first step in tackling this problem is to learn the exact nature of your debt. One young woman who repaid $90,000 in loans noted that her first step in the process was going to the National Student Loan Data System and assessing her loan profile. All the success stories began by knowing intimately the terms of their student loan portfolio.

Tip No. 2: Decide to pay off the debt early – no matter what
Making the decision to pay down student debt aggressively was pivotal, an active decision made by all who succeeded in becoming debt-free. To get to that point, one described moving back with her parents, while another shared stories of biking to work to save bus fare. The tenacity required to stick with the plan through thick and thin was a common thread in these stories.

Tip No. 3: Prioritize your debt
Once these people knew their debt situation, they were able to see that they had several loans, not just one, and that some had higher interest rates than others. Each set up a plan to pay off these loans, starting with the one with the highest rate of interest. Most also had credit card debt, which was also prioritized and paid off.

Tip No. 4: Set up a budget, and stick to it
This part is of paramount importance, and goes hand-in-hand with Tip No. 2. Having the will to dedicate themselves to becoming debt-free led to taking a good, hard look at their personal finances, which almost all admitted were a mess. One young woman learned about budgeting from a personal finance workshop, and ruthlessly squeezed extras out of her monthly expenses. She paid off a combined student loan and credit card debt of nearly $25,000 in less than four years.

Tip No. 5: Keep track of your loan profile, and contact the servicer promptly if problems arise
Don't expect your loan servicer or lender to get everything right – check your paperwork often, and call if you see an issue. The determined college graduate who noticed that her extra payments were being applied to future payments, rather than principal, made a point of straightening out these errors right away.

Another noted that she didn't feel the burden lift from her shoulders until she received the letter from her lender saying that the debt had been repaid – so make sure that you also receive such a letter, and hold on to it. After all the hard work you'll have accomplished by following the advice of these savvy individuals, you might even want to have it framed.

Save money on your tax bill, too
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers