8 Ways to Pay Off Your Student Loans on Time -- or Early

If you’re saddled with student debt or in the process of racking it up, you’re in good company. An estimated 44 million Americans are on the hook for student loans, and collectively, borrowers owe a staggering $1.48 trillion. Not only can your loans monopolize a large chunk of your income, but the very idea of being in debt can be a source of untold stress. So if you’d rather that debt not loom over you like a black cloud for many years to come, here are some strategies for knocking it out on or ahead of schedule.

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A good way to ensure that you pay off your student loans on time, or even early, is to borrow as little as possible. You can minimize your debt in a number of ways. First, try accelerating your studies so that you’re able to graduate early. Leaving college even one semester ahead of schedule could shave thousands off of your total debt load.

Another option is to lower your education costs by transferring to a less expensive school. For example, switching from a private college to a public four-year in-state school could save you around $25,000 annually on tuition alone. Finally, consider commuting from home rather than living on campus if you’re close enough to do so. Room and board will generally run you roughly $11,000 at a public college and over $12,000 at a private one, so if you can cut out that expense, you’ll rack up less debt during the remainder of your studies, thereby making it easier to pay off.

Many colleges offer work-study opportunities for students looking to earn money while at school. Even if you don’t get a job directly through your university, chances are, there’s something available in the town or city you’re living in during your studies. And if you’re willing to put in a little extra effort, you can accumulate a nice chunk of cash so that by the time you graduate, you have the money to pay off a large portion of your loans before interest starts to accrue. 

When it comes to student loans, you generally have two choices: federal loans, and private ones. If you’ve already maxed out the former, you might consider signing up for the latter to give yourself access to extra money for college. Don’t do it. Not only do private loans offer far fewer protections for borrowers, but they often come with interest rates that are exorbitant compared to what federal loans charge. Worse yet, some private loans come with variable interest rates, which means that your monthly payments could climb over time, thus making it more difficult to keep up. 

ALSO READ: Your 2018 Guide to Federal Student Loan Repayment Plans

When you’re just starting out in the working world, there’s a good chance your salary will be mediocre at best. But if you’re willing to move back in with your folks after graduation, you’ll be able to bank a much larger chunk of your earnings and apply that money to your loan balance. Not only will living at home spare you from paying rent, but you’ll also save on utilities, and possibly food (if your folks are willing to let you raid the fridge) and transportation (if you’re able to share a car with a parent). 

Performance bonuses are pretty common in the workforce, and if you do well at your job, there’s a good chance you’ll snag one year after year. And if you resist the temptation to spend that cash and instead apply it to your outstanding loans, you’ll be debt-free sooner than your original repayment schedule allowed for.

Imagine you graduate with $30,000 in debt. The interest rate on your loan is 5% and you're set up for a 10-year repayment plan. If you get a bonus later this year that gives you $2,000 after taxes and apply it to your loan, you’ll be done with it 10 months early. The same concept applies to any extra cash you come into, whether it’s a generous birthday gift or a tax refund, so be smart about maximizing those windfalls.

Refinancing essentially means swapping out your existing loan for a new one. If you took out private loans with high interest rates, chances are, you'll snag a lower rate by refinancing. That, in turn, will lower your monthly payments so that you're less likely to fall behind on them.

Ridding yourself of student debt sooner might boil down to the career choice you make. Certain jobs, like teaching or public service roles, offer student loan forgiveness provided you meet the requirements involved. For example, if you took out Direct or Stafford Loans and become a teacher, you may be eligible to have up to $17,500 of your outstanding debt forgiven. This is just one example of many, so it pays to read up on student loan forgiveness, provided you took out federal loans. If you borrowed privately, you’re unfortunately out of luck.  

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There comes a point when you can only cut so many expenses from your budget to free up money to pay off your loans. If you’re struggling to eke out savings from your salary to knock out that debt, then it pays to get yourself a side hustle. The beauty of having a second job is that the money you earn won’t already be earmarked for other expenses, which means you should, in theory, be able to save it all and apply it to your outstanding debt. Keep up that side hustle for a couple of years, and you might be debt-free before you know it. 

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