How to Pay Off Your Student Loans

Created by Henry Steele

By Henry Steele - August 22, 2017
Reading Time: 5 minutes
Reading Time: 5 minutes

Many students today rely upon student loans to pay for their college education. Matter of fact, college graduates in America today hold more than $1 trillion, according to some estimates. This is because getting a college education is quite expensive.

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For many colleges, the cost each year of attending school, including tuition, room and board and books is more than $30,000. Over four years, it is possible to run up debt of more than $100,000. Even if you live at home, you still can run up debt of $30,000 or more. In fact, the average amount of college debt for students as of 2015 was approximately $30,000.

Once you graduate from school, you will typically have a six month grace period before you start paying off your debt. At that point, you will need to start making your student debt payments. What are some of the best, most effective ways to pay off your student loans? Below are some expert tips to make the student loan balance drop faster.

Treat Your Student Loan Like a Mortgage

If you have enough income, it is strongly recommended to treat your debt like a home mortgage. That is, pay above the minimum amount to pay off the principal faster. For instance, if you have a $25,000 loan with a 6.8% interest rate, a 10 year payback would run you $288 each month. If you can afford to pay $700 per month, you will pay off that loan in just three years.

Another smart move is to send in more payments. Send in a check every 14 days rather than every 30 days. Every dollar you pay above the minimum reduces the interest paid and the loan term.

Create a Financial Plan

Experts also advise creating a three or five year financial plan to pay off your college debt. It often helps you financially if you have a clear goal in place, such as having your student loan debt fully paid off in five years.

For example, if a couple has $50,000 in student loan debt and make $100,000 per year combined, they can establish a budget and reduce their discretionary spending. With enough discipline, it is possible to pay well above the minimum amount every month and pay off the loan in less than five years. In many cases, paying the minimum payment would result in paying on the loan for 15 or 20 years.

Establish a College Loan Repayment Fund

Each month, have money moved automatically into your savings account to pay down your debt. It works because it is forced and automatic. It makes it easier to set aside additional money for paying down debt, which might have just been used to go out to eat.

That account should only be used for paying off your student debt. Do not use it for anything else.

Have a Part Time Job in College

Working while in college is one of the best ways to reduce your college debt. Paying some of your student expenses with work will pay off big in the long run by saving you thousands in interest. If you can work to save $1000 per month, that is $12,000 less each year in student debt.

Have Self Discipline

The biggest reason that people have trouble paying off their student loans quickly is that they want to buy ‘fun’ things that they cannot really afford instead. Let’s face it: Paying off student debt isn’t fun. Buying clothes, going out to dinner and going to bars is fun. But if you want to pay off your debt years faster, you have to have the financial discipline to make your additional debt payments instead of enjoying instant gratification.

People who pay off their student debt fast live within their means and save money. Also keep in mind that there are options to student loans in many cases.

Those options are outlined below.

Alternatives to Student Loans

If you already have student debt, then you need to focus on paying it off as fast as you can. If you have not yet accumulated student debt, know that there are sometimes options to running up thousands of dollars in debt you have to pay back for years. Here are some of your best options below. If you are already in school and running up debt, check into these options right away. You might be able to save yourself a bundle.

Student Grants

The US government, state governments and many universities offer generous grants to students who need help. A grant is financial aid that need not be paid back. Grants target many types of students, such as those with acute financial need, minorities, females, the disabled and students who are in a field where there is a shortage. Grants will not usually cover your entire tuition, but they can definitely help!

The Federal Pell Grant is the most common option. This grant offers up to $5815 per year for the 2017 academic year. There also are state and school specific grants available. You should check with your financial aid office.


Fewer than 1% of students get full ride scholarships. But luckily most students can win some amount of scholarships if they look hard enough. You may be able to find a scholarship for almost anything.

Most universities offer need and merit based scholarships to students at their university. They often go to the students either with the best grades and/or the most financial need. But you do not have to be in those groups to score some scholarship funds. You might be able to find scholarships through private organizations, including banks, credit unions, civic organizations, businesses and even private individuals.

One thing to remember is that too many students spend only an hour or two applying for scholarships, give up, and sign the student loan papers because it’s fast and easy. It is recommended that you make applying for scholarships a temporary ‘part time job.’  If you spend 20 hours applying for scholarships and get $1000, you have made $50 per hour, and saved yourself $1000 plus interest in student loan debt. Experts advise applying for small scholarships under $1000 because fewer people apply for them.

Work Study

Federal work study programs offer you the chance to gain experience working while you are in school, and also earn an income. The majority of work study jobs are very basic part time jobs, such as working in the kitchen or library. However, you may be able to find a job at your university in your area of study.

As you earn income while in college in your work study program, you can use some of your income to pay for college. Note that income from work study does not affect your eligibility for financial aid. If you are in a regular job, your aid eligibility drops by .50 for every dollar over $6400 you make in a year.

Bottom Line

There are ways to both pay off student loans faster, and to avoid them in the first place. People who do the financial legwork and research will find that they can save themselves thousands of dollars over the years and eliminate debt quickly or avoid it entirely.


Henry Steele
Managing Editor
Henry is Managing Editor of He is a seasoned business professional who regularly consults with local business's throughout Southern California. Henry pursued his undergrad in Business and Economics at the University of San Diego and gained valuable life changing experience through a unique internship upon graduation.

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