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How to Pay off Student Loans Fast, No Matter How Much Money You Make

by Jen Smith, Robert Bruce

Updated July 13, 2023

Whether you’re a recent college grad or you attended college years ago, there’s a good chance student loans have impacted you.

The current American student loan debt burden is $1.77 trillion — with more than 7% being delinquent or in default.

While mortgage debt has risen with inflation by about 3.2% since 2009, student loan debt has more than doubled over the same time frame.

The stats are painfully depressing. But what does all that mean if you’re an average person trying to get by and have some promise of a future?

It means you need to prioritize paying back your student loan payments, and fast.

Why You Should Prioritize Paying Student Loans Off Fast

Easy enough to say, right? It’d be nice to pay off student debt, buy a house and not have to stress about money every month.

But to make it happen, you need to know how to pay off student loans quickly. It’s the best way to get out from underneath their burden and get your financial life on track.

If you aren’t convinced, here are some concrete reasons:

Student loan debt — whether it’s private student loans or federal — is almost never dischargeable in bankruptcy. In the rare cases that you can get them discharged, most bankruptcy courts will require you to prove three things in what’s known as the Brunner test:

  1. Based on your current income and expenses, you can’t maintain a minimal standard of living if forced to pay off student loans.
  2. Your inability to pay is likely to continue for a significant portion of the repayment period of the student loans.
  3. You have a history of making loan payments.

Even if you eventually qualify for forgiveness, you’re likely to owe taxes. Unless your federal student loan debt is discharged under the Public Service Loan Forgiveness (PSLF) program, which is only available to government and nonprofit employees, you’ll have to claim the forgiveness on your taxes in the year your student loans are forgiven and pay taxes on that amount as if it were income for the year.

If you’re unable to make that payment to the IRS in a lump sum, you’ll have to pay fees and interest until it’s paid in full.

The consequences of student loan repayment will continue to hold you back. According to data from the office of Federal Student Aid, borrowers between ages 50 and 61 had the highest average student loan debt at the end of 2022 — more than $45,000 is owed on average.

And you still want to retire, right? The later you get started investing in your 401(k) and IRA, the more money you’ll need to contribute to retire.

How to Pay Off Student Loans: 11 Simple Strategies

So now you see why it’s so important to pay off student loans quickly. But how do you do it? We’re here to help you figure that out with these 11 strategies to paying off student loans fast.

  1. Build an emergency fund.
  2. Take inventory of your student loan debt.
  3. Figure out if you qualify for Public Service Loan Forgiveness.
  4. Determine your eligibility for income-driven repayment plans.
  5. Lower your interest rates.
  6. Make a plan for repayment.
  7. Budget for your monthly payments.
  8. Get a side hustle.
  9. Cut your expenses.
  10. Make above-and-beyond payments.
  11. Go for a raise or promotion.

1. Build an Emergency Fund

It may sound counterintuitive to save money instead of throwing it at your loan balance, but think about it: Emergencies come up all the time, especially in times when you’re low on cash.

Pro Tip

Aim to save three to six months’ worth of expenses, and you’ll find your student loan repayment will face fewer setbacks.

By having a rainy day fund in a savings account, you won’t have to put those emergency expenses on a high-interest credit card or use the money you were going to put toward your student loans.

2. Take Inventory of Your Student Loan Debt

Log in to all your loan servicers’ websites, and write down the full amount you owe to each. If you’re unsure who your student loan servicers are, you can use sites like Credit Sesame to run a soft credit check and see everyone you owe money to.

You’ll also need to determine if you have federal or private loans. You can check the National Student Loan Data Center for a list of your federal loans. Any loan not listed there is most likely private.

This is important, because your options for repayment will differ based on whether your loan is backed by the federal government.

3. Figure Out if You Qualify for Public Service Loan Forgiveness

Eligibility for the Public Service Loan Forgiveness (PSLF) program seems straightforward: If you’re a government or nonprofit employee, you can enroll in PSLF and have your federal student loans forgiven tax-free after 120 payments.

PSLF was revamped in late 2021 to help more qualified borrowers have their loans forgiven. Those changes expired in October 2002, but the program still exists. If you’re working in an eligible field, it’s a no-brainer to at least try for it.

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