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Pay Off Student Loans

How to Pay Off Student Loans Faster

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Pay Off Student Loans Quicker With These 11 Simple Tips

Paying off loans is a challenging task. Today’s young people are not the only ones plagued by student loans. The debt is a nuisance for adults too. If you have taken on a student loan, you may want to get rid of it faster than the lender requires. There is no magic bullet, but there are things you could do to pay off your debt faster.

Pay More Than the Minimum Amount Due

Paying more than the minimum due is one of the easiest ways to accelerate your student debt repayment. Not only does it reduce the balance of the debt, but it also saves you money on interest. Set up your automatic deductions with this additional amount so that you are not tempted to change your mind later.

Consider Debt Consolidation Options, But Understand the Consequences

If you are paying high interest on your student loan, consider consolidating or refinancing the loan. You might consider a student loan consolidation to take advantage of lower interest rates, or you might look into refinancing using a bank or credit union. Debt consolidating can help save you thousands in interest and clear off your debt sooner than expected.

However, please understand that by refinancing, you lose many of the consumer protections you have under a student loan, such as the right to defer your payments in cases of hardship or if you go back to school full time. If you miss payments, you could be sent to collections, sued, and have your wages garnished.

On the other hand, refinancing to a personal loan means that your debt is no longer protected in bankruptcy court. Because this is a legal protection student loan creditors enjoy, the refinancing lender will usually charge higher interest rates than those charged on government-guaranteed loans. While interest on most federal student loans is below 5% (graduate loans have higher rates), refinancing to a personal loan could mean interest rates in the upper single-digit or even close to 20% annually.

Many such lenders might even advertise monthly interest rates to minimize the shock of their APRs. If, for example, you see a lender promoting a monthly interest rate of 1%, that equates to 12% annually. Likewise, 1.5% monthly equates to 18% ARP and 2% monthly equates to 24% APR.

Note: While consolidating debt, you can choose a loan term much shorter than the original one. Choosing a shorter term will increase your monthly payments, but it will also help you save money on interest and pay off your debt faster.

Use Extra Income Towards Paying Your Student Loan

Whenever you get a salary hike or a bonus, add a portion of it to your monthly student loan payment. Consider this option: Add 50% of the extra income to your student loan payment, 30% to savings, and 20% to entertainment or discretionary spending to have some fun.

Take On Extra Work

Put your skills to work. Work part-time, overtime, on weekends, or pick up freelancing projects to generate a new income stream. These small extra earnings can help you get out of student debt in a hurry.

Sell Things You No Longer Use

Dispose of things you no longer use, which may include clothing or shoes you no longer wear, a PlayStation or Xbox gathering dust below your TV, the bicycle or motorcycle you ride once a year, the treadmill in your TV room you use to dry your laundry, kitchen appliances neglected in dark recesses of your cabinets, and little-used furniture, to name a few.

Rent Out the Spare Room

Whether you live alone, with your family, or with a room, if you have a spare bedroom, you might consider renting it out. Make sure you read through applicable rental agreements or homeowners association covenants before giving this option a try. Also, use a written lease or sub-lease agreement before ever allowing anyone to move it.

Accept Help From Family

Rather than giving you birthday or holiday gifts, your family might be happy to contribute toward your student loan debt repayment if you just let them know about the possibility. If the student loan debt was for one or more of your children, be sure to ask them to pitch in, too. If they are still in school, a small amount can keep them connected to the fact that their education is not free and warrants their self-control when it comes to their personal spending. If your child has graduated, then you should discuss together what they can contribute. Even small amounts can make a significant impact on your outstanding balance.

Negotiate a Lower Interest Rate

Reach out to your lender by phone or through their online messaging portal. Not many people realize that a single call to your lender or email might save you thousands of dollars in interest. Through simple negotiations, you can lower your interest rate by discussing your repayment plan with the lender.

Ask Your Employer for Help

There is a growing trend among medium and large employers to offer financial assistance to their employees to retain talent. If you have not checked out your benefits package lately, look it over or contact your HR department to see whether your employer can help you repay your student loan.

Direct Payments From Your Paycheck

Set up an automatic deduction of your loan’s repayment amount to be sent directly from your paycheck. Make sure your paycheck date corresponds appropriately to your payment due dates in order to avoid late payment fees. Automatic deductions reduce your chances of defaulting on your loan.

Streamline Your Budget

The last option to really reduce your debt is to reduce your monthly spending wherever possible.

Find ways to save wherever you can. Even small adjustments to your monthly spending can have a big effect on your debt repayment when you put it towards your student loan.

Final Thoughts

Getting out of student loan debt faster than your current plan requires will be one of the best financial decisions you could ever make. There are quite a few ways to manage your debt more effectively, but the worst move you could make would be to do nothing. Get your game plan on and start working to reduce your student debt in a hurry with these tips. If you’re struggling with your loans you may want to seek student loan counseling for additional information and ideas that could help speed up your repayment.

About the Author

Rick Munster

Rick Munster

Rick Munster is a personal finance expert and author with over 21 years of experience in the credit counseling industry. He currently serves on the board of directors for the Financial Counseling Association of America and has written over 200 articles on personal finance. Rick's expertise has been recognized by several prominent online organizations, which have quoted him on issues related to credit counseling, debt management, and financial education. With more than 20 years of experience at Money Fit, a non-profit credit counseling organization, Rick has established himself as a trusted authority in the field of personal finance.
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NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

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Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

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Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
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  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

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The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).