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Student loans suck. Plain and simple.
Although I paid off my student loans years earlier than the loan term and faster than most people who graduated around the same time as me, there are definitely a bunch of things that I would have done differently to pay them off even faster.
I come from a family whose parents (mainly my dad) put a huge emphasis on getting a good college education, so when it came time to pick a school, money was not a factor.
Despite what some may think, I am not exceptionally smart. The school I chose to attend gave me $20,000 in scholarship money. This may sound like a lot, but it wasn’t even enough to cover tuition for a single semester.
After 3 1/2 years I graduated from college with a bachelor’s degree.
I also graduated with over $37,000 of debt in student loans.
My parents had helped me as best they could with my loans while I was attending school, but once I graduated I chose to take full responsibility for my own student loans. I was an adult and wanted to act like one. Unfortunately that meant paying my own loans.
I owed money to Citibank, Sallie Mae, Discover, your mama.
The job I landed out of college didn’t pay much, but I continued making a little more than the minimum monthly payments.
Months later I landed a job at a market research company, which paid a little more.
Since I owed the least amount on my Sallie Mae loan, I paid more of it each month until it was paid off. Having one less loan felt like a big accomplishment at the time.
Whenever I received a promotion or raise I would make bigger payments on my loans.
The interest rates on my loans were very low, but at the rate I was going I’d never pay off my student loans. At the time, Discover gave me a 0.25% decrease on my loan’s interest rate if I made my payments automated. Yes please!! I didn’t do the math, but knew that even a little of a percent off thousands of dollars would at least save me a few hundred.
I had started a new job and moved in with my husband full-time. This made me look at my loans even more. I started paying them down even more aggressively. I drained a small savings account I had to pay my loans down even more. I kept doing calculation upon calculation to figure out when my student loans would finally be paid off.
I was shaving years off the loan terms. The closer I came to paying my student loans off the more aggressive I became with my payments. I used the money I received from raises, gifts, tax returns, and any extra money I could get my hands on.
I finally paid off my student loans.
Looking back, here are the things I did right and what I could have done differently to pay off my loans even faster.
Make a plan early on.
Writing down a grand total of what you owe and seeing it all in front of you makes the debt that much more real. You start to realize how many zeroes are in that number and really start to think how many YEARS it’ll take to be paid off. Unless you get a high-paying job or make some changes, you’ll be chained to your student loans for FOREHHHHHVERRRR.
What killed me was knowing how much I would be paying in interest if I only paid the minimum.
I’d like to say that I graduated a semester early because I was super ambitious and a go-getter. Really I was just looking at how much money I could save myself by graduating a semester early and not breaking my back.
How soon do you want to pay off your student loans? Months, years. Use a loan calculator to figure out how much more you have to pay each month to make it happen. This is not something that is set in stone, but makes a great starting point.
Get aggressive and mad at your student loans.
Don’t just accept that you’ll have student loans for the rest of your life. Treat your loans like an emergency. I didn’t have many financial commitments when I graduated. No kids. No car loan. No mortgage.
I was very passive with my student loan debt in the beginning. It wasn’t until I got serious with my student loans that I was able to start chipping away at them.
Make extra payments that you won’t cause you any additional financial burden.
Round your monthly payments up. It they are $420, try to pay $450. Your objective should be to pay more and more when you can. If you can make it $500 a month even better.
Reallocate where your money goes. E.g., If you normally spend $50 a week eating out and you don’t eat out one week, put the $50 toward your loans.
Consolidate Multiple Loans
If you have more than one loan and aren’t close to paying any of them off look into consolidating your loans into one loan.
Consolidating your loans will allow you to make one monthly payment on all your combined loans. Make sure you do your research and weigh the benefits.
What will be the new interest rate, what fees are associated with consolidating, do the benefits outweigh the fees?
I suggest doing this with your student loans as soon as possible. Once you calculate the maximum you can pay each month, have it go through automatically. This will be one less thing for you to worry about or forget.
Whenever you have extra money to spare go in and manually make the payment.
These payments aren’t set in stone. You can always go back in and increase the payments as you see fit.
This is something I did not do, but wish I had.
I went to college hoping to graduate with this really great paying job. Reality was I didn’t land a job until months later and that initial job probably paid me the same as they probably would have paid me without my degree.
Even if you take a job that isn’t your dream job or doesn’t ideally pay what you want, having some form of income is better than none.
Having a side hustle like selling on eBay, babysitting, having a garage sale, walking dogs, etc. on top of your regular job can significantly help decrease the term of your loan.
Mistakes to Avoid
Paying only the minimum balance each month.
Not checking with the loan company if there is a benefit to paying your loans bi-weekly as opposed to monthly. Not asking if they reduce interest rates for automatic payments.
Making late payments. You don’t want this to affect your credit score. This is why you should have an automatic payment set up even if it’s the minimum.
Remember student loans are NOT forever. Set yourself up for future success by paying your student loans as aggressively as your budget will allow.
If you have student loans there is no such thing as extra money. Have some money saved for an emergency fund and that’s it. Don’t be like me and have money sitting in a bank account gaining little to no interest. Chances are the interest you are paying on your student loans are higher.
If you’ve paid off your student loans or in the process of paying them off, leave a comment below on what is working or worked best for you.