Best Ways to Pay Off Student Loans

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Contributor, Benzinga
December 10, 2021

Paying off student loans can be daunting. It might take months, or even years, before you feel like you’re really making progress.

A unique payment plan can help you pay off student loans more quickly. By implementing effective strategies, you can even save money in the long run. 

Take a look at the best approach to use when paying off student loans. 

1. Review Your Financial Status

It can be overwhelming to keep track of bills, especially debt payments. But awareness is important as you prepare to pay off your student loans. 

Start by reviewing your finances. You want to know exactly how much debt you;re carrying and how much your payments come to. 

Next, track how much money you have coming in. Ultimately, you want to arrange your budget so you have more than enough money to make your payments. Plus, you may need to adjust other aspects of your budget so that you can afford your payments.

2. Make Extra Payments

If you have enough money to make extra payments, do so. If not, try to adjust your budget to make room. This will help you cut down your principal debt, pay off your loans faster and save on interest in the long term. Even if you are paying an extra $10 every month in the beginning, you can escalate the extra payments over time.

There’s never any penalty for paying student loans early or paying more than the minimum. But there is a catch. Some student loan companies may apply the extra amount to the next month’s payment. Make sure to verify your provider’s policy. If possible, reach out tot he lender and ask them to apply extra payments to your principal balance, thus dropping your interest payments and accelerating the timeline of your loan.

3. Refinance

High interest rates can make it more difficult to pay off student loans. If you think you might qualify for better rates, or if your credit score has improved, you may be able to save money and get out of debt faster by refinancing. 

Here are some of the top student loan providers that offer refinancing: 

4. Student Loan Forgiveness

Forgiveness programs are some of the best ways to pay off student loans. They can help you eliminate all or a portion of your debt given a litany of requirements. However, each program comes with strict guidelines you must abide by in order to qualify. 

The most well known student loan forgiveness program is Public Service Loan Forgiveness (PSLF). It’s only available to individuals in specific career fields (such as the public sector) with government-issued loans. 

If you have private loans, there’s a chance you could quality through a combined Direct Consolidation Loan

5. Find Discounts

Even if you don’t qualify for forgiveness programs, you may find new discount programs. Many private lenders will offer you a discount if you meet certain criteria. You might also receive a discount just by setting up automatic payments. 

Reach out to your student loan company and ask about any discounts they offer and how to qualify.

6. Tax Deductions

Did you know the interest payments on your student loans may be tax deductible? Whether you have government-issued student loans or private loans, you may be granted a deduction for up to $2,500, depending on your adjusted gross income or AGI. 

Make sure your filing status is anything other than “married filing separately“ and that you’re legally required to pay interest on your student loans. 

If you are able to deduct your interest payments, you could end up saving hundreds, if not thousands of dollars. Use these additional funds to make extra payments and eliminate your student loans that much more quickly. 

7. Autopay

Setting up autopay ensures you never miss a student loan payment. It’s the best way to keep track of your bills and maintain a healthy credit score.

Government student loan providers offer a 0.25% discount on your interest rate, and some private lenders offer even more for such a simple change to your payment habits. When you agree to automatic payments, lenders feel more confident they will get paid on time.

8. Cut Out Unnecessary Expenses

If you don’t have a budget you actively review, chances are that a good chunk of your money may be going to miscellaneous items, like clothing, tech gadgets, subscriptions and more. 

Take a hard look at your spending habits and try to identify any areas you could cut out. Simple things like making your own food or coffee can help you save big in the long run. 

It’s never fun to cut down on your spending. But people find they are just as satisfied, if not more, to live below their means if it means eliminating student loan debt faster. 

9. The Snowball Strategy

The snowball method is a popular strategy for paying down debt. Many people say it’s helped them get out of debt faster and relieve stress surrounding their finances. 

The snowball strategy works for any type of debt. You start by listing all your debt payments and organizing them from smallest to largest. 

Then, you take any extra money you have and concentrate it on paying off the debt with the smallest balance. Make sure to continue making the minimum payment on all your other obligations. 

After you’ve paid off the debt with the smallest balance, you tackle the next largest debt and so on

until your money is “snowballing” towards making your student loans disappear.

10: Use Unexpected Income

Have you asked your boss for a raise? Have you received a larger than expected tax refund? Maybe you received an unexpected inheritance? 

If you find yourself with extra cash, don’t waste it on an impulse buy. Instead, try to live below your means and use every additional dollar you have to pay down your student loan debt. 

11. Pay off capitalized interest

Capitalized interest is backed-up interest you haven’t paid off. Capitalized interest happens when your payments are in forbearance or deferred. Some people find they have capitalized interest from when they were a full-time student. 

Capitalized interest is added to your principal balance. In other words, you’re charged interest on capitalized interest. As you can imagine, this is incredibly pricey over the long run and can hinder your efforts to pay off the loan quickly. Try to focus additional money towards paying off your capitalized interest or speak to the lender about adjusting the interest that was charged to your account.

Stay Motivated When Paying Off Student Loan Debt

No matter which strategy you use, paying down student loan debt takes time. It’s consistent, steady progress that generates the best results. Stay motivated and try not to divert from your plan. Even if things may be going slowly, you’re getting closer to being debt free every day!

Frequently Asked Questions


Q: Is it smart to get a loan to pay off student loans?


It depends. Getting a new loan to pay off your student loans is a common practice known as refinancing. In some cases, refinancing can actually help you get out of debt faster. This is only the case when the interest rate on your new loan is lower than the interest rate you’re currently paying. 

Refinancing also comes with fees, so you’ll need to take those into account as well. As long as you do the math and the numbers add up, it could be a smart move to refinance your students loans. 



Lend-Grow offers 5-, 10-, 15-, 20- and 25-year student loan refinance terms with fixed rates as low as 2.80% APR and variable rates as low as 1.89% APR. 

Lend-Grow pays down your loan, too — 0.10% APR every month for 3 years! Here’s what this means: Lend-Grow deposits 0.10% APR of your loan amount funded each month for up to 3 years (as long as your account is active) with payback rewards. 

Lend-Grow deposits the payback reward directly to the loan account you specify at the time of Payback Reward enrollment. Payback reward is not a rate discount and you must continue to meet your full payment obligations with the lender each month.