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How To Pay Off Student Loans

Published January 12, 2022


Student Loan Repayment

There’s a lot to wrap your head around if you’ve borrowed money for school.

You might be wondering, what’s the best way to repay my loans? How fast should I aim to pay off the debt? Is there any way to delay payments while I get my finances in order? What about forgiveness? These are common questions, and this article aims to provide some ideas and suggestions to help you ask the right questions and take action. In our experience, the sooner you do, the better you’ll feel.

How To Start Repaying Student Loans

With another record high of 1.7 trillion in student loan debt in 2021, the thought of taking out loans today is not an easy one for many. As a borrower, when you’re confronted with your first payment, it can feel pretty overwhelming. Here are some things to consider before payment comes due:

  1. Grace period: Your grace period is a time frame of 6-months after graduation, during which you do not have to pay back any money. Utilize your grace period to start budgeting for your upcoming loan payments. Set aside a little extra cash per month, and start to think about what your repayment plan could look like to budget accordingly.
  2. Income status: How’s your income looking? Have you landed a job, or are you looking for work? You’ll have the 6-month grace period to think about how you’ll fund your repayments. This is a great time to get serious about planning for the upcoming payments so you can avoid forbearance (or deferment) or other repayment options that could cost you more in interest over the life of your loans. Make sure you’ve got the date for your first payment clearly marked in your calendar, and use it as means to motivate yourself and plan your budget carefully.

How To Pay Off Student Loans Quicker

Once you’ve started making regular monthly payments on your loans, you might be tempted to think of ways to pay down your debt sooner. Though it’s not for everyone, this is when you might consider refinancing, through which you can alter the terms of your loan to suit your needs. Here are a few of the most common ways to change the length of your repayment term.

  1. Pay More

    Paying more than the minimum.

    Faster repayment? Yes. By paying down principal at a faster rate, you reduce the overall cost of the loan and prevent additional interest charges from accruing over the life of your loan.

    Paying twice a month.

    Faster repayment? Yes. Making payments 2x per month rather than once can reduce the amount of interest you pay.

    Refinancing to reduce overall interest.

    Faster repayment? Maybe. Reducing your interest by refinancing to a shorter loan term and paying more towards your principal could result in paying off your loans faster, but your monthly payments may be higher overall. On the other hand, with a lower rate, you could refinance to the same term length (e.g. 10 yrs.) and simply pay less interest, without paying off your loans faster.

  2. Pay Less

    Change the terms of your loan to pay less

    Faster repayment? No. If you lengthen your term length through refinancing, you’ll pay less per month, but for a longer period of time (possibly with a higher interest rate). Alternatively, if you refinance to reduce your term length, you could pay more per month in exchange for paying off your loans sooner and potentially saving on interest over the life of your loan.


    Faster repayment? No. Forbearance or deferment offers temporary payment relief if a borrower has a qualifying reason to delay their payments, which may vary by lender.  It is important to understand the type of forbearance you are requesting and how it impacts your payment schedule afterwards. Currently during the COVID-19 pandemic, borrowers with federal loans are being placed in administrative forbearance.

    Income-Based Repayment

    Faster repayment? Maybe. Income based repayment (IBR)offers payments capped at up to 10% of a borrower’s discretionary income, allowing the borrower to pay based on their current income level. Your balance will be forgiven after a certain future date (generally 10, 20, or 25 yrs). Be aware that under certain programs, there are tax implications.

    Enroll in Autopay

    Faster repayment? Maybe. Enrolling in your lender’s autopay program could come with interest-rate discounts and will help keep you on track to make regular payments and avoid default. Many lenders offer interest rate discounts for using autopay, and some may apply the discount directly to principal (instead of your monthly payment) which could actually help you pay off your loans faster if you use autopay consistently.

  3. Save More For Loans

    Modify your budget

    Faster repayment? Maybe. A few cuts in your spending here and there can go a long way towards long-term financial wellness. By putting more aside in your budget every month for student loan payments, you will have the opportunity to pay more and, as a result, pay off your loans faster. Yes, you must be willing to sacrifice a few things—not easy, but it’s worth it!

    Apply for assistance programs/grants

    Faster repayment? Maybe. Certain grants and assistance programs can provide some relief towards student loan debt.

Repay Student Loans On Your Terms With Refinancing

As mentioned, student loan refinancing can be a very useful way to change the terms of your loan, whether it’s lowering your monthly interest payments or changing the speed of repayment. Whatever your needs, refinancing offers the flexibility and potential added savings that could make a real impact on your future financial health.

If you have student loans, a strong credit profile, and a low debt-to-income ratio, refinancing with Laurel Road could save you thousands over the life of your loans.1 Get in touch today to see how we might be able to help, or check out more of our resources for all of your student loan questions.

  1. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.

In providing this information, neither Laurel Road or KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.

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