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Learn the Best Way to Pay Off Your Student Loans

The best ways include finding ways to save more money, making larger monthly payments, restructuring your loans, or receiving assistance from your job to pay off student loans faster.

Published January 20, 2022

11 min read

Student loan debt can be a heavy weight to carry. The best way to lighten the load is to get rid of it. How do you do that? By paying off your loans faster than you have to.

The best ways to pay off your student loans fast include finding ways to save more money, making larger monthly payments each month, restructuring your loans, or receiving assistance from your job. In this article, we’ll discuss each of these strategies, so you can decide which one best fits your repayment needs.

Save more money

Saving more each month could help you make larger payments. This might seem to be an impossible task but it’s totally feasible if you have a plan. Here are a few ways you can set aside a little extra cash.

Cut your budget

Take a look at your after-tax income against your monthly expenses. If you’re spending more than you’re saving, you should tweak your budget to cut down on non-essential items. Making small changes could help you repay your debt sooner. For doctors and other professionals, we recommend trying the 50/30/20 budget model to help you easily keep track of expenses.

Take advantage of tax credits

In many cases, you can deduct student loan interest payments on your taxes, with a maximum deduction of $2,500 per year. And if you’re getting any tax refunds, consider applying those funds to reduce your loan’s principal. If you’re returning to school, you could also deduct tuition/fees as well. For more information on taxes benefits, visit: https://studentaid.gov/resources/tax-benefits.

Use a student loan cashback card

Some credit cards are now offering cashback rewards to help you pay down your student loans. With the Laurel Road Student Loan Cashback® card, you’ll be able to redeem 2% cashback toward your student loans with 95% of U.S. servicers.1 You’ll be able to make progress on your loans with every dollar you spend.

Pay more each month

The more you pay each month, the sooner you’ll retire your debt. Paying more each month may allow you to reduce your principal amount, which could reduce the amount of interest you ultimately pay, saving you money over the life of your loan. Learn more about the benefits of paying extra on your student loans here.

Extra monthly payments

Whether you decide to pay more than the minimum, use windfalls for extra payments, or schedule bi-weekly payments, the simplest way to pay back your loans faster is to set aside more money for them.

Earn more income

Taking on extra hours and/or a side gig can boost your income, which may allow you to make larger loan payments. Be careful to manage your time and not overstretch yourself – it’s important to pay down your debt but not at the cost of burning yourself out.

Restructure your student loan

Restructuring your loans by refinancing or streamlining your payments could help you pay off your student loans sooner.

Refinance your student loans

Refinancing your student loans could potentially reduce your interest rates, which could in turn help you pay your loans off faster with the money you’ll save in interest. With interest rates currently at near-historic lows, and the Federal Reserve now indicating they expect to increase interest rates at least three times in 2022, now may be a good time to consider refinancing your student loans. With Laurel Road, you could also get an additional rate discount during refinancing when you open a Laurel Road Linked CheckingSM account and set up qualifying monthly direct deposits. Learn more here.

Keep in mind that if you have federal student loan debt, refinancing to private loans will mean you’ll no longer enjoy benefits including, but not limited to, income-driven repayment plans, Public Service Loan Forgiveness, federal forbearance, the temporary federal loan payment and interest pause, and any other benefits offered to federal borrowers. If your finances and job are stable, the appeal of the money you could save might outweigh the advantages of the safety provided by Federal benefits.

Change repayment terms

You can work with your lender to try and shorten your loan term. This would mean your monthly payments would increase but you could reduce your interest costs over the life of a loan.

Adjust your servicer settings

You can also work with your lender to make larger payments towards the principal of your loan. Reducing your principal amount may lower your interest costs, driving your overall loan costs down. Remember to speak with your lender to see how you can restructure your payment settings.

Automate student loan payments

Some loan programs offer discounts in exchange for automating payments. This could help you lower your interest rate and guarantee that you always pay on time. If you refinance your loans with Laurel Road, we offer an additional discount for setting up automatic monthly payments from your bank account, click here for more information.

Investigate your job’s student loan repayment assistance

Depending on your job, you might qualify for student loan forgiveness and assistance programs.

Student loan forgiveness

Some jobs in public sector fields, such as education, health care, and public service, may allow you to forgive parts of your student loans. Public Service Loan Forgiveness (PSLF) is a federal program available to some nonprofit employees that forgives your remaining loan balance after you make 120 qualifying payments. Read more about federal student loan repayment programs here, or learn more about Public Service Loan Forgiveness (PSLP) at https://studentaid.gov.

Student loan assistance

Some public sector jobs may also provide loan repayment assistance to help you pay off your student loans, and some private companies are also beginning to offer student loan assistance as an additional benefit. Laurel Road partners with employers to set up this type of incentive for student loan benefits.

Best Strategies to Repay Your Federal Student Loans

If you have federal student loans, here are a few strategies to consider depending on your repayment goals:

If you want to qualify for loan forgiveness: For those employed by the U.S. federal, state, local governments or not-for-profit organizations, you can apply for Public Service Loan Forgiveness (PSLF). Learn more about qualifying for PSLF here. Other options are income-driven repayment (IDR) plans (where your monthly payment is based on your income) but be aware the focus of these plans is to lower your monthly payments (see below), rather than loan forgiveness.

If you want lower monthly payments: Go with income-driven repayment. Income-driven repayment plans establish monthly payments ranging from 10%-20% of your discretionary income. They’ll extend your loan term to 20-25 years, after which any remaining balance will be forgiven (though you’ll owe taxes on the amount forgiven). Note that decreasing your monthly payments will typically result in you having to pay more interest overall.

If you want to pay less interest over the life of a loan: Go with a standard repayment plan. This is the default repayment plan if you don’t select another repayment option. You’ll make equal monthly payments for 10 years and pay off your loans faster and with less interest than other federal repayment plans.

How Much Can Refinancing Save You?

Qualifying for a lower interest rate or shortening your loan terms could help you save money on your student loans. Calculate how much refinancing your loans with Laurel Road can save you with our student loan refinance calculator.

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Calculate Your Payments

This calculator is for illustrative purposes only and does not take into account benefits currently offered by the federal government and should not be used for loans being repaid under a federal program. For additional details click here.

  1. You will earn 2.0% in Cashback Rewards for each $1 spent on eligible Purchases if you redeem your Cashback Rewards towards your Student Loan with an eligible servicer. This equates to $0.02 in Cashback Rewards, for each $1 spent. For example, if you spend $100, you will earn $2.00 in Student Loan Credit. You will earn 1.0% in Cashback Rewards for each $1 spent on eligible Purchases if redeemed for a statement credit. This equates to $0.01 in Cashback Rewards, for each $1 spent. For example, if you spend $100, you will earn $1.00 in Cashback Rewards. Cashback is awarded based on eligible credit card purchases excluding transactions such as cash advances of any type, balance transfers, convenience check transactions, overdraft protection transfers and quasi-cash transactions.

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

 Any third-party linked content is provided for informational purposes and should not be viewed as an endorsement by Laurel Road or KeyBank of any third-party product or service mentioned. Laurel Road’s Online Privacy Statement does not apply to third-party linked websites and you should consult the privacy disclosures of each site you visit for further information.

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