It can feel impossible to pay off student loans, but there are plenty of tips and tricks that will show you how to pay off student loans fast.
Education can be very expensive causing many students to need student loans in order to pay for tuition, books, school supplies, and even housing while they're in school. Thankfully, there are many resources out there that can make it easier to figure out how to pay off student loans faster so you don't remain in student loan debt for the rest of your life.
How Should I Pay Off My Student Loans?
Did you know that there are actually many different ways to pay off student loans that can help you pay off your loans quickly and efficiently? Student loan repayment plans can help you divide and conquer your debts with a payment plan that fits you and your circumstances best.
Below are the 4 different kinds of student loan repayment plans you have to choose from:
1. Standard Repayment Plan
The standard repayment plan is available to everyone with student loan debt. It is the basic or first choice of repayment plans you have to choose from. Many people are put on the standard repayment plan by default.
This student loan payment plan has a fixed monthly payment amount. It is also designed to have you finish paying off your student loans in 10 years.
The pros of the standard repayment plan are that the monthly payment stays the same, so you don't have to worry about your payment amounts fluctuating at all.
But in order for this plan to finish paying off your student debt in just 10 years, these monthly payment amounts are usually higher.
Paying more each month for only 10 years can help you pay a lot less in student loan interest overall, but it can take more out of your monthly budget in the meantime.
2. Graduated Repayment Plan
The graduated repayment plan is also available to everyone with student loan debt. This student loan payment plan does not have a fixed monthly payment amount, but it is also designed to finish paying off your loans in 10 years.
The graduated repayment plan does not refer to a student's graduation, rather, it refers to the gradual increase in monthly payment amounts throughout the life of the loan.
This plan can be great if you don't mind your monthly payments getting bigger over the years, if you'd like to finish your loans in 10 years, and if you'd like to at least start out with smaller monthly payments.
3. Extended Repayment Plan
The extended repayment plan is not available to everyone with student loan debt. Instead, it is only available to Direct Loan borrowers who have more than $30,000 in debt.
This plan can have fixed or graduated monthly payment amounts and is designed to have your loans repaid in 25 years. So if you have a Direct Loan and more than $30,000 still in debt, and you want a repayment plan that takes a little longer in order to get smaller monthly payments, then this plan might be right for you.
4. Income-Driven Repayment Plans (IDR)
Income-Driven Repayment Plans (IDRs) base your monthly student loan payment on how much money you make and your family size. The 4 types of IDR plans include:
- Saving on a Valuable Education (SAVE) Plan
- Pay As You Earn (PAYE) Repayment Plan
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan
Part of qualifying for this plan includes providing updated information about your income and family size.
The Best Way to Pay Off Student Loans
Whatever student loan repayment plan you choose, make sure you consider your annual income and monthly budget and how your repayment plan will fit into those two things.
Regardless of how you go about making payments, the best way to pay off student loans is to avoid accumulating student loan interest as much as possible.
Most loans come with an interest rate. This percentage is how much your loan grows, accumulating in additional interest, or extra money and extra payments you'll need to make to pay off your student loan debt entirely.
Student loan interest can make the money you owe bigger and take longer to repay.
Avoid student loan interest as much as possible by making minimum payments as soon as possible and making bigger monthly payments whenever you can.
Can I Refinance My Student Loans?
Yes! You can refinance your student loans. You can apply to change your student loan repayment plan to a different plan or you can refinance your student loan with a private lender. You can't refinance student loans through the government, but you can if you consolidate your loans to a private lender.
When you go to refinance your student loans, a private lender will pay off your loans so you can start a repayment plan with a loan through the private lender instead of a federal student loan program.
The Pros and Cons of Refinancing Student Loans
Refinancing with a private lender can come with some great benefits, but also some unique costs. The first con is that you give up any benefits from having a federal student loan and remaining within that government program.
However, using a private lender instead could provide you with the loan payment plan you want.
How Long Does It Take to Pay Off Student Loans?
According to a report done by the Education Data Initiative, on average it can take student loan borrowers up to 20 years to pay off their student loans.
For some professional graduates in the report, it can take up to 45 years to repay their student loans.
What is the Average Student Loan Debt?
According to a report done by the Education Data Initiative, on average someone with student loans has about $37,338 in student loan debt.
The averages between federal student loan debt and private student loan debt are also different. Average federal student loan debt is about $37,338 while the average private student loan debt is higher at $54,921.