7 ways to repay your student loans faster
While student loans can be a useful tool for paying for college in the United States, they can become a major financial burden after you graduate. If you’re ready to get that monthly student loan payment out of your life, there are ways to pay off student loans faster.
Accelerating your debt repayment might not be easy, but it could be worth the sacrifices in the end if you’re able to get rid of your student loans ahead of schedule.
How to pay off student loans fast
If you’re wondering how to pay off student loans fast as an international student, here are some strategies that could help:
- Refinance for a lower interest rate
- Pay more than the minimum payment
- Find a job with student loan assistance
- Make biweekly payments
- Ask for a raise or work a side hustle
- Reduce your living expenses
- Put a cash windfall toward your loans
1. Refinance for a lower interest rate
If you’re looking to pay off your student loans faster, you might consider refinancing your international student loans with a lender based in the United States. If you refinance student loan debt, you could score a lower interest rate.
Since less of your money will be going to interest, you might be able to afford extra payments on your refinanced loan. Many refinancing lenders in the U.S. don’t charge a prepayment penalty, so you probably won’t have to worry about racking up any prepayment fees either.
Some lenders also offer an additional rate discount in specific instances. MPOWER Financing, for example, offers a 0.25% rate cut if you put your refinanced student loan on autopay.
Taking these steps to reduce your interest rate as much as possible could help make your loan more affordable as you work to pay it off faster.
2. Pay more than the minimum payment
When you borrow a student loan, you usually agree to pay it back with fixed monthly payments over a certain number of years. But if you pay more than the minimum amount due each month, you can shave months or even years off your repayment term.
For example, let’s say you took a US$35,000 loan at a 10.00% rate. If you pay US$463 per month, you’ll get rid of that debt in 10 years. But if you can bump your monthly payment up to US$513 ($50 more per month), you’ll get out of debt a year and a half faster and save nearly US$3,500 in interest. If you can pay US$563 per month, you’ll get rid of your debt two years and eight months faster and save nearly US$6,000 in interest charges.
Before setting up your increased payments, it could be worth reaching out to your loan servicer to make sure it’s applying the payments correctly. You want to make sure your payments are going toward your principal balance rather than being saved for future bills.
3. Find a job with student loan assistance
Some companies offer student loan assistance benefits to their employees. Google, for example, will match up to US$2,500 in student loan payments annually for its employees. And technology company Nvidia will pay up to US$6,000 per year in student loan assistance with a lifetime limit of US$30,000.
If you’re looking for a new job, consider prioritizing a company that will help you pay back your student loans. Note that international student loans are not always eligible for this benefit — you might need to refinance your student loans with a U.S.-based lender to qualify for employer-sponsored student loan assistance.
4. Make biweekly payments
If you’re making monthly student loan payments, consider switching to biweekly payments. In other words, split your monthly bill in half and pay that amount every two weeks. Instead of paying US$200 once per month, for example, you’d pay US$100 every two weeks.
You’ll still pay the same amount every month, but because of how the calendar works out, you’ll end up making a full extra payment every year. Making biweekly payments on your student loans is an easy way to pay off your debt faster without much extra effort on your part.
5. Ask for a raise or work a side hustle
Making extra payments on your student loans will be difficult if you don’t have any room in your budget. If you’re committed to getting rid of your debt ahead of schedule, search for ways to increase your income.
You could ask for a raise from your employer or work a side hustle, such as driving for a ride-sharing service or offering freelance services online. If you can increase your income, you can apply that extra money toward paying down your student loan debt.
6. Reduce your living expenses
Along with increasing your income, consider ways to decrease your expenses. Freeing up more room in your budget will help you afford extra payments on your student loans.
Consider downsizing to a cheaper apartment or moving in with a roommate or two. If you often eat out at restaurants, try meal planning and cooking at home. And if your car payment is a stretch, consider trading in your car for a less expensive vehicle.
Take a look at your monthly expenses to identify areas where you can cut back. Even an extra US$50 or US$100 per month could help you pay off your student loans faster.
Budgeting your money is a lot easier when you have a bank account in the country where you study. That way you can access your money without excess foreign transaction fees and keep an eye on your spending. Approved MPOWER customers can get a U.S. bank account and a credit card prior to their arrival to the country. Canadian students can check out TD Bank’s Student Package*, a bank account designed specifically for your needs.
7. Put a cash windfall toward your loans
If you receive an unexpected windfall of cash, such as a bonus at work or inheritance, it might be tempting to spend it on something fun. But if you’re committed to getting rid of your student debt as fast as possible, consider putting that windfall toward your student loans.
If you need a boost of motivation, use a student loan calculator to see how much an extra payment would save you. By seeing how much you could save in interest, along with the time you could shave off your debt, you might feel inspired to stick to your debt repayment goals.
*TD is a partner of MPOWER Financing
