Paying off student loans is a long-term prospect for most people with educational debt. In fact, the average borrower takes around 21 years before they are finally free of the financial burden they took on when earning their degree.
If you don’t want to be repaying your loans for the better part of your career, there are options to tackle this obligation sooner. In fact, trying out these three techniques could help your loans disappear in about half the time.
1. Choose a plan with a shorter repayment timeline and stick to it
The most obvious way to reduce the timeline for paying off your student loans is to choose a short repayment plan and stick to it.
If your loans are federal student loans, the standard repayment plan would result in you becoming debt-free in a decade. As long as you don’t opt for an extended or income-driven plan that stretches out your payoff time — and as long as you don’t refinance or consolidate your loans to one with a longer payoff term — you will be done with repayment after just 10 years, instead of 21 like the average borrower.
As for private student loans, your repayment timeline is determined based on the payoff schedule you select when you first borrow. Pick a shorter loan payoff schedule that lasts 10 years or less. And, if you refinance your loans later to try to reduce the rate, don’t extend the total time to become debt-free. For example, if you have seven years left to repay your loans, choose a refinance loan with a five- or seven-year repayment period instead of a 10-year one.
A shorter payoff schedule means you’ll have to make higher monthly payments, which could require some financial sacrifices to afford them. But, if you watch your spending for a short time and keep on track with that payoff plan, you’ll be saying goodbye to your debt in much less time than your peers. You’ll free up cash then to focus on other things, like growing your 401(k) balance.
