How to Pay Off Student Loans

Molly Carapiet, Head of Student Loan Refinancing, First Republic Bank
June 11, 2019

It’s no secret that many Americans are challenged to pay off their student loan debt. Roughly 44.2 million Americans have a combined total of more than $1.5 trillion in student loan debt. Grads with this type of debt may find it difficult to focus on other future financial goals, like buying a first home, traveling, starting a family or even getting married. You can save thousands of dollars in the long run by paying off your student loans fast — and start working toward other saving and investing goals.

Although your student loan debt may seem intimidating, there are more ways than ever to help pay down those loans faster. The following is your comprehensive guide to the best ways to pay off student loans, so you can get out of debt and take back your financial freedom.

7 steps to pay off student loans

  1. Assess your current financial health. You can’t begin to pay down your student loan debt responsibly until you get a full view of your entire financial picture. To do this, figure out your total annual income (after taxes), your total debt and other financial obligations, and your credit score. The stronger you are financially, the better position you’ll be in to secure the best interest rate if refinancing is in your future.

Bonus tip: If you have debts with higher interest rates than your student loans (like credit cards, for example), it might make sense to work on paying those off completely first, before putting any of the following plans into place to pay down student loan debt.

  1. Try consolidating and refinancing. What’s the difference between consolidating and refinancing student loans? Consolidating combines all your student loans from different lenders under one financial roof so you can keep better track of them. Refinancing is paying off all of your existing student loans into a completely new loan, potentially with a lower interest rate or a different loan term. Often refinancing results in reduced monthly payments and helping you pay your loans down faster. Refinanced already? You might consider refinancing your student loans again as interest rates have fallen across many lenders. In short, this step can keep more money in your pocket for other living expenses or financial objectives.

Bonus tip: Keep in mind when you refinance into a new loan you may be required to give up special features of federal student loans like loan forgiveness and income-based repayments.

  1. Make higher monthly payments. You might think finding extra money each month to pay more toward your debt is impossible, but here are some smart ways to make it happen:
  • Go over your monthly expenses line by line to cut back on (or cut out) wasteful spending, such as paying for cable or a gym membership you never use. You should also take a full inventory of leisure expenses — like coffee, eating out at restaurants, etc. — and prioritize your spending to achieve your goals.
  • Make a plan to accelerate your career growth and increase your monthly income so you can put the difference toward your student loan debt every month.
  • Take on a second job or side gig and put that money directly towards your debt.
  • Put extra cash like bonuses or gifts toward your student loans.
7 Steps to Pay Off Student Loan Debt Fast
  1. See if your job offers forgiveness options. You can’t always plan your career around jobs that will help you pay your student loans more quickly, but keep in mind that certain fields offer loan forgiveness programs that could significantly decrease your loan balance and how much you end up paying in the long term. If you happen to work in one of these fields — like public work or teaching, for example — check with your company to see if you qualify for full or partial student loan forgiveness.

Bonus tip: Many job listing sites allow you to search for jobs that offer loan forgiveness as part of their incentive packages. For example, on, simply type “loan forgiveness” in the What box and add your location for a list of companies that offer loan forgiveness perks in your area. 

  1. Sign up for automatic payments. You’ll need to check with your loan provider for specifics, but many providers offer discounted interest rates for automatic payment enrollment. You can even set up the payment date every month based on when it’s convenient for you. This can save you money every month and prevent you from missing payments (which can cause fees and negatively impact your credit score).

Bonus tip: Most providers send you a notification before they deduct the payment from your bank account, so you can be sure you have the funds to cover it.

  1. Start making payments while you’re still in school. Most students don’t even think about making payments on their student loans until after they graduate. However, paying down student loans as soon as possible could help you save significantly in the long run — even small payments can add up.

Which student loans should you pay first? If you have the means to make payments on your federal loans while in school, it’s best to tackle unsubsidized loans first. These loans begin accruing interest as soon as funds are disbursed, so making early payments could help you pay less interest over the life of the loan. Subsidized loans, on the other hand, don’t actually accrue any interest while you’re in school. For private loans, direct any prepayments to the loans with the highest interest rates — especially if they are variable — to save the most money. Learn more about how student loan interest works.

If you plan to make early loan payments, work with your loan provider to make sure the payments are being applied as you want them to. Also, double check that your payments are going towards the principal of your loan, not just the interest. This is the best way to decrease the amount of interest you’ll owe over the course of your loan.

Remember: It’s a marathon, not a sprint

If you’re currently paying off student loans, it might be hard to envision a life without them. The best thing to do is to focus on the future and everything you can do once you’re free of your student loan debt. The methods above can help you eliminate those loans more quickly, so you can get on with reaching your other goals in life.

Building a relationship with a trusted banker who can provide personal service and guidance allows you to focus on your career and life while having confidence that your financial goals are on track. A banking partner can model scenarios for paying down a student loan or making the most of bonus income. They can also build a team to help you navigate career developments and as new wealth goals take hold, such as establishing emergency funds, buying a home, investing accumulated wealth and more.

If you’re still unsure what the right move is for you, consider speaking with a financial advisor who can provide you with advice on how to pay down your student loans faster and prepare for the future.

Refinance your student loans – fixed rates as low as 1.95% APR with discounts.

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the consequences of any strategies mentioned in this document. This information is governed by our Terms and Conditions of Use.