If you graduated with around $30,000 in student loan debt, you're in good company — the average student loan balance per borrower is $33,654. While that amount may seem manageable compared to some six-figure debts, it can still pose a serious financial challenge.
Find the most effective strategies to pay off your student loans faster and take back control of your finances.
1. Make extra payments
If at all possible, try making extra payments toward your student loan debt. To get started, use this chart to estimate what your minimum payment would be.
Numbers are based on a 10-year repayment term and a 4.53% interest rate.
Making additional payments can help decrease the interest that accrues, so you’ll save money over time. If you’re short on cash, you don’t have to come up with huge sums to make a difference. Small amounts applied to your loan balance consistently can pay off over time.
For example, if you had $35,000 in student loans, your monthly payment would be $363. If you upped your payment by just $20 per month — paying $383 toward your loans — you’d pay $42,999 over the length of your loan. Paying a little extra each month would help you save nearly $600, and you’d pay off your loan over a month earlier.
2. Refinance your debt
If you want to pay off your student loans as aggressively as possible, consider refinancing your debt. With this option, you take out a loan from a student loan refinance lender and use it to pay off your existing debt.
If you have good credit, you could qualify for a lower interest rate. With a lower rate, more of your monthly payment goes toward the principal instead of the interest that accrues, so you may save money and pay off your debt sooner.
For example, if you had $30,000 in student loans at 7% interest and a 10-year loan term, your monthly payment would be $348. Over the life of your loan, you’d repay a total of $41,799; interest charges would cause your balance to grow by over $11,000.
But let’s say you refinanced your loans and qualified for a 10-year loan at 5% interest. Your monthly payment would drop to $318, but you’d repay just $38,184 during your loan term. Taking the time to submit an application for student loan refinancing would allow you to save over $3,600.
Credible allows you to compare rates from all of the student loan refinancing lenders below by filling out a single form. Comparing rates is completely free and doesn’t affect your credit score.
3. Sign up for an income-driven repayment plan
If your student loan balance exceeds your income, or if you simply can’t afford your monthly payments, consider applying for an income-driven repayment (IDR) plan. The Department of Education offers four different plans:
- Income-Based Repayment
- Income-Contingent Repayment
- Pay As You Earn
- Repay As You Earn
With these plans, the loan servicer extends your repayment term from 10 years to 20 or 25 years. The servicer will also set your monthly payment as a discretionary income percentage. Some people qualify for payments as low as $5. An IDR plan is a great way to reduce your monthly payments so you have more breathing room in your budget.
You can apply for an IDR plan online.
4. Pursue loan forgiveness
If you have $30,000 in student loans, you may have chosen a career as a teacher or in public service. If that’s the case, you may be eligible for loan forgiveness through one of two programs:
Public Service Loan Forgiveness
With Public Service Loan Forgiveness (PSLF), you can qualify for loan forgiveness if you work for a non-profit organization or government agency while paying your loans. If you work for a qualifying employer for 10 years and make 120 monthly payments, the government will forgive your remaining loan balance, tax-free.
Teacher Loan Forgiveness
If you teach full-time for at least five consecutive years, you can get up to $17,500 of your loans forgiven through Teacher Loan Forgiveness.
To be eligible, you must:
- Have federal Direct Subsidized or Unsubsidized Loans
- Have been employed as a full-time teacher for five full and consecutive years
- Teach at an elementary school, secondary school, or educational service agency that works with low-income students
- Have taken out loans before you finished the required years of teaching
To apply for Teacher Loan Forgiveness, fill out the Teacher Loan Forgiveness application and send it to your loan servicer.
Paying off your student loans
Now that you know how to pay off $30,000 in student loans, you can come up with an action plan that works for you.
If you decide to refinance your education debt to accelerate your repayment, check out the best student loan refinance companies.
