• Paying off Student loans early is financially beneficial.


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How to Pay Off Student Loans Early

Published: September 17, 2018 | Updated: November 10, 2020

Did you know that the longer it takes to pay off your student loans, the more money they wind up costing you? That’s because interest adds up over time. And while it’s common to have student loans when you finish your education, the sooner you pay down your debt, the better off you’ll be!

Here are some steps you can take to pay off student loans early:


Consolidate And Refinance Your Student Loans

You may be able to consolidate your loans into a single, lower interest note. If you can, you’ll only have one monthly payment—which will make life a little less confusing. And with a lower interest rate, your loan will be more affordable. Instead of pocketing the savings, just continue paying the same amount and you’ll finishing paying it all off more quickly.


Pay a Little Extra Each Month

When you begin to pay back your loans, you’ll have a set amount due each month. How the amount is determined will depend on the terms of your loan and how much you owe. Look at your budget and figure out whether or not you can afford a bit more. If you can, let your lender know each month that the extra money is to be applied to the principle.

The great thing about this option is that you can view the set amount as your minimum payment and anything over that can vary based on your circumstances that month. This way, you pay your loans off faster than planned but still have flexibility when you need it.


Put Your Tax Refund Toward Paying Your Loans Off

If you are a fortunate enough to get money back at tax time, you might be tempted to put it toward something fun. But think about where that money can best benefit you. You can take a bite out of your student loans if you make an extra — or bigger than usual — student loan payment with your tax refund.


Reduce Your Monthly Budget and Put the Savings Toward Your Loan Payoff

Do you really need those 250 cable TV channels? Could you eat out less? Make a budget, look at where your money goes each month and re-evaluate your spending. You might find that you spend more than you thought on one part of your life and could cut back on it or eliminate an entire bill. Then you can take the money you save each month and increase your monthly student loan payments.


Put Gifts and Bonuses Toward Your Loans

If you get a bonus at work or money from a family member, use it for your student loans. You could even make a rule that this is always where gifted money and bonuses need to go. Graduation, birthdays, holidays, and even your wedding have the potential to offer opportunities where you’ll receive financial gifts that you could apply to your student loans. If you get a bonus at work, you could apply it to your loans too.


Make an Extra Student Loan Payment

Is there a time or two a year when you typically have extra money? Maybe you work more hours in the summer or have the most money in the spring, long before holiday shopping season arrives. These could be great times to add another student loan payment into your budget.

Any time you make an extra payment, make sure the money is applied to the principle so your lender recognizes it as such and doesn’t consider it an advance payment.


Take Advantage of Auto-Pay Discounts

Find out if your lender will give you a better interest rate if you sign up for auto-pay. If that’s the case, auto-pay can be doubly beneficial to you: You’ll always make your payments on time—thus avoiding  penalties—and you’ll pay less in the end.


Start Making Payments Before You Finish School

Most people wait until they’ve graduated or finished training to begin loan repayment. If you can afford to, get ahead of the payments and begin them while you’re still in school. That way, you’ll reduce the time and cost of your notes.

Do you want to get your education at a school that cares about your future and will help guide to toward career and financial success? Contact Charter College today to learn about our programs in business, health care, trades, and information technology.