Young woman budgeting to pay off student loans.

How to Pay Off Student Loans

Updated January 5, 2020 . AmFam Team

Paying off student loans is possible! In this step-by-step guide, we share how long it can take, refinancing options and budgeting tips.

Student loan debt is one of the biggest financial challenges facing twenty and thirty-somethings today. As of 2019, U.S. student loan borrowers owed a collective $1.6 trillion, at an average of $29,000 per person. Students pursuing a professional degree can expect a much higher student loan debt—the average medical school graduate owes a whopping $196,000.

Keeping up with loan payments can be tough, and some find it gets in the way of other things like buying a first home. We have tips on paying off your student loans faster, so you can pursue your next dreams.

Step 1: Find Out How Much You Owe

When you graduate from college, you have a grace period of six months before your first student loan payment is due. If you’re like most students, you probably took out more than one loan to pay for your education. So knowing how much you actually owe can be a tricky thing. Once you have all of your loan information, you’ll have a clear picture of what you owe.

Federal student loans

If you have a federal student loan, log in to the National Student Loan Data System (Opens in a new tab). This database is managed by the Department of Education, and can show how much you owe in federal student loans, and who your loan servicer is now.

Private student loans

Finding your balances on private loans is a little more complicated. There is no national database for private loans, so you’ll need to do some investigating. Ask your original lender, talk to your university’s financial aid office, or check your credit report for a listing of all of your lenders.

Step 2: Make a Payment Plan

Now that you know how much you owe, it’s time to come up with a strategy for making payments. You can use a student loan calculator (Opens in a new tab) for a quick estimate on how long it will take to pay off your loan to be debt-free, and how extra payments can speed up the process.

Step 3: How to Pay Off Student Loans Faster

One of the most important things you can do to pay off your student loans is making sure you’re paying on time. Depending on your financial situation, you might be able to speed things up and save money with one of these methods.

Start making your payments. This one might seem obvious, but paying your loan on time is crucial. When you miss a payment, you may be charged a late fee (which just makes your debt bigger).

Try autopay. Many loan issuers and banks have auto pay options, so you can set a regular payment date each month and forget all about it. It’s one of the easiest things you can do to make sure your student loan payment is on time.

Use extra income to pay down debt. If you have a tight budget without money for extra payments, there are still ways you can get ahead of student loans. Did you get a raise? A tax refund? A big check for your birthday? Use that money to make an extra payment on your loan balance.

Other Tips: Refinancing Student Loans

When you refinance a student loan, you are transferring your education debt to a new lender, often with a lower interest rate and repayment schedule You can refinance both federal and private loans, and you may be able to get a lower monthly payment. Consolidating your student loans isn’t the same thing. If you consolidate your loans through the federal government, you may qualify for loan forgiveness or income-related payment plans, but you won’t get a lower interest rate.

Student loan debt can be a lot to handle. By starting small and making payments on time, you’ll be one step closer to eliminating that loan and getting closer to being out of debt. Take a look at our tips on debt consolidation for more ideas.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.

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    Buying a house with defaulted student loans

    If you’ve defaulted on your student loans, it’ll be more difficult — but not impossible — for you to get a mortgage. Because defaulting negatively affects your credit score, lenders will be less likely to want to give you a loan or will charge a much higher interest rate on a loan.

    Getting a home loan with student loan deferment

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    Signs You Should Pay Off Student Loans

    When considering whether to pay student loans or save for a house, there are a few factors that can help you decide if paying off your student loans should be a priority.

    Your debt-to-income ratio is too high

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    You’ve defaulted on your loans

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    You’re struggling to make payments

    If you feel like you’re living paycheck to paycheck or struggling to make payments on your loan every month, it’s best to hold off on saving for a house. Need help keeping track of your student loan payments? Try our student loan payment tracker to get organized.

    You haven’t saved for a down payment or emergency fund

    Before you start picking out which houses you want to tour, you should take a look at your savings. If you don’t have enough for a 5 to 10 percent down payment or enough as an emergency fund for home expenses — like a broken dishwasher or damaged roof — take more time to put money away for your first home.