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UMe’s Helpful Tips For Paying Off Student Loans Faster

While the student loan pause was extended to June 30, 2023, you might be wondering how to tackle your student loan debt faster when it all kicks back into gear.

Taking out student loans for college is a common occurrence in this day and age. According to College Board (also accounting for inflation) the average cost of college tuition fees has increased by more than double since the 1991-92 school year. Many graduates leave college and look forward to their next milestones, such as buying a house or starting a family but feel overwhelmed by their college debt.

As your BFF (Best Financial Friend), we want to help set U up for success (always!) so we compiled a few helpful tips on how to pay off your student loan debt quickly and efficiently!

UMe Emu in a graduate hat holding a diploma against a gradient purple-orange backround with the blog headline and UMe logo

1. Additional Payments are a Good Idea

Making larger payments will help cut through the principal quicker, which will allow you to pay off your loan sooner. If you can make it work, paying more than the minimum required monthly amount counts toward the principal balance faster and reduces your total payoff timeline, which in turn minimizes the interest you pay on your loan!

Use a student loan calculator and plan out your payment strategy. Even just contributing $25 on top of your minimum due every month on a $25K loan with an interest rate of 6% can reduce your interest owed by $1,000 and the length of the loan by a year! Play around with different scenarios and you can see into your financial future!

It’s important to note that each loan provider can handle additional payments differently. Some might account for your extra payments towards the loan’s interest amount. Some others might put it towards next month’s payment. You may be able to tell them how you’d like the extra payments to be accounted for. Check and see if you can specify that on their website and/or contact the lender.

UMe Pro Tip: If U have multiple loans, it’s normally best to start with the one with the highest interest rate.   

2. Create a Loan Repayment Fund

Having a separate account for your financial goals is another great idea. Using your main checking or savings accounts can leave too much to temptation – but having a separate account for paying your college debt can help make sure your repayment goals are being funded and can help control out-of-budget expenses, like that new merch drop or an extra round on you at happy hour.

While you might be undecided on how much you can contribute towards a student loan repayment fund, start with small, automated transfers.

3. Stick to Your Budget

You know how much we value creating a budget! Having a plan for your living expenses and spending allowance is an important tactic that will really help you keep your finances healthy and on track.

Not having a plan to follow could put your financial health in a vulnerable state, which could turn into a slippery slope! Veering off-course can prevent you from paying off your student loan(s) quickly, and sometimes even on time, which can get in the way of your other financial goals like buying a home, financing your dream business, or getting a yacht! (Hey, if we’re gonna dream, let’s dream big!)

Protect your finances by having a good plan and overview of your cash in and cash out. Knowing where you stand will help you to make good, ongoing financial decisions. Even if you run into an expense you didn’t account for, your plan can help you navigate where to make necessary cuts. We all have unexpected expenses from time to time, but being on top of your budget will help keep you in line and eventually, out of debt!

If you find student life is far too unpredictable to have a steady budget, take a deep breath. Start simple and realistic with your budget (U can use this budget template). Just know your budget can and will evolve with you! It’s like developing good health habits like a workout plan. Having good financial habits now will truly benefit the rest of your life.

4. Start Early with a Part-Time Job in College

While you’re in school, keeping your GPA up is key. But, if you have the time, engaging in a part-time job while at college is a fantastic way to get a head start on paying down your student loans. You can put a portion of each paycheck that in a separate account (like what we suggested in Point #2 above) to get a head start on paying down that loan.

Working a part-time job while you’re in school will not only earn you money – it will also help you develop skills in the workplace such as time and personnel management, which you can apply to your career, down the line.

UMe Pro Tip: Look for on-campus jobs. By nature, they can be more flexible for busy class schedules.

5. Investigate Loan Forgiveness Options

Did U know that if you’re willing to work a specific job and adhere to some requirements, it is possible to get a portion of your loan(s) forgiven? It’s true!

There’s been a lot of discussion lately around student loan forgiveness, and while information on that is still developing, there are a few programs out there with their own unique requirements and approval standards. For example, the most well-known program is Public Service Loan Forgiveness (PSLF). To be eligible, you have to be employed full-time in a public service role at a government or non-profit organization and make 120 qualifying payments under an income-driven repayment plan. Getting approved for the program is relatively difficult, so be ready to stay on track.

The Teacher Loan Forgiveness program is another popular program, for this one you teach full-time for five consecutive years in a low-income school or educational service agency and have an eligible loan under the Direct Loan Program or FFEL Program. Depending on your specialty, the program forgives up to $5,000 – $17,500.

It’s also possible to have a portion of your student loans forgiven if you’re on an income-driven repayment plan. Once the 20- or 25-year repayment term ends with these programs, any remaining balance is forgiven. If you hit the end of your repayment period before 2026, the forgiven amount is not taxable.            .

6. Refinancing Can Be A Benefit

Refinancing a loan means bringing that debt to a new lender who offers a lower interest rate and/or better terms like a shorter repayment period. So, if you have a student loan with a high-interest rate, refinancing might be an option to help you pay them off faster. Timing and your credit score are key factors for refinancing (this goes for any loan at any time of your life). For the average student graduating college, your credit score is typically at its lowest and your credit history is at its shortest — which means interest rates that you qualify for might be on the higher side.

You’ll also want to note that many lenders will look for stable income and/or employment history when they assess qualifications. It’s smart to explore a few lenders in order to align you with the best rates. You will also have the option to refinance your loans more than just once, which might be a good move if your credit score improves or you experience a healthy increase in your annual income.

If you have federal student loans, there is a disadvantage to refinancing because it means the loans go to a private lender and therefore you lose all the benefits that come with federal loans — including income-determined payment plans, longer deferment and/or forbearance periods, and loan forgiveness programs. For example, when the pandemic began, the government suspended federal student loan payments and set interest rates (for the time being) at 0%. That same condition wasn’t extended for private loans.

Another scenario to be mindful of is for those of you who have a mix of federal and private loans. In that case, you could keep the federal loans where they are and refinance the private loans, in order to obtain a lower interest rate, giving you the advantages of both sides of the coin.

7. Take Advantage of Tax Deductions

Did U know that the federal government offers a student loan interest deduction on your taxes? This is for interest paid during the year on qualified loans which allows you to deduct up to $2,500, depending on your adjusted gross income and your filing status, and is available for both federal and private student loans.

Talk to your tax advisor about what this means for you. Those who qualify for the deduction will generally save a few hundred dollars on their income taxes, which could help with student loan repayment.

8. Inquire About Employer Repayment Assistance

Some employers offer an educational assistance program — an employee benefit where an employer pays for an employee’s educational expenses, offers tuition reductions or scholarship grants. This sometimes even extends to a spouse or dependent children. Some employers also offer student loan repayment assistance or benefits. Look into your company’s employee manual or speak with your HR representative to see what kind of tuition assistance or loan repayment options are available to you!

Employers can contribute through the year 2025 with favorable tax treatment because Section 2206 of the CARES Act states that employers can make tax-exempt payments of $5,250 per year directly to each employee’s federal student loans. Better yet, it’s not considered taxable income for the employee, which is a major plus for workers who are pursuing higher education while continuing to work, which is a considerable tax benefit on both ends. And we here at UMe love a win-win!

UMe Pro Tip: Some employers, like Starbucks and Walmart for example, even offer free college for workers who sign up for degree programs within a chosen network of courses and schools.

9. Use Your Windfalls

Anytime U get a sum of money you weren’t counting on, that’s a “windfall.” This includes unexpected cash such as tax refunds, inheritances and work bonuses. If becoming debt-free quickly is top of your mind, consider diverting your windfalls toward your student loans.

Before you get that extra cash, decide how much to allocate toward your loans. Obviously you can use 100% of it but that doesn’t leave any room for U to treat yourself! Also, the amount you choose can rely on other expenses or financial goals. Don’t forget you can also cover other debt –  and consider beefing up your emergency fund!

10. Lower Your Interest Rate Through Discounts

It may be possible to reduce the interest rate on your existing loans by setting up autopay or asking about loyalty discounts! Some lenders offer a 0.25% discount for setting up automatic payments on your loan.

If you have private student loans, contact your lender and ask about any opportunities for interest rate reductions or discounts. Private lenders may offer other interest rate discounts if you meet certain criteria, like making consecutive on-time payments or taking out another loan with the same company.

11. Search for “Found Money”

Found Money is a term to describe cash that is legally yours but hasn’t been claimed. What’s that? How can you not know about your own money?! It happens more often than you think! You could have unclaimed money from old bank accounts, government agencies, insurance policies, or even previous employers.

Just search for found money through official government websites and make sure to check every state you’ve lived in, no matter how short the duration was.

UMe Pro Tip: If you’re married, look for money for yourself and your partner and/or if you’ve inherited money from someone, you may also be eligible to claim any found money in their name.


And there you have it, UMe-verse. Congrats on your higher education! Now, U have plenty of tips for optimal financial success with your student loan(s).

One more thing… U may have seen recent news about student loan forgiveness programs and are wondering how that works… head to studentaid.gov/debtrelief for all the details.

If you’re in need of help with a plan or assessing your loan and financial situation, please feel free to contact us. We’re here for U!

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This post was updated on January 25, 2023

Disclaimer: U matter to Me (all of us) at UMe — and that’s why we do our best to deliver helpful information on our blog. Please note the following: (1) UMe Credit Union works hard to make certain that the information we post here is as accurate as humanly possible. But as you know, information can change and evolve quickly. While we try to update the blog on a regular basis, the content of some older posts may not be correct or up-to-date. (2) Some destinations on the World Wide Web that we link you to will exist on external websites. UMe Credit Union does not officially endorse any connected sites, nor do/did we compensate or get compensated by any entities to be featured in our posts (unless otherwise noted). (3) Everyone’s situation is unique and we advise you to consult with our personal bankers or your finance, tax, or legal professional for advice individualized to you!