Student Loan Repayment Strategies That Work

3 MIN. READ

 

Key takeaways:

• Repaying student loans can put a strain on your finances, which is why you need a strategy.
• Look into adjusting your repayment plan for monthly payments that better fit your budget.
• We share tactics you can use to make more payments and make larger payments.

Paying off student loans can feel overwhelming. Whether you’re still in school, have graduated recently, or find yourself years into repayment, the right strategy can make a real difference.

Here are a few tips to speed up student loan repayments, from adjusting the terms to match your budget to finding ways of making larger payments.
 

Don’t Wait to Start Making Payments

Unless you have a Direct Subsidized Loan, your student loans start racking up interest right away. By the time you graduate and start making payments, your balance could be thousands higher due to interest.

Don’t wait to start chipping away at this balance, even if you’re not obligated to make payments. A part-time job or a side gig can help you make small payments before your grace period is over.
 

You Don’t Have to Settle for the Standard Repayment Plan

Once your grace period ends and you must start making payments, your loan will likely default to a Standard Repayment Plan.

It can be a good option for your budget, but you should know you can request a different type of repayment plan if you reach out to your loan servicer:
 

• You can also apply for an Extended Repayment Plan, which allows you 25 years to repay your loan instead of 10.
• You can also request an Income-Driven Repayment Plan. This option adjusts your monthly payments based on your income and family size, and you might even get a portion of your loan forgiven if you qualify.

An Income-Driven Repayment Plan is a great option if you find that your current payments are difficult to make with your budget. You can always make larger payments when you have extra money available.
 

When to Refinance Your Student Loans

You don’t have to stick with the same loan servicer for the entire term of your student loan:
 

• You can refinance federal loans with private options. However, you’ll lose some of the perks of federal programs (like deferment of payments if you’re unemployed).
• Refinancing private loans with another private lender is a common practice.

Refinancing a student loan is worth it if you can get a lower interest rate and a term that won’t drag out repayment.

You should look into refinancing if:
 

• Your credit score improved, and you can qualify for a better interest rate.
• You have several student loans you’d like to consolidate.

Fast Payoff Tactics

Things like refinancing your student loans and adjusting your repayment plan give you more flexibility. Once you have that breathing room, you can look into strategies that will help you pay off your student loans faster:
 

• Make biweekly payments instead of monthly ones.
• Use tax refunds, bonuses, and other windfalls to make a larger-than-usual payment.
• If you have multiple student loans, pay a little bit more on the account with the highest interest rate.
• At the end of the day, having an extra source of income to make larger payments is the fastest way to pay off your student loans. Consider side gigs or focus on career advancement to increase your earnings.

When making extra payments on your student loans, make sure to ask your loan servicer to apply the money to the principal.
 

How Power Financial Credit Union Can Help With Your Student Loans

Need help with your student loans? At Power Financial Credit Union, our goal is to make borrowing affordable.
We offer student loans with affordable interest rates and flexible repayment plans. We can also help you explore refinancing options and give you personalized banking advice for balancing your budget with student loan payments.

Contact us today to discuss student loan repayment options or stop by one of our South Florida branches.
 

FAQs

What happens if I miss a student loan payment?

Missing a payment can lead to late fees, added interest, and damage to your credit score. Contact your loan servicer quickly to explore deferment, forbearance, or income-driven options before the loan goes into default.
 

What's the difference between deferment, forbearance, and the grace period?

Your grace period is the time after graduation when payments aren’t required. Deferment pauses payments, often interest-free for subsidized loans, while forbearance pauses payments, but interest keeps growing.
 

Should I pay extra on my student loans or save for an emergency fund?

Build an emergency fund first before putting extra money toward loans. Once secure, focus on paying down your highest-interest loan.
 

How can refinancing help me manage my loans?

Refinancing can lower your interest rate or combine multiple loans into one payment, but you’ll lose federal benefits if you refinance federal loans privately.