8 signs you can pay off your student loans in less time

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  • In the US, 45 million borrowers owe more than $1.5 trillion in student loans.
  • You can pay off those loans on a 10-year plan or longer, but you may be able to shave off a few years (and save yourself some money on interest) by making extra payments along the way.
  • If you have extra money in your budget at the end of the month, private loans that can be consolidated, or a loan payoff assistance program at work that you're not taking advantage of, you can probably pay off your loans faster.
  • Looking to refinance your student loans? Our partners SoFi and CommonBond can help »

Student loan debt is at an all-time high, with the latest 2019 statistics showing roughly 45 million borrowers collectively owing over $1.5 trillion in student loans in the United States.

Student loan debt has grown so significantly over the years that it is now "the second highest consumer debt category - behind only mortgage debt - and higher than both credit cards and auto loans," according to Forbes.

Additionally, over half of those who earned a college education in 2018 left with debt, graduating with an average debt balance of $29,800, according to Student Loan Hero.

If you are one of those adults dealing with student loan debt, it might be possible to pay it off sooner than you realize. But why would you even want to?

"When you pay off your student loans in less time, you'll save hundreds or even thousands of dollars on interest, depending on the size of your loan," Sahil Vakil, CFA, CFP at MYRA Wealth, explained. "In addition, you'll have one less bill to pay every month, which gives you the power to invest for your future instead. You'll even have a lower debt-to-income ratio, which will make it easier to get approved for the house you want."

So, how do you know if you can actually pay off your student loans in less time than you anticipated? Here are eight signs you might be ahead of the game.

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1. You have expenses that aren’t necessary or could be reduced

1. You have expenses that aren’t necessary or could be reduced

While most of us love to eat out with friends and family or drown our sorrows with a bit of retail therapy, these expenses aren't always necessary — and eliminating or reducing them could actually take you one step closer to being debt-free.

"It's the small changes that add up," Anna Keisler of SG Financial Advisors in Atlanta, Georgia, pointed out. "Maybe you cut back $50 from eating out and put the money toward your loans each month?"

Keisler also said that if you're going to make the sacrifices to cut back on your expenses to pay off your loans quicker, you should be "making sure the extra money goes toward the principal payment each month — you're going to see the amount of your loans decrease each time a payment posts."

She explained that the less principal there is, the less interest will accrue before you make another payment.

2. You have leftover money in your budget at the end of the month

2. You have leftover money in your budget at the end of the month

Assuming you've gotten a solid handle on the art of budgeting and at the end of the month you've found yourself with some extra money, Vakil suggested putting that money toward eradicating your student loans.

"As a tip, you can make extra payments toward your loan at the beginning of the month, so that you aren't tempted to spend it at the end," he said.

3. You have private loans with high interest rates that can be consolidated for less

3. You have private loans with high interest rates that can be consolidated for less

"If you have private loans, there may be hope for paying them off sooner. Do your research to find out what your options are for reconsolidating them," Vakil explained.

He noted that by doing this, you could end up saving yourself thousands of dollars and years of payments.

Refinance your student loans today with our partners SoFi and CommonBond »

4. You have an emergency fund of at least three to six months of living expenses

4. You have an emergency fund of at least three to six months of living expenses

While using your extra money to pay off your student loans is sometimes advised, doing so without a safety net might not be the best financial move.

Life is uncertain, and you can't predict when you'll find yourself in hard times. That's when your emergency fund will come in handy until you're able to get back on your feet.

Most financial advisers will agree, before you start trying to clear up your student loans quicker than initially planned, you should use your extra money to build up that emergency fund.

If you have a full emergency fund already, though, put your extra cash towards your loans.

5. Your employer offers student loan repayment assistance

5. Your employer offers student loan repayment assistance

"Any extra money towards your student loans is a big indicator that you can pay them off early. Contact your human resources department to determine what assistance you are eligible for," Vakil suggested.

6. You have financial support from family

6. You have financial support from family

If you're lucky enough to have family willing to offer financial support, consider asking them to cover your loans upfront so you can pay them back without interest.

If you're comfortable moving back home, you could also consider doing so then tossing the money you'll be saving on rent toward paying off your student loans faster.

7. You are in a graduate program

7. You are in a graduate program

Many student loans will not require payment while you're still in school.

"If you're in a graduate program, this means that subsidized loans will not accrue interest either," Vakil said. "With no required payments and little accruing interest, making payments anyway will go a long way. You'll be able to get a jump start with these benefits."

8. You have spare time and spare things

8. You have spare time and spare things

Paying off debt is important because you can free up your cash flow for other savings or investments.

"If you find yourself with spare time, consider taking on overtime at work, starting a side hustle, or picking up a part-time job. You'll be able to pay off your debt in no time by using these earnings as extra payments toward your student loans," Vakil explained.

He added that having a yard sale or selling items online could help declutter your space and make some extra cash, which could then be used as additional payments toward your student loans.

Now, with all that said, just because you can pay off your student loans sooner doesn’t always mean you should

"Student loans with very low rates often are not worth paying off, especially if in the federal system," Mark Struthers of Sona Financial in Minnesota, said. "If you can borrow money at 2 to 3% and invest aggressively enough to get 6 to 8% over the long term, the math is not hard."

Struthers said the goal here should be growing your net worth, not paying off the student loan for the sake of paying off the student loan.

Much like paying off a mortgage, if you are 30 and your financial house (pun intended) is in order, paying off a cheap mortgage may not lead to a higher net worth.

He also added that if you're looking to build credit, paying off your student loans over a slightly longer term might be worth it, especially because the rates are usually lower than other loans.

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