How to pay off your student loans before payments resume


How to pay off your federal student loans faster before the temporary forbearance period ends. (iStock)

The CARES Act provided financial assistance to federal borrowers in the form of a abstention on payments and reduction of interest rates. These benefits, which will expire at the end of September, have been extended until the end of 2020 by the White House.

President Trump’s executive order means you have more time to qualify for student loan relief. The repayment moratorium is also an opportunity to consider ways to pay off your student loans before payments resume (and while interest rates are still set at 0%).

Here are three easy ways to repay student loans quick:

  1. Keep making monthly loan payments if you can
  2. Refinance your student loans
  3. Search for repayment options

1. Keep making monthly loan payments if you can

Although student loan repayment is not technically required at this time for eligible federal loans, continuing to pay could work in your favor.

“If a borrower’s federal student loans are eligible for payment pause and interest relief, all payments they make will go entirely to principal,” said Mark Kantrowitz, publisher and vice president of the search at

The more money you can pay now before interest rates return, the more you could reduce your loan balance.

If you plan to send extra money for your federal student loan balance now, let your loan officer know what you want, Kantrowitz said. Specifically, make sure your loan manager is aware that you want any additional payments to be applied to the loan principal only. And if you have both subsidized and unsubsidized loans, specify which ones the supplement should go to.

Again, the executive order did not suspend payments for private student loan holders. If you have a private student loan, it should be business as usual. Some private lenders may offer you a forbearance period, which allows you to temporarily defer payments, but interest will still accrue. So, if you are able, you should also continue to make monthly payments on private student loans.


2. Refinance your student loans

Student Loan Refinance means taking out new loans to repay existing ones. For example, you can refinance a federal student loan into a private student loan or refinance existing private loans.

Refinancing student loans has benefits, including:

  • Find a better loan rate
  • Facilitate the repayment of student loans

Better loan rates: One of the biggest benefits of student loan refinancing is interest rates. Depending on your current loan rates, you may be able to refinance into a new loan at a lower rate. Or, if you have a variable interest rate loan, you can refinance to a fixed interest rate and vice versa.

If you can refinance student loans at a lower APR, that translates to more student loan interest savings. It could also reduce your monthly payment. With student loan refinance rates low across the board, now might be the time to compare rates from multiple lenders using an online tool like Credible.


Cutting your interest rates by a full percentage point or more might be worth it, Kantrowitz said. Refinancing student loans may also be worth considering if you have commercially held family federal education loans or older loans with higher fixed interest rates, Kantrowitz said.

Don’t forget to consider what your new monthly payment might be for refinanced loans. With the aid of online refund calculator can help you estimate the cost to determine if refinancing a student loan is a good idea. You can also find prequalified rates on the Credible website.

Student loan repayment: Refinancing can make it easier to pay off student loans and potentially save you money. The better your credit score and credit history, the lower the interest rates you may qualify for.

But there’s also a major downside to consider: you could lose federal student loan benefits.

Advantages of the federal loan: “Refinancing federal student loans into private student loans is not a good idea,” Kantrowitz said. This means that you would lose certain benefits, such as deferment and forfeiture periods, as well as income-contingent repayment plan options.


3. Research refund options

In addition to continuing to pay off your student loans and refinance, think about what else you can do to pay off your loans faster, including:

  • Contact your employer
  • Change repayment plan
  • Automatic payments

Contact your employer: You might want to check if your employer offers some type of student loan assistance, such as tuition reimbursement or student loan forgiveness. You may have education-related benefits that you are unaware of that could help pay off your student loan.

Change repayment plan: If you will continue to repay your federal loans after the repayment moratorium ends in 2021, ask yourself if your current repayment plan is the right one. If you followed an income-driven repayment plan, for example, switching to a standard repayment plan could help you pay off your loans in less time. This assumes, however, that you can afford a higher monthly payment.

Automatic payments: And don’t forget to take advantage of benefits that could save you money, such as a interest rate reduction to make automatic payments. If you’ve already enrolled in autopay for federal students, make sure you’re still enrolled after student loan relief ends to continue receiving the discount, Kantrowitz said.

Trump’s executive order is an opportunity to think about how you want to handle student loan repayments in the future. Making extra payments for your loans or refinancing your student loan can help you get the most out of the repayment moratorium.

Remember, however, that student loan relief only applies to federal borrowers. If you have private student loans, refinancing now while rates are low could help you save money. Consider using an online tool like Credible to compare student loan refinance rates from multiple lenders without affecting your credit score.



About Author

Comments are closed.