How To Pay Off Student Loans Early

More than two-thirds of college students had to take out some form of student loan during their time in college in 2019. However, just because you take out student loans doesn’t mean you have to be stuck with them for the next ten-plus years. 

Whether you have $10,000 in student loans, or $100,000, or more, let’s take a look at some necessary steps and strategies on how to pay off student loans faster.

Step #1: Know What You Owe

The first step in paying off your student loans is understanding them. Take the time to sit down and compile all the information you have about your loans. You’ll want to be aware of the following:

  • Who you owe money to (including whether the loan is a federal or private loan)
  • The amount you owe for each loan, and the total amount you owe combined
  • When you are required to start repaying the loans
  • What the minimum monthly payment is for each loan
  • The interest rate you’re paying on each loan
  • The amount of time you have to repay your loans (5 years, 10 years, etc.)

Read more about how student loans work here. Once you organize all the above information, you can make better-informed decisions on how to pay off student loans early and strategically. 

Step #2: Look Into Strategies to Pay Off Student Loans Faster

There’s nothing scarier than stepping into the world of adulthood with thousands of dollars in debt strapped to your back. But it doesn’t have to be a reality forever if you’re strategic about how you pay off the loans. There are a lot of opinions about how to pay off student loans quickly, but these eight strategies are some of the most common and doable ways to get it done.

Make More Than The Minimum Payment

You’ve probably heard this one before, and it seems pretty obvious. Loan service providers automatically put your loan repayment at the minimum amount, but making a minimum payment on a loan doesn’t usually get you very far very fast. The longer you take to pay off a loan the more a loan service provider will make since you’re paying more interest over a longer time. It’s important to determine a reasonable amount you can repay periodically which is more than the minimum payment so you can make a bigger dent in the principal of your loan balance(s). That amount might just be $50 more, but every little bit helps. It’s up to you to figure out what works best for your budget and repayment goals.

Make Biweekly Payments

If the thought of increasing your monthly payment seems daunting, you could try breaking it up into biweekly payments. Instead of making one minimum monthly payment, maybe you make a smaller payment amount twice a month. This isn’t an option for all loan service providers, but some do allow it. 

Use Found Money

“Found money” is extra money that you weren’t expecting and isn’t factored into your everyday budget. This surprise money can be a great way to pay down on loan principals quickly. “Found money” can be things like tax refunds, rebates, bonuses, side hustle money, cash gifts, and more.

Use Life Insurance

Many people don’t realize that the benefits of a well-designed participating whole life insurance policy can help you get out of student loan debt faster. Cash value within your policy is available for you to use during your life. This can be used in one of two ways. 

The first way you can use your cash value is by taking out a policy loan to pay for your college expenses. A policy loan gives you quick access to money for expenses like tuition, books, room and board, etc. Some people will use a 529 plan for these same college expenses, however, assets in life insurance do not affect your ability to qualify for subsidized loans if you need them.

The second way you can use a cash value policy loan is when you’re looking into refinancing or consolidating your student loans postgraduate. Some people go for this option in the case that they haven’t had their life insurance policy long enough to accumulate enough cash value for a policy loan before college, or for more cash flow flexibility during school. It may still be beneficial to take out a policy loan after college to pay off your third-party loan provider early. Once your student loan is paid off through the third-party loan provider, you can make policy loan payments to your life insurance company instead, while continually increasing your cash value. In other words, the money you would have been paying a third-party lender will now return to your whole life insurance policy. For more on how this works with funding college and consolidating student loans, read our article here.

Refinance or Consolidate

Refinancing or consolidating your student loans are another two strategies for streamlining student loan repayment. Refinancing can help you pay off student loans faster by replacing multiple student loans with a single private loan. Ideally, this new loan will also be at a lower interest rate without prepayment penalties. 

This strategy can help you decrease the amount of interest you’re paying overall as well as make repayments simpler with one loan payment every month instead of several.

Make sure to do your research before refinancing or consolidating your student loans to make sure you are helping and not hurting your chances of paying off your loans faster. You should also note that if you refinance or consolidate a federal loan, you could lose certain protections such as forgiveness, deferment, and forbearance periods.

Enroll In Autopay

Enrolling in autopay may help to pay off your student loans in two major ways. First, it helps you avoid late payments that could negatively impact your credit score. Second, some service loan providers offer interest rate savings if you enroll in auto payments. This could save you some money on interest.

Stick To The Standard Repayment Plan

If you have a federal student loan, you’ll most likely be put on a 10-year repayment timeline. Other plans, such as income-based repayment are often available and may seem like a better option. Before you make the switch, realize that extended repayment and income-based repayment plans will prolong the time needed to pay off your loan(s). Be sure to check the numbers and make sure you really will save more money by switching to a different repayment plan.

While these strategies won’t solve the student debt crisis across our nation, they can certainly help you get out of debt at a faster rate than many other people struggling with student loan debt.

Step #3: Consider the Pros & Cons To Paying Them Off Early

Before beginning paying off your student loans faster, you’ll also want to consider the pros and cons of doing so ahead of schedule. Here’s a quick breakdown of things to keep in mind:


  • You’ll pay less interest over your loan life
  • You can improve your debt-to-income ratio and credit score faster
  • You may be able to focus on other financial goals sooner like buying a home or saving for retirement


  • Could inhibit you from paying back more pressing forms of debt like credit cards
  • Less money to use for potential investments, a house down payment, or even life insurance protection

How A Well-Designed Participating Whole Life Insurance Policy Can Help

While no one wants to have debt, especially from school, there are plenty of ways to effectively pay off your student loans. The important thing is that you’re doing something toward achieving this goal, even if it will take longer than you might wish. 

As mentioned above, using whole life insurance can simultaneously help you tackle your student loans while beginning to build a financial legacy. At McFie Insurance, many of our clients have used their whole life insurance policy(s) to fund children’s college, consolidate their own loans instead of using third-party lenders, or simply to better manage cash flow while paying off student loans. 

We can help you design a policy that will not only provide a legacy when you’re gone but also be a great financial tool for your family while you’re alive. Let us help you avoid years of student loan repayment, with nothing to show for it. Schedule a strategy session with us today.

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