How to Pay Off Student Loans in 5 Years or Less

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According to a recent Federal Reserve study, 22% of American families owed student loan debt, with federal loans (which make up the vast majority) racing towards $1.6 trillion. With the meteoric rise in student loan debt, people everywhere are looking for strategies to pay off their student loans. In today’s post, I will walk you through exactly how to pay off student loans in 5 years or less.   

While paying off student loans won’t be easy, it has the potential to reshape your finances for the better. So, in these next eight steps, you will learn what you need to do to make it happen.

1. Know Your Numbers

First, if you want to learn how to pay off student loans in 5 years, you’ll need to understand your current position. 

As a first step, you’ll want to determine the total amount of student loan debt you have, as well as the interest rate. Let’s use the following example.

  • Loan A:  $26,000; 6% interest rate
  • Loan B:  $3,000; 4% interest rate
  • Loan C: $12,000; 5.5% interest rate

For each of these loans, you’ll want to figure out exactly how much you’d need to pay to reach your goal of eliminating your loans in five years.

The best way to do this is to use a student loan repayment calculator. My favorite is this one from SmartAsset.

In this example, I determined using the calculator that to pay off each loan in five years, the following payments would be necessary:

  • Loan A:  $503
  • Loan B:  $55
  • Loan C:  $229

In total, a payment of $787/month would pay off these loans in 5 years. 

While this may seem like an impossible amount, stick with me. In this case, ignorance is not bliss – you want to know how much you owe. So, once you determine the requisite payments, you’ll need to figure out how to afford them.

How to Pay Off Student Loans in 5 Years Pinterest Pin

2. Create Your Budget

If you want to learn how to pay off student loans in 5 years or less, you’ll also need to learn how to budget.

Why? Because if you’re serious about paying off your student loans, you’ll need to make it a financial priority and find other places to make sacrifices. 

The best way to do this is to track your spending to understand where your money is going. And this is what a budget can help you do.

Start by getting a budgeting app like You Need a Budget or Tiller Money and then create room in your budget for your student loans. In other words, take your income, subtract off your student loan payment, and then figure out how to live on what’s leftover. This ASF guide on how to create your post-college budget can help!

3. Cut Expenses

If I had to guess, you’re probably looking at your budget thinking what I just suggested is impossible.

While it may feel that way, there are ways to make it work. However, chances are you’ll need to cut expenses. 

If you’re looking to lower your expenses drastically, the very best thing you can do is start with the big-ticket items:  housing and transportation. These two items are likely the biggest budget-hogs you have.

Let’s start with housing, which is likely your most significant expense. While there are many ways to cut back here, my two favorites are A) move somewhere cheaper or B) house-hack. 

Lowering Housing Expenses

Moving somewhere cheaper may mean finding a less expensive apartment, or it could even mean moving to a different city with a lower cost-of-living. While moving to a less expensive city isn’t always feasible (especially if you need that big city salary to pay your loans), house-hacking can be a reasonable alternative.

What is house-hacking, you ask? House-hacking is when you find a way to share your housing expenses with someone else. The most common example is buying a multi-family home (such as a duplex) and living in one unit while someone lives in the other unit. The other unit then pays most, if not all, of the mortgage, allowing you to live for free. However, there are other forms of house-hacking, such as renting out a room in your house. 

Lowering Transportation Expenses

Transportation is the other area where you can make significant strides in lowering your expenses. If you currently have a car payment, see what might be possible to reduce it. Perhaps you sell your existing car and get an inexpensive, reliable vehicle that you can purchase outright. Or, if you’re really ambitious, maybe you can get rid of your call altogether and use alternative means of transportation.

While housing and transportation are the two categories that can make the most significant impact, there are countless other mechanisms to lower your expenses. Here are a couple of ASF guides to help you find more ways to save:

4. Ask for a Raise

Once you’ve found all the possible ways to scale back your expenses, the next best thing you can do is find ways to increase your income. While expanding your income can be more challenging than cutting expenses, it is possible.

The fastest and easiest way to scale your income is to ask for a raise. Now, of course, you better have some justification for asking, but asking for a raise is one of the easiest ways to boost your income.

You will know your audience (your boss) better than anyone, so think through whether the timing is right and what leverage you might have. 

The best thing you can do is learn how to ask for a raise before you do it. I highly recommend checking out the book Negotiating Your Salary:  How to Make $1,000 a Minute

This book will teach you everything you need to know about negotiating your salary. Using the techniques in this book, I was able to boost my income by nearly 12%.

If you ask for a raise and get shut down, it’s not the end of the world. There are other ways to boost your income (more on that in a minute), but perhaps it’s worth considering a career move. 

While prior generations found career success by staying with one company for decades, that is no longer the case today. Moving to a new company is one of the best ways to increase your salary, so don’t be deterred if you are unsuccessful in boosting your salary in your current role. 

5. Get a Side Hustle

If you aren’t able to negotiate a raise in your current role and you aren’t willing to jump ship, consider other ways to boost your income.

This could be as simple as driving for Uber or DoorDash on the weekends or as complicated as starting your own business.

There are countless ways to earn more money. What they all have in common, though, is that they’ll require a time investment. However, if you’re serious about learning how to pay off student loans in 5 years, putting in a few more hours working is a small price to pay.

Unsure what the best way is to earn more income? Check out this list of side hustles to find one that is right for you. 

6. Refinance Your Loans

If you’re looking to pay off your student loan debt faster, one of the best things you can do is determine whether it makes sense to refinance your loans. With interest rates at historic lows, if you haven’t refinanced already, chances are you’re paying too much.

When you refinance your loans, you take out a new loan from a private lender to pay off old loans. In many cases, this means turning your public student loan debt private. Key benefits of refinancing include:

  • Lowering the interest rate on loans
  • Combining multiple loans into one payment
  • Aligning monthly payments with repayment goals

The biggest downsides to refinancing student loans are potentially forfeiting federal assistance programs (more on that in a minute) and sometimes costs associated with refinancing. 

Let’s use our previous example of three loans at varying interest rates of 4.0-6.0%. Imagine that you combine these three loans into one manageable loan at 3.0%. How much would the payment drop for a five-year repayment schedule? It would drop to $737/month, which equates to a savings of $600 per year.

How do you go about refinancing? Consider finding a refinance lender with competitive rates and low or no closing costs. Some of our favorites include:

All of these lenders offer competitive interest rates and low refinancing costs, so I urge you to check them out to see if refinancing is right for you. 

7. Look for Assistance Programs

While cutting expenses and earning more is much of the “secret sauce” in paying off student loan debt, there are other ways to lower your student loans, such as student loan forgiveness and assistance programs.

The downside to these programs is that they only apply to those in specific fields. For example, the Public Service Loan Forgiveness program requires working for a government agency or a non-profit.

Without going into the countless different types of programs, I will refer you to this list of student loan forgiveness and grant programs.

While you may not be eligible for these programs, they’re worth taking a look to see if any of them fit your situation.

8. Automate Your Payments

Paying off student loans in full is a long road. That’s why you’ll want some help along the way. I am talking about automating your payments

By automating your payments, you’re more likely to meet your goals and stay on track. When the money leaves your account every month, you’ll learn how to live on what’s leftover. 

And by removing the choice around student loan payments, you’ll reduce decision fatigue, further increasing the likelihood that you’ll reach your goals.

When automating your student loan payments, here are a few tips to keep in mind:

1) Max Out Payments on the Most Expensive Debt First

If you have multiple loans, pay the minimum amount on the lower interest rate loans while maxing out payments on higher interest rate loans. If you use the monthly payment amount determined using the student loan calculator but then modify the payment order utilizing this approach, you’ll get your loans paid off even faster.

2) Make Payments Twice Per Month

If you get paid twice per month, make student loan payments twice per month. Because student loan interest typically accrues daily, you can save yourself money by making more frequent payments.

Plus, if you pay every two weeks, that’s like making payments for 13 months per year (as there are 26 biweekly payments), so you’ll further accelerate your payoff.

3) Make Sure Payments Are Applied to Principle

When automating your payments, make sure your lender applies any excess payments to principle rather than future payments. Otherwise, your payments won’t be helping you make much progress.


Before we wrap up this article on how to pay off student loans in 5 years or less, let’s cover a couple of frequently asked questions. 

Should I Pay Off My Student Loans Early?

While nobody likes having debt, prepaying student loans isn’t always the best idea. If your student loan debt is cheap, it often makes sense to invest rather than prepay loans. 

For example, if the stock market averages 7-8% over the long run, and your student loans only cost 3%, it can make sense to invest rather than prepay your loans.

That said, there is something to be said for being debt-free, so consider this decision wisely. 

How Long Does It Take the Average Person to Pay Off Their Student Loans?

According to, it takes 20 years for the average person to pay off student loans.

However, for those with advanced degrees such as graduate degrees or doctoral programs, that period increases exponentially. 

How to Pay Off Student Loans in 5 Years or Less

Paying off student loans is not easy. But it is possible. If you want to pay off student loans in 5 years or less, start with these eight simple steps. 

  1. Know Your Numbers
  2. Create Your Budget
  3. Cut Expenses
  4. Ask for a Raise
  5. Get a Side Hustle
  6. Refinance Your Loans
  7. Look for Assistance Programs
  8. Automate Your Payments

In today’s low-rate environment, start by looking into refinancing your loans with a lender like Splash Financial or LendKey. Once you refinance, then build a plan around repaying your loans using the other tips I’ve outlined. 

Take control of your student loans, and start paying them off today!

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