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How to pay off your student loans faster



The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

In 2020, Americans hit a new record for total student loan debt. There is a total outstanding balance of $1.6 trillion in student loan debt spread across 45 million people. And in 2019, the average graduate took out just over $30,000 in student loan debt to fund their education. More students are turning to student loans—and at more significant amounts. 

Unfortunately, student loans can follow you after graduation and take a huge toll on your credit. Many individuals sign up for student loans not fully understanding just how large their payments will be upon graduation. The high monthly payments often cause young graduates to make payments late or miss them entirely and default on their loans, which can wreak havoc on a person’s credit score. 

So, are you wondering how to get rid of student loans fast? Unfortunately, there’s no quick, magic solution. However, there are options out there that may help you pay off your student loans more quickly than sticking to the repayment plan automatically assigned to you. Keep reading to see what these options are so you can understand which option works for you. 

1. Consider your repayment plan options

If you have a federal student loan, you’ll automatically be enrolled in the Standard Repayment Plan. This plan spreads out your payments over 10 years and is the option that allows you to pay the least amount of interest. For this reason, if you can’t afford to make extra payments on your student loan, this is usually the best option. 

There are other repayment plans for you to consider. An Income-Driven Repayment Plan will take 10 to 15 percent of your discretionary income monthly and can span up to 25 years. If your loan is not paid off in full within those 25 years, the balance of your loan is forgiven. This option is typically best for people who make a low income. 

There are other options as well, such as the Graduated Repayment Plan and the Extended Repayment Plan, to name a few. The Graduated Repayment Plan is a 10-year loan with payments that increase every two years, so it’s ideal for people who expect their income to grow over time. The Extended Repayment Plan allows individuals to take 25 years to pay their student loan (but requires you owe a minimum of $30,000). 

Do your research and pick the plan that works best for your situation. Take the time to consider your current income, your expected income growth and the total interest you’ll pay with each repayment option. 

2. Start making payments before you graduate

If you have a subsidized federal student loan, the government covers your interest while you’re in school and for six months post-graduation. However, if you have an unsubsidized loan, interest starts accruing the day you receive your money. This means that while you’re in school, your student loan debt is growing. 

Consider making payments on your student loan while you’re still in school. If the payment can even cover your monthly interest, it will make a significant difference when you graduate. 

A word of caution: Make sure to contact your lender about early payments. Some private lenders will charge a fee for early payments. 

3. Apply early payments to the principal

If you are able to, consider making early payments on your principal loan. If you want to make extra payments, make sure to do so correctly. Most student loan lenders will take prepayment and apply it to interest first or to your next month’s payment. Neither of these options helps you pay off your loan faster. 

Whenever you make an early payment, contact your lender and specify that it should be applied to the principal amount. Additionally, while you’re on the call, take the time to verify that you won’t be charged a prepayment fee. 

4. Pay more than the minimum

Just because you picked a repayment plan doesn’t mean you have to stick to that exact monthly payment. If you ever find yourself with extra money—such as tax refunds, gifts or side jobs—apply that money to your student loan. 

You can also try to make payments twice a month instead of monthly. Many people use a biweekly payment approach for their mortgages, too. Biweekly payments mean you end up making one extra full payment in the year. If you have a $30,000 loan for 10 years at a six percent interest rate, having biweekly payments will allow you to pay off your debt faster and save $1,186.56  in interest.

5. Apply for student loan forgiveness

There are student loan forgiveness programs for specific individuals. These programs include Teacher Loan Forgiveness, Military Forgiveness, Public Service Loan Forgiveness and other versions run by state governments. 

Each of these programs has different factors for qualifying but usually requires that the individual works for a specific employer for a period of time while making payments. For example, the Public Service Loan Forgiveness Program requires that you complete 10 years’ worth of payments and spend that time working for a nonprofit or public sector employer before your remaining balance may be forgiven. 

It’s important to note that you shouldn’t rely on a forgiveness program as they can often be challenging to qualify for. 

6. Consider refinancing or consolidating

Student loan refinance

If your credit score is healthy or has improved, you should consider refinancing your loan at a better interest rate. When you refinance, your lender looks at your credit score and income level before determining your loan interest rate.

If your credit score is high, that interest rate may be lower than your current rate, which can save you a lot of money in the long run. Additionally, if your credit score continues to improve, you can refinance again and get a better rate each time. 

If you don’t have a good credit score, you could use a cosigner to refinance. Your cosigner’s healthy credit will allow you to qualify for a better interest rate. 

Student loan consolidation

If you have multiple student loans—usually a mix of private and government—you can consolidate them into one. When you consolidate your loan, you typically get an equal or overall lower interest payment than what you were paying before. Additionally, you only have to worry about making one monthly payment, which can relieve stress and allow you to focus on a repayment plan. 

7. Set up autopay

With many lenders, signing up for autopay gets you a slightly lowered interest rate. The added benefit of this option is that you never miss or make a late payment, both of which can severely lower your credit score. 

Have a plan for your finances

Your student loan likely allowed you to get the education you wanted. Unfortunately, it does come at a high cost. Many people are surprised to find out just how long it’ll take to pay off their student loans. But that doesn’t mean you can’t be proactive and pay off your loan faster. 

The most crucial step is to make a plan and stick to it. This advice applies to all other areas of your finances, too—like your credit, savings and budget. When you have a plan, you can control your finances and ensure you’re staying on track. 

If you already have a student loan repayment strategy, check to make sure it’s still best for you. And if you don’t yet have a strategy, now is the time to come up with one. Work to pay off your student loans faster so you’re one step closer to financial freedom.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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Credit Cards

Does Getting Joint Credit Cards Have an Impact on Both Spouses’ Credit?



couples credit history

While marriage can help you improve your financial situation, it does not automatically mean that you and your spouse will share a credit report. Your credit records will remain separate, and any joint accounts or joint loans that you open will appear on both of your reports. While this can be advantageous, it’s critical to remember that joint account activity can effect both of your credit scores positively or negatively, just as separate accounts do.

Users Who Are Authorized

An authorized user is a user who has been added to an existing credit account and has been granted the authority to make purchases. Authorized users are typically issued a card bearing their name, and any purchases made by them will appear on your statement. The primary distinction between an authorized user and a shared account owner is that the account’s original owner is solely responsible for debt repayment. Authorized users, on the other hand, can always opt-out of their authorized status, although the principal joint account owner cannot.

If your credit score is better than your spouse’s as an authorized user, he or she may benefit from a credit score raise upon account addition. This is contingent upon your creditor notifying the credit bureaus of permitted user activity. If your lender does report authorized users, the activity on your account may have an effect on both you and your spouse. However, some lenders report only positive authorized user information, which means that late payment or poor usage may not have a negative effect on someone else’s credit. Consult your lender to determine how authorized users on your account are treated.

Joint Credit Cards Have an Impact on Your Credit Score

Opening a joint credit account or obtaining joint financing binds both of you legally to the debt’s repayment. This is critical to remember if you divorce or separate and your spouse refuses to make payments, even if previously agreed upon. It makes no difference who is “responsible,” the shared duty will result in both partners’ credit histories being badly impacted by late payments. Regardless of changes in relationship status or divorce order, the creditor considers both parties to be liable for the debt until the account is paid in full.

Accounts Individuals

Whether you’re happily married or divorced, you and your spouse may decide to open separate credit accounts. Most creditors will enable you to transfer an account that was previously joint to one of your names if both of you agree. However, if there is a debt on the account, your lender may refuse to remove your spouse’s name unless you can qualify for the same credit on your own. Depending on your financial status, qualifying for financing and credit on a single income may be tough.


While creating the majority of your accounts jointly with your spouse may make it easier to obtain financing (two salaries are preferable to one), reestablishing credit independently following a divorce or separation is not always straightforward. To make matters worse, your spouse may wind up causing significant damage to your credit rating following the separation, either intentionally or through irresponsibility – making the financial situation much more difficult.

Before you rush in and open accounts with your spouse, take some time to discuss the shared responsibility of these accounts and what you and your husband would do in the event of a worst-case situation. These types of financial discussions can be difficult, especially when you rely on items lasting a long time, but a mutual understanding and respect for each other’s credit can go a long way toward keeping your score when sharing an account.

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Credit Cards

Should you pay down debt or save for retirement?



rebuilding credit

While establishing a comprehensive, workable budget is undeniably one of the most important factors in maintaining a healthy financial life, it can also be one of the most difficult. For those who are struggling with personal debt, building a budget can be particularly challenging. When the money coming in has to stretch like a contortionist to cover expenses, it can be hard to determine where to focus — and where to trim.

Sometimes, the battle of the budget can come down to a choice between dealing with the present — and thinking about the future. When your income is running out of stretch, do you pay off your existing debt, or do you start saving for retirement? At the end of the day, the solution to that particular dilemma depends on the type of debt you have and how far you are from retiring.

If you have high-interest debt, pay it down

When considering how to allocate your budget, it’s important to understand the different kinds of debt you may have. Consumer debt can be categorized into two basic types: low-interest debt and high-interest debt, each with its own impact on your credit (and your budget).

In general, low-interest debt consists of long-term or secured loans that carry a single-digit interest rate, such as a mortgage or auto loan. Though no debt is the only real form of good debt, low-interest debt can be useful to carry. For instance, purchasing a home with a low-interest mortgage can actually save you money on housing costs if you do your homework and buy a house well within your price range.

High-interest debt, on the other hand, typically has a hefty double-digit interest rate and shorter loan terms, such as that of a credit card or payday loan. High-interest debt is the most expensive kind of debt to carry from month to month and should always be priority number one when building a budget.

To illustrate why you should focus on high-interest debt above everything else, consider a credit card carrying the average 19% APR and a $10,000 balance. If the balance goes unpaid, that high-interest credit card debt will cost $1,900 a year in interest payments alone. Now, compare that to the stock market’s average annual return of 7%, and it becomes clear that you’ll see significantly more bang for your buck by putting any extra funds into your high-interest debt instead of an investment account.

If you are having trouble paying off your high-interest debt, there may be some steps you can take to make it more manageable. For example, transferring your credit card balances from high-interest cards to ones offering an introductory 0% APR can eliminate interest payments for 12 months or more. While many of the best balance transfer cards won’t charge you an annual fee, they may charge a balance transfer fee, so do your research. You’ll also want to make sure you have a plan to pay off the new card before your introductory period ends.

Most balance transfer offers will require you to have at least fair credit, so if your credit score needs some work, you may not qualify. In this case, refinancing your high-interest debt with a personal loan that has a lower interest rate may be your best bet. Make sure to compare all of the top bad credit loans to find the best interest rate and loan terms.

If you’re nearing retirement, start to save

The closer you get to retirement age, the more important it becomes to ensure you have adequate retirement savings — and the more pressure you may feel to invest every spare penny into your retirement fund. No matter your age, however, paying off your high-interest debt should always remain the priority, as it will always provide the best rate of return (as well as likely provide a credit score boost).

Indeed, no matter how tempting it becomes, you should avoid reallocating money you’ve dedicated to paying off high-interest debt to save for retirement. Instead, the focus should be on re-evaluating your budget to find any additional savings you can. To be successful, you will need to make a strong distinction between want and need — and, perhaps, make some tough lifestyle choices.

Though simply eliminating your daily coffee drink won’t magically provide a solid retirement fund, saving a few bucks by homebrewing while also eliminating a pricey cable bill in favor of an inexpensive streaming service — or, better yet, free library rentals — can add up to big savings over the course of the year. The ideal strategy will involve overhauling every aspect of your lifestyle, combining both large and small cuts to develop a lean budget structured around your long-term goals.

Of course, while you should never allocate debt money to your retirement savings, the reverse is also true. It is almost always a horrible idea to remove money from your retirement account before you hit retirement age — for any reason. Withdrawing early means you will be stuck paying hefty fees for withdrawing money early and, depending on the type of account, you may also have to pay significant taxes.

Aim for both goals by improving income

As you take the necessary steps to pay off debt and save for retirement, you may have already stretched the budget so thin it’s practically transparent. In this case, it is time to consider ways to improve your overall income. Increasing the amount you have coming in not only provides extra savings to put toward your retirement, but may also speed up your journey to becoming debt-free.

The easiest solution may be to look for ways to increase your income through your current job; think about taking on additional shifts or overtime hours to earn some extra cash. Depending on your position — and the time you’ve been with the company — consider asking for a pay raise or promotion, as well.

If you do not have options to make more money at your day job, it may be time to find a second job. Look for opportunities that provide flexible schedules that will accommodate your regular job; many work-from-home positions, for example, can easily fit into most work schedules. Doing neighborhood odd jobs, such as babysitting and dog walking, may also provide a solid income boost without interfering with your existing job.

For some, the need to pay off debt and improve retirement savings can be more than just a source of stress — but a hidden opportunity to begin a new career adventure. Instead of being weighed down by yet more work, use the desire to better your budget as a reason to explore the profit potential of a passion or hobby. Starting a small online store, part-time consulting service, or other small business can be a great way to improve your income and your overall happiness.

While it may sound intimidating, starting a side business can be as simple as putting together a professional looking website and doing a little marketing legwork to spread the word. And no, building a website isn’t as scary — or expensive — as it seems, either. A number of the top website builders now offer simple drag-and-drop interfaces perfect for putting together a professional-looking web page in minutes (without breaking the bank).

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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How does a loan default affect my credit?



loan default

Nobody takes out a loan expecting to default on it. Despite their best intentions, people sometimes find themselves struggling to pay off their loans. These types of struggles happen for many reasons, including job loss, significant debt, or a medical or personal crisis.

Making late payments or having a loan fall into default can add pressure to other personal struggles. Before finding yourself in a desperate situation, understanding how a loan default can impact your credit is necessary to avoid negative consequences.

30 days late

Missing one payment can further lower your credit score. If you can pay the past due amount plus applicable late fees, you may be able to mitigate the damage to your credit, if you make all other payments as expected.

The trouble starts when you (1) miss a payment, (2) do not pay it at all, and (3) continue to miss subsequent payments. If those actions happen, the loan falls into default.

More than 30 days late

Payments that are more than 30 days past due can trigger increasingly serious consequences:

  • The loan default may appear on your credit reports. It will likely lower your credit score, which most creditors and lenders use to review credit applications.
  • You may receive phone calls and letters from creditors demanding payment.
  • If you still do not pay, the account could be sent to collections. The debt collector seeks payment from you, sometimes using aggressive measures.

Then, the collection account can remain on your credit report for up to seven years. This action can damage your creditworthiness for future loan or credit card applications. Also, it may be a deciding factor when obtaining basic necessities, such as utilities or a mobile phone.

Other ways a default can hurt you

Hurting your credit score is reason enough to avoid a loan default. Some of the other actions creditors can take to collect payment or claim collateral are also quite serious:

  • If you default on a car loan, the creditor can repossess your car.
  • If you default on a mortgage, you could be forced to foreclose on your home.
  • In some cases, you could be sued for payment and have a court judgment entered against you.
  • You could face bankruptcy.

Any of these additional consequences can plague your credit score for years and hinder your efforts to secure your financial future.

How to avoid a loan default

Your options to avoid a loan default depend upon the type of loan you have and the nature of your personal circumstances. For example:

  • For student loans, research deferment or forbearance options. Both options permit you to temporarily stop making payments or pay a lesser amount per month.
  • For a mortgage, ask the lender if a loan modification is available. Changing the loan from an adjustable rate to a fixed rate, or extend the life of the loan so your monthly payments are smaller.

Generally, you can avoid a loan default by exercising common sense: buy only what you need and can afford, keep a steady job that earns enough income to cover your expenses, and keep the rest of your debts low.

Clean up your credit

The hard reality is that defaulting on a loan is unpleasant. It can negatively affect your credit profile for years. Through patience and perseverance, you can repair the damage to your credit and improve your standing over time.

Consulting with a credit repair law firm can help you address these issues and get your credit back on track. At Lexington Law, we offer a free credit report summary and consultation. Call us today at 1-855-255-0139.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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