Many college students worry about paying off their student loans. In fact, concerns over student loan debt are one of the most common reasons people choose to bypass college and enter the workforce straight out of high school. This is a legitimate concern, especially as the cost of college continues to grow rapidly and students are leaving school with greater debt than ever before.

However, while student loan debt is serious, it doesn’t have to be a nightmare. If a college degree is necessary for your chosen career or you have decided college is the right step for you, you don’t have to let fear derail your plans. By borrowing wisely and developing a repayment strategy, you can use student loans effectively and leave college with a manageable amount of debt.

Here are ten proven strategies for paying off your student loans.

Tip 1: Choose the right payment plan.

The fastest way to pay off federal student loan debt is to follow the standard plan. If you make your minimum payment each month on this plan, your student loans will be paid off in ten years. However, if you find you cannot afford your payments on the standard plan, there are other repayment plans to choose from. Some plans even base your monthly payments on your income.

While the standard plan is the fastest way to repay federal student loans, choosing the right repayment plan is important. If you miss payments or pay less than your required monthly payment, you may be penalized with fees that actually increase your debt. If you’re having trouble making your monthly payments, contact your student loan servicer and adjust your payment plan right away. You can find your student loan servicer through the U.S. Department of Education’s website.

Tip 2: Consider Employer Student Loan Repayment Programs

Some employers offer to repay a portion of employees’ student loans as part of their employee benefits. The terms of these programs vary from company to company. Some provide this assistance for a set amount of time or up to a certain dollar amount. Others may provide the benefit up to a lifetime. 

It’s important to check with your individual employer for details. In some cases, you may be expected to trade another benefit, such as leave time or a 401(k) contribution, in exchange for assistance with your loan. Depending on your situation, the value of your benefits, and the amount of money you owe, an employer student loan repayment program may or may not benefit you.

Tip 3: Make extra payments.

Not everyone is in a position to pay ahead on their student loans. But if you can pay even a little bit more per month, you’ll see real benefits. Over time, you may even receive a lower interest rate from your lender. And the faster you pay off student loan debt, the less total interest you will pay. As Ryan Lane of Nerdwallet explains, “let’s say you owe $10,000 with a 4.5% interest rate. By paying an extra $100 every month, you’d be debt-free more than five years ahead of schedule, if you were on a 10-year repayment plan.” That can add up to a lot of money saved!

You don’t have to make extra payments every month, either. Just make a habit of taking a portion of any extra money you come into (such as bonuses or tax refunds) and putting it toward paying down your debt. Over time, this extra money will add up.

One note: If you pay ahead on your student loans, be sure to contact your lender and ask them to apply the extra amount to your current balance. Many lenders will automatically apply extra payments to your next month’s payment instead, which won’t help you pay off your loan more quickly.

Tip 4: Refinance Your Student Loans.

When you refinance a loan, a new lender pays off your current debts and you repay the new lender. You still owe money after refinancing, but to someone different and with different loan terms than before. This is only a good move if the new lender offers you a lower interest rate than your current interest rate. A lender might do this if your credit has improved since you took out your original loan. If you decide to refinance multiple loans, you can choose to consolidate all of them into one refinanced loan. Or you can choose to refinance specific loans if 

Like with making extra payments, this method is not right for everyone. But if you have good credit and you can find a lender who offers an interest rate lower than your current rate, then refinancing can be a good option.

Tip 5: Pay Off Highest Interest Rate Loans First

One of the fastest routes to becoming debt-free is to pay off your debt with the highest interest rate first. High interest can be a huge hurdle to paying off loans. This is because interest can accumulate and add to your principal over time if you don’t make your minimum payments plus cover the interest charges each month.

When you pay off your loan with the highest interest rate, you might feel like celebrating. After all, you now have more money in your pocket each month, right? But a better strategy is to find your loan with the second highest interest rate. Continue making your regular payments on that loan plus add the money from the loan you paid off. This allows you to pay more on that loan and pay it off even faster, and you can do that while still operating on your same budget.

Tip 6: Pay Off Capitalized Interest

Capitalized interest is interest that isn’t paid off. It gets added to the principal of the loan, increasing your overall debt. Usually this kind of interest builds up while loans are in deferment or forbearance, or if you change from an income-driven repayment plan. If you have private student loans, they can also accumulate while you are in school.

Anna Helhoski of Nerd Wallet explains that this type of interest can cost you a lot: “Say you borrow $5,000 each year you’re in school at an interest rate of 5% each year. Over four years of school and a six-month grace period, $2,937 in interest accrues. At repayment, that interest amount will capitalize...and you’ll owe $22,937. Going forward, you’ll pay interest on top of that capitalized interest — an extra $31 a month, in this case.”

However, interest doesn’t have to capitalize. In many cases, private lenders allow borrowers to make loan payments while they are in school. Depending on the lender and the terms of the loans, these payments may cover only the interest or they may be payments toward the principal and the interest. Either way, paying down your interest makes a huge difference. In Helhoski’s example above, the borrower would save $802 over the life of their loan just by avoiding capitalization.

Tip 7: Sign Up for Automatic Payments.

For borrowers with federal student loans, enrolling in automatic payments will reduce your interest rates by 0.25%. That may not seem like much, especially if you owe a lot in loans, but over time the savings in interest do add up. It also ensures you won’t miss payments, which could cause you to pay more in fees and even face higher interest rates.

Tip 8: Take Advantage of Tax Deductions and Tax Credits.

Most people paying off student loans are eligible for the student loan interest deduction on their federal taxes. This allows you to deduct up to $2,500 on your taxes based on the amount of interest you pay annually. 

Another option is to take a tax credit based on the cost of tuition you are paying. Some experts suggest that you will receive more money back if you take it in the form of a credit rather than a deduction. Either way, a tax deduction or credit can help put money back in your pocket each year. The website Student Loan Hero has more detailed information if you’re interested in how student loan tax deductions and tax credits work. 

Tip 9: Pay Your Loan Every Two Weeks

Another pro tip for paying off your student loans is to pay them every two weeks. This doesn’t mean that you make two full payments per month. Instead, make one payment, but pay half at the start of the month and half in the middle of the month. Not only does this make payments more manageable if you’re paid weekly or bi-weekly, but also means you’ll end up making a whole extra payment by the end of the year. Over the course of multiple years, these extra payments can help shave months or years off of your debt and save you hundreds or thousands in interest.

Here’s how it works. If you make one loan payment per month, you’ll make 12 payments in a year. However, if you pay bi-weekly, you’ll make 13 full payments. There are 52 weeks in a year. Divide by two and you end up with 26—the number of payments per year you will make on this schedule. Remember, each of those 26 payments is only half of a payment. Divide by 2 and you get the total number of full payments you make on the bi-weekly plan, which is 13.

Tip 10: Borrow Wisely at the Start.

Before you take out any loans for school, carefully consider how much you really need to borrow. The more you borrow, the more you will have to pay back—both in loan principal and in interest. Researching costs, looking for alternative funding methods, and using a good loan interest calculator can help you determine the right amount of money to borrow for school. For more tips on borrowing wisely, check our out post “What To Consider Before Taking Out A Student Loan.”

Bonus Tip: Borrow from the Right Lender

Choosing the right student loan lender is an important part of borrowing wisely. For many, federal student loans are the best option. But if you’ve decided to use private student loans, then consider Pickett & Hatcher.

Since 1938, we’ve made competitive, low-cost, private student loans to deserving students. Our goal isn’t profit. In fact, the money you repay goes back into our educational fund to support other high-achievers just like you.