Home » Repayment » Debt Elimination » How to Pay Off Student Loans in Ten Years or Less

How to Pay Off Student Loans in Ten Years or Less

Even if you have a larger student loan balance, knocking out student debt in under ten years is a reasonable goal.

Written By: Michael P. Lux, Esq.

Last Updated:

Affiliate Disclosure and Integrity Pledge

For some borrowers, paying off student loans in ten years may seem impossible. To other borrowers, ten years on student debt may seem like an eternity. For all borrowers, eliminating student loans in just ten years is an accomplishment given that the average student loan borrower takes over 20 years to pay off their debt in full.

Student loans can be paid off in ten years or less. This goal is best accomplished by utilizing a combination of borrower resources, including student loan forgiveness, refinancing, and accelerated repayment strategies.

The key to quickly eliminating student debt is to take full advantage of the various opportunities to save money in repayment. Mistakes can be costly, but the good news is there are plenty of ways for informed borrowers to finding savings.

Student Loan Forgiveness

There are many different federal student loan forgiveness programs, but for borrowers interested in getting rid of their student debt in ten years, Public Service Loan Forgiveness can be an ideal choice.

The idea behind Public Service Loan Forgiveness, or PSLF, is to empower government and non-profit workers to take positions that help their community without having to worry about their student debt.

Borrowers first have to sign up for an income-driven repayment plan, which allows them to make payments based upon what they can afford rather than what they owe. After making 120 certified payments, borrowers become eligible to have their loans forgiven under Public Service Loan Forgiveness.

The PSLF program has been in the news lately due to the high rejection rate of applicants. While this rejection rate should be a concern to borrowers, the approval rate is likely to increase. The important lesson that borrowers should take away from the current rejection rate is that it is critical to understand all of the rules and the fine print associated with PSLF.

Other forms of student loan forgiveness will take more than ten years, so most borrowers will have to focus on options that do not involve forgiveness…

Student Loan Refinancing

A significant obstacle to quickly paying off student debt is the interest generated by the loans. High interest rates and large loan balances mean many borrowers face an uphill battle to eliminate their debt.

The advantage of student loan refinancing is that borrowers can get a lower interest rate. This means that a more substantial portion of monthly payments will be applied to the principal balance and the loans can be paid off quicker.

There are two major downsides to student loan refinancing. First, the people who benefit most from refinancing are those with high credit scores and large incomes. Second, borrowers that refinance federal loans are no longer eligible for income-driven repayment plans and forgiveness programs such as PSLF. Refinancing is a great way to save money on interest, but it is a risk.

Generally speaking, there is little risk to refinancing private student loans as soon as lower interest rates can be obtained. Federal loans should only be refinanced by borrowers certain they will not need any of the borrower protections that come with federal debt.

Borrowers looking to pay off their student loans in ten years have a few options. Most refinance companies offer 5-year, 7-year, and 10-year repayment plans. The 5-year repayment plans have the lowest interest rates, but 10-year repayment plans will have lower payments.

When refinancing is it critical to check rates with at least a few different lenders. The biggest and best-known lender in refinancing is SoFi, but there are many other lenders that borrowers should review and consider. Each company has unique criteria for making interest rate decisions and the lender that advertises the best rate is not always the one that offers the best rate.

Aggressive Repayment

Student loan forgiveness and refinancing are common tools to pay off student loans quickly, but not all borrowers will qualify.

However, all borrowers are allowed to pay off their student loans aggressively. Paying extra each month means less spending on interest and paying off the loan faster.

There are various schools of thought on the best way to approach the extra payment, but the one that is mathematically the best is as follows:

  1. The borrower makes the minimum payment on all student loans except one.
  2. Any extra money that the borrower can spare gets put on the highest interest loan.
  3. Once the highest interest loan is paid off in full, the next highest loan is attacked.
  4. This process is repeated until all of the loans are eliminated.

The exciting part about this approach is that success can build. Once the first loan is paid off, more money is available each month to attack the other loans.

Borrowers looking to pay off their loans in ten years or less will benefit greatly from adopting an aggressive repayment strategy. In many cases, it is the only way to eliminate student debt in under a decade.

Pros and Cons of Repaying Student Loans in Under 10 Years

Eliminating student loan debt is about more than getting rid of a monthly bill. It means freedom from debt that causes a great deal of stress for many people. It means an improved debt-to-income ratio and a better shot at homeownership. It means student loan interest is no longer working against you. The tremendous financial and psychological benefits of paying off student loans are the reason that so many Americans make eliminating student debt a goal.

The problem with making student loan repayment a priority is that there are other financial goals that also need to be considered. The disadvantages of early repayment stem from the consequences of focusing on student debt elimination.

One of the most common concerns of borrowers is trying to decide between saving for retirement and paying off student debt. Most people find that there is a happy medium to be found between these two goals. For example, employees who get matching contributions from their employer should typically maximize this benefit first.

Saving for retirement can take many different forms, and some student loans have excellent interest rates while others are terrible. As a result, it is impossible to say whether it is better to save for retirement or to pay off student loans first. The trick is to weigh the available options.

Similarly, getting married or trying to buy a house can be a challenge for someone aggressively paying off their student loans. Marriage can change repayment math, and buying a house has extra challenges for student loan borrowers.

Fortunately, eliminating student debt does not preclude these other goals, but it does mean that careful planning is required.

The 10-Year Plan

Planning your spending for the next decade is a tall order.

A big raise in the future could change the strategy. Major life changes, like getting married and having kids, can also have a significant influence on financial plans. The opportunities and hardships of the future may be a complete unknown in the present.

However, two things about the future are certain:

  1. Things will change in some way, and
  2. Student loan interest.

Anyone with student debt should make eliminating student loans a priority. However, they should also come up with a plan that is flexible enough to adjust for future concerns. There isn’t a right way or a wrong way to strike a balance. The key is to consider different scenarios carefully and to make an informed decision based upon the best available information.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

Leave a Comment