Credible
Get Rates
  • Refinance Student Loans
    • Compare Options
      • Best Refinancing Companies
      • Lender Reviews
      • Refinance Student Loans
      • Student Loan Consolidation
    • Learn the Basics
      • Fixed vs. Variable Rates
      • Forgiveness Programs
      • Consolidation vs Refinancing
      • Repayment Plans
      • More on Student Refi
    • How to
      • Consolidate Your Student Loans
      • Pay Off Your Student Loans
      • Lower Your Interest Rate
    • Tools
      • Current Student Loan Refi Rates
      • Refinancing Calculator
      • Repayment Calculator
      • Student Loan Score Calculator
  • Student Loans
    • Compare Options
      • Private Student Loans
      • Parent Student Loans
      • Law School Loans
      • Medical School Loans
      • Graduate Student Loans
    • Learn the Basics
      • Student Loan Limits
      • Living Expenses
      • Applying for FAFSA
      • Federal Student Loans
      • Student Loan Interest Rates
      • More on Student Loans
    • How To
      • Pay for College
      • Take Out Student Loans
      • Apply Without Cosigner
      • Apply for Student Loans
      • Pay for Grad School
    • Tools
      • Best Private Student Loans
      • Current Student Loan Rates
      • Student Loan Interest Calculator: Estimate Payments
      • Lender Reviews
  • Personal Loans
    • Compare Options
      • Best Personal Loan Lenders
      • Lender Reviews
      • Get Personal Loan Rates
    • Learn the Basics
      • How to Qualify
      • How to Get a Loan
      • Where to Get a Loan
      • Personal Loans with Cosigner
      • Pay Off Credit Card Debt
      • More on Personal Loans
    • Best for
      • Credit Card Consolidation
      • Debt Consolidation Loans
      • Home Improvement Loans
      • Good Credit
      • Fair Credit
      • Bad Credit
    • Tools
      • Current Personal Loan Rates
      • Personal Loan Calculator
  • Mortgages
    • Compare Options
      • Mortgage Refinance
      • Home Loan
      • Best Mortgage Refinance Companies
      • Best Mortgage Lenders
      • Mortgage Preapproval
      • Mortgage Payment Calculator
    • Compare Rates
      • Mortgage Refinance Rates
      • 30-Year Fixed Refinance Rates
      • 15-Year Fixed Refinance Rates
      • Home Loan Rates
      • 15-Year Fixed Mortgage Rates
      • 30-Year Fixed Mortgage Rates
    • Learn the Basics
      • How to Buy a House
      • How to Refinance Your Mortgage
      • How to Get the Best Rate
      • Cash-Out Refinancing
      • More on Home Loans and Refi
    • Pay Off Mortgage
      • Home Equity to Pay Off Debt
      • Paying Off Mortgage Early
      • Mortgage Refinance Cost
  • Insurance
    • Insurance Products
      • Insurance Products
      • Learn more about home insurance
    • Compare Options
      • Compare Insurance Quotes
      • Home Insurance Guide
    • Learn the Basics
      • What Home Insurance Covers
      • How Much Home Insurance You Need
      • Estimate Your Home Replacement Cost
      • How to Change Home Insurance
  • Company
    • About
    • Reviews
    • Blog
    • Lenders
    • Editorial Guidelines
    • FAQs
    • Press
  • Find My Rate

Before Paying Off Your Student Loans Early, Read This

Jamie Young Jamie Young Edited by Ashley Harrison Updated April 20, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

paying off student loans early

Content provided by Credible. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.
This article first appeared on the Credible blog.

You can always pay off your federal or private student loans ahead of schedule by paying more than the minimum each month. And for some, paying off student loans early can be a smart decision that gives you more freedom and flexibility.

If you’re wondering how long it’ll take to pay off your student loans, a student loan calculator can help. Refinancing your student loans could help you pay them off sooner if you refinance into a shorter repayment term and/or lower interest rate. With Credible, you can easily compare student loan refinance rates from multiple lenders.

Here are three signs that paying off your student loans early makes sense (and two signs that you should wait):

1. If you have an emergency fund

Before considering making extra payments toward your loans, it’s a good idea to have an emergency fund. An emergency fund is money set aside in a bank account to cover sudden crises, such as an unexpected car repair, job loss, or illness.

Having an emergency fund ensures you won’t have to turn to credit cards when faced with a problem. But if you don’t have an emergency fund yet, you should consider holding off on making extra payments on your loans and put that cash toward your savings first.

Tip: Typically, you want to have three to six months worth of expenses in your emergency fund.

2. If you have lots of credit card debt


If you have credit card debt, paying off your balance should be the priority before turning to your student loans. While student loans can have high interest rates, credit card interest rates can be staggering. The average credit card interest rate was 16.44%, as of November 2021, according to Federal Reserve data.

With such high rates, you’ll probably save more money by paying off your credit card debt first than if you focused on your student loans.

3. If your student loans have high interest rates


If you have high student loan interest rates — federal student loans (from the federal government) can have rates as high as 8.5%, while private loans (from private lenders) can be even higher — a good deal of your monthly loan payment goes toward interest rather than principal, increasing how much you’ll pay over time. Paying off your private or federal loans early can help you save thousands over the length of your loan since you’ll be paying less interest.

If you do have high-interest debt, you can make your money work harder for you by refinancing your student loans. With a stable income and good credit score, you could qualify for a low interest rate, helping you save more and become debt-free faster. Plus, there’s no limit to how many times you can refinance and there are no fees to do so either.

Credible makes it easy to compare student loan refinance rates from multiple lenders.

4. If you don’t contribute to your retirement and get the max employer match


When you have student loans, future goals like retirement may not seem that important. But it’s important to invest now, while you’re young. This gives your money time to grow so you can have a comfortable retirement.

Not all employers offer 401(k) matching, but many offer a match up to a certain amount or percentage. So at the minimum, it’s a good idea to contribute enough to employer-offered retirement plans to qualify for the full match before making extra payments on your debt.

how much to save per month to have $1M by age 65

5. If you’re already contributing to other life goals


When your finances are in good shape, deciding what best to do with extra money can be difficult. If you have student loan debt, you might think about paying it down aggressively. Just make sure you’re contributing to your long term goals, as well, or else paying student loans off early could set you too far back.

Here are some long term goals you should consider contributing to first:

  • Saving for a house
  • Investing
  • Paying off higher interest debt first

Don’t let your student loans weigh you down

If your student loans weigh you down, cause you anxiety, or make you feel like you can’t pursue other goals while you have them, it might be worth tackling them early.

Getting rid of your debt can give you a sense of freedom and independence you wouldn’t otherwise have if you let the debt linger. It can also motivate you to work toward paying down your other debt, as well.

If you’re financially ready to start paying off your student loans early, refinancing your loans can be a smart way to save money and pay off your student loans faster. With Credible, you can fill out one, simple form and get prequalified rates from multiple lenders — all without affecting your credit score.


About the author: Jamie Young is an authority on personal finance. Her work has been featured by Time, Business Insider, Huffington Post, Forbes, CBS News, and more.

About the author
Jamie Young
Jamie Young

Jamie Young is an authority on personal finance. Her work has been featured by Time, Business Insider, Huffington Post, Forbes, CBS News, and more.

Read More

Home » All » Yahoo » Before Paying Off Your Student Loans Early, Read This

Paying Off Student Loan Debt


  • How to Pay Off Student Loans
  • How to Lower Your Monthly Payment
  • How to Lower Your Interest Rate
  • Paying Off Student Loans Fast
  • How to Pay Off Student Loans Early
  • Pay Off Student Debt or Invest?

Compare Your Student Loans

  • Calculate Student Loan Score
  • Student Loan Repayment Calculator
  • Student Loan Refi Calculator

👇 CARES Act Info 👇

  • COVID-19 Student Loan Relief

Guides

  • How to Pay Off $30k in Student Loans
  • How to Pay Off $50k in Student Loans
  • How to Pay Off $100k in Student Loans
  • How to Pay Off $200k in Student Loans

Refinancing Guides

  • How to Refinance Student Loans
  • Refinancing Federal Student Loans
  • Refinancing Private Student Loans
  • Consolidating Student Loans
  • When to Refinance Student Loans
  • How to Refinance with Bad Credit

Additional Resources

  • Current Student Loan Refi Rates
  • List: Student Refi Lenders
  • List: Parent Plus Refi Lenders
  • No Degree Needed Refi Companies
  • Lender Reviews

  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to email a link to a friend (Opens in new window)

Related Articles

Student Loan Refinancing

Why you should use a student loan interest calculator while in school

Student Loan Refinancing

The 3 Best Stories of Graduates Paying Back Their Student Loans

Student Loan Refinancing

How to Know if Your Student Loan Interest Rates are Too High

  • Read More
    • Refi Student Loans
    • In School Loans
    • Personal Loans
    • Mortgages
    • Insurance
  • Resources
    • Lender Reviews
    • Loan Calculators
    • Student Loan Score Calculator
    • Data Insights
    • Debt Statistics
    • Sitemap
  • Compare
    • Student Loan Refinance
      • Current Student Loan Refi Rates
    • Student Loan Consolidation
    • Private Student Loans
      • Current Student Loan Rates
    • Personal Loans
      • Current Personal Loan Rates
    • Refinance Mortgage
      • Mortgage Refinance Rates
        • 15-Year Fixed Refinance Rates
        • 30-Year Fixed Refinance Rates
    • Home Loans
      • Home Loan Rates
        • 15-Year Fixed Mortgage Rates
        • 30-Year Fixed Mortgage Rates
    • Insurance
  • Top Lenders
    • Best Student Loan Refi Companies
    • Best Private Student Loans
    • Best Personal Loans
    • Best Mortgage Lenders
    • Best Mortgage Refinance Companies
  • Company
    • About
    • Reviews
    • Blog
    • Editorial Staff
    • Editorial Guidelines
    • News
    • Press
  • Legal
    • Terms of Use
    • Privacy Policy

© 2023 Credible


Credible Operations, Inc. NMLS ID# 1681276 | NMLS Consumer Access | Licenses and Disclosures
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.