Can You Pay Off Student Loans in One Lump Sum?

Yes, you can always pay student loans off early in one lump sum.
Ryan Lane
By Ryan Lane 
Edited by Des Toups

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You can use a lump sum to pay down or pay off student loans. There are never any penalties for prepaying federal or private student loans.

You’ll save time and interest if you can pay off student loans in one lump sum. But before you do, make sure there’s not a better use for that money — like building up your emergency fund.

Should you make a lump-sum student loan payment?

Before making a lump-sum student loan payment, prioritize putting that money toward an emergency fund, retirement savings and high-interest debt, like credit cards.

If you’ve checked those boxes, a lump-sum payment can make sense if you want to prevent interest capitalization or pay off student loans early.

For example, say you owe $30,000 at 6% interest for 10 years. If you put $5,000 toward those loans, you would finish repayment 26 months earlier and save roughly $3,600 in interest.

If you can’t afford a lump sum, making any extra payment helps. In the scenario above, adding $50 to your payments would cut 20 months off your term and save roughly $1,600 in interest.

Other strategies, like refinancing with a private lender at a lower interest rate, can save you money without you paying more.

Student loan lump-sum payment calculator

How to make a lump-sum payment on student loans

  • If you’re ready to pay off your loan: Contact your servicer for a loan payoff quote. This will detail the exact amount you’ll need to pay off your student loans in one lump sum as of the payoff date.

  • If you want to knock down your debt: Tell your servicer to apply the lump sum to your loan’s balance. If you have more than one loan, you may want to provide additional instructions based on which loan you want to pay off first.

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