Can You Pay Off Student Loans in One Lump Sum?

You can pay off student loans early with one lump sum. Use this student loan lump-sum payment calculator to see how much you could save.
Ryan Lane
By Ryan Lane 
Updated
Edited by Des Toups

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You can use a lump sum to pay down or pay off student loans. There are no penalties for prepaying federal or private student loans.

You’ll save time and interest if you can pay off your student loans in one lump sum. But before you do, consider financial goals that may take higher priority — like building up an emergency fund or beefing up retirement savings.

Should you make a lump-sum student loan payment?

Before making a lump-sum student loan payment, evaluate your other financial priorities. Putting that cash toward an emergency fund, retirement savings or high-interest debt, like credit cards, could save you more money overall and limit your chances of increasing your debt down the road.

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

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

Even if you don't have a lump sum, any extra payment helps. In the scenario above, adding $100 to your monthly payments would cut 35 months off your term and save you roughly $3,070 in interest.

Other strategies, like refinancing with a private lender at a lower interest rate, can also 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 student loan 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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