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Which Student Loan Should You Pay Off First?
Paying off high-interest student loans first will save you the most money.
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NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
Ryan Lane is an editor on NerdWallet’s small-business team. He joined NerdWallet in 2019 as a student loans writer, serving as an authority on that topic after spending more than a decade at student loan guarantor American Student Assistance. In that role, Ryan co-authored the Student Loan Ranger blog in partnership with U.S. News & World Report, as well as wrote and edited content about education financing and financial literacy for multiple online properties, e-courses and more. Ryan also previously oversaw the production of life science journals as a managing editor for publisher Cell Press. Ryan is located in Rochester, New York.
Laura McMullen assigns and edits content related to personal loans and student loans. She previously edited money news content. Before then, Laura was a senior writer at NerdWallet and covered saving, making and budgeting money; she also contributed to the "Millennial Money" column for The Associated Press. Before joining NerdWallet in 2015, Laura worked for U.S. News & World Report, where she wrote and edited content related to careers, wellness and education and also contributed to the company's rankings projects. Before working at U.S. News & World Report, Laura interned at Vice Media and studied journalism, history and Arabic at Ohio University. Laura lives in Washington, D.C.
Lisa Mulka is a freelance writer specializing in personal finance content. With more than 15 years of writing experience, Lisa most recently authored a book on personal financial literacy and served as lead writer on the FDIC’s Money Smart for Young People program. She holds a bachelor’s in creative writing, and master’s degrees in written communication and in educational technology. Lisa lives with her husband and two children in Michigan, where she spends her free time teaching the next generation of writers at Johns Hopkins University Center for Talented Youth.
Contributing Writer
When deciding which student loan to pay off first, consider what motivates you.
If you’re determined to save as much money as possible, tackle the loans with the highest interest first. If you need some momentum, knock out small balances first, regardless of interest rate.
When your goal is to pay off student loans fast, the best strategy is the one that keeps you on track. Whichever you choose, remember to always pay the minimum on all your student loans — even if it's not the one you're trying to pay down.
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Whether you have private loans, federal loans or both, consider these strategies:
Pay off high-interest loans first
Getting rid of loans in order of the highest to lowest interest rate is called the debt avalanche, and it will save you the most money. Paying off a loan with a 4.53% interest rate, for example, lets you keep 4.53% of the balance each year you would have been in repayment.
Here’s an example with two $10,000 loans and two different interest rates.
Say your $10,000 loan has a low 4.53% interest. If you pay it off in five years — rather than the standard 10-year repayment timeline — you will save about $1,259 in interest.
Say your other $10,000 loan has a 7% interest rate. If you prioritize that loan over the 4.53% loan and pay it off in five years rather than 10 years, you will save more: $2,052.
As you pay off each loan, roll over your payment to the next highest interest rate.
Pay off small loans first
Some borrowers like watching their loans disappear, which encourages them to continue focusing on debt payoff. If that sounds like you, use the debt snowball method. You’ll pay off the smallest student loan first, rather than the one with the highest interest rate.
As you pay off each loan, roll over your payment to the next smallest balance.
Combine strategies
You can also opt for a combination method. Rank your loans by interest rate, and if several have the same or similar rates, pay off the smallest one first. You’ll still get some savings from choosing the debt avalanche strategy, but you’ll enjoy early, quick wins, too.
🤓Nerdy Tip
When determining which loans to prioritize, also consider whether a loan is federal or private. Private loans have fewer repayment options and opportunities for forgiveness than federal loans, as well as a higher interest rate. So you’ll likely want to pay those sooner.
Pay attention to the big picture
Not everyone should pay off student loans early. First, aim to:
Saved at least a month of expenses for emergencies.
Started saving automatically for retirement, either by getting the company match on a 401(k) or putting money in a Roth IRA.
Made a plan to pay off credit card balances, which often have the highest interest rates of all.
If you're not quite ready to aggressively repay student debt, some strategies can still help you chip away at your balance. For example:
Making biweekly loan payments will shrink your repayment term.
