Should I use my savings to pay off student loan debt?

Hi. First time posting. Thanks for being a great resource. I finally paid my student loan down to the point that I actually have enough savings to pay it in full. I have been debating whether to use my savings or just continue to pay on them. Right now I’m paid ahead six months so the majority of my payments are going towards the principal. Any opinions? Advice? Thanks so much.

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If you use all your savings to pay off your student loans, how quickly can you get your savings back up to the same level or more? It’s always better to pay down your debit, but you should keep about $1000 aside for emergencies.

Ask yourself “Would it be better to keep putting money each month to a student loan that is growing due to interest (aside from right now where most loans are interest free due to the pandemic) or would it be better to not have to worry about it and apply that payment back into savings (hopefully earning interest) or use it for other goals?”


Plus, the interest on the student loans are probably low or no interest at all as @jeremym pointed out. As for the emergency fund, I’d keep as healthy an emergency fund as possible. You don’t know what’s coming down the pike. You’ve done good, @ann.hay.


What is the interest on your student loans? Even if you are paying mostly principal there is still interest. Then what interest are you earning on your savings? I am willing to bet that its much lower that the interest charged on your student loans.

If you saved up before, you can save up again. Pay off those student loans. You will feel better AND your money will be earning more because you won’t be losing value by paying interest.

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Thanks for the advice. Unfortunately my loan didn’t qualify for interest free. My big saving grace though is that it’s completely federal, no private. What I may do instead of using savings is try to get extra shifts at work. It is so nice to see a light at the end of the student loan tunnel. Party at my house when I make the final payment.??

@elizabethPugliese-Shaw The interest on my loans is 7.25 percent. The interest on my savings account is negligible. I think what I’m going to do is shorten the time by paying significantly more. I have 3 years left. I won’t completely wipe out my savings but I will use it to pay a thousand from time to time. Thanks for the advice.

@sthom. Thank you. It’s been a long time coming.