Should I pay off student loans early?

Concerns & risks

You were trying to get out of debt faster, so you're wondering whether paying off student loans early is a smart move.

Interest is costly.

Causes & evidence

Federal loans have no prepayment penalty. See student loan repayment.

What to do

1. Build an emergency fund first.
2. Target highest-interest loans.
3. Tell your servicer how to apply extra payments.

Common mistakes: Common mistakes: paying off low-interest loans while carrying high-interest credit card debt. Build an emergency fund first. If you pay extra, tell your servicer to apply it to the highest-interest loan. Federal loans have no prepayment penalty. If you're working toward PSLF, paying extra may not help. Think about retirement savings, especially if your employer matches contributions. Before paying extra, check whether your loans have a variable rate; those can rise. Paying even small extra amounts on the highest rate saves the most interest. Set extra payments up through the official servicer and check your next statement to confirm where the money went. If you're on an income-driven plan with possible forgiveness, compare options with the Loan Simulator.

Speed Man tip: If pursuing PSLF, extra payments may not help.

Wrap-up: No penalty. Emergency fund. High interest first.