Skip to content
ScoreSense
  • Available Features
    • Credit Scores & Reports
    • Credit Insights
    • Credit Monitoring
    • Identity Theft Monitoring
    • Credit Tools
    • Mobile App
  • Blog
  • In The News
  • Credit Journeys
    • College
    • Military
    • Home Buying
  • Contact
  • FAQs
  • Reviews
  •   Sign In
  • Get My Scores
Main Menu
  • Credit Education
    • Credit Basics
      • Credit Bureaus
      • Types of Credit
    • Credit Scores
      • Credit Score Factors
      • Credit Score Tips
    • Credit Reports
      • Negative Credit Items
      • Credit Report Errors
      • Credit Report Disputes
    • Credit Monitoring
      • Signs of Credit Fraud
      • Credit Fraud Recovery
      • Credit Security Tactics
    • Credit Repair
      • Credit Repair Scams
    • Build Credit
      • Establish Credit for Teens & Students
    • News & Trends
  • Fraud
    • Identity Protection
    • ID Theft
      • Child ID Theft
      • Tax ID Theft
      • Medical ID Theft
    • ID Theft Recovery
    • Data Breaches
    • News & Trends
  • Personal Finance
    • Loans
      • Home Loans
      • Auto Loans
      • Student Loans
      • Personal Loans
      • Business Loans
    • Budgeting
    • Saving
    • Debt
    • Banking
    • Investing
      • 401K & IRAs
      • Stocks & Mutual Funds
    • Taxes
    • Life Events
      • Marriage
      • Parenthood
      • Retirement
      • Divorce
      • Death
      • Bankruptcy
      • Job Loss
      • Natural Disaster
    • News & Trends
  • Credit Cards
    • Interest Rates
    • Denied Credit
    • Card Types
    • Manage Balance
    • News & Trends
  • Credit Tools
    • Credit
      • Monitoring & Alerts
      • Credit Scores & Reports
      • Credit Insights
      • Credit Specialists
      • Score Simulators
    • Identity Theft Insurance
    • Identity Theft Monitoring
    • Sex Offender Monitoring
  • COVID-19
Search

CreditSense > Personal Finance > Loans > Student Loans > Which Student Loans Should I Pay Off First?

Which Student Loans Should I Pay Off First?

Picture of ScoreSense

ScoreSense

  • December 2, 2020

If you’re struggling to pay off student loans, you’re not alone: 44.7 million Americans are carrying a total of $1.64 trillion in student debt. Many of them have loans from more than one lender. If you’re carrying student loans from multiple sources you may be wondering which loans to pay off first, especially if you have the resources to make more than the minimum payments. 

There are several approaches to prioritizing debt payments. Each has advantages and disadvantages, so you’ll need to review them and decide which is most appropriate to your needs.

Should You Prioritize Student Debt?

If you’re carrying large amounts of student debt this may not seem like a sensible question: getting that debt off your back can seem like the most important financial goal you have. 

Before you start using your extra money to pay off student debt, though, you should consider other important financial problems and goals: 

  • Credit card debt. Credit card debt typically carries much higher interest rates than student loan debt. If you’re carrying a credit card balance from month to month, consider paying that off first. 
  • Your emergency fund. An emergency fund is a critical backup plan that can save you from having to rely on credit card debt or payday loans. If you don’t have an adequate emergency fund, consider building one up before prioritizing student loans 
  • Retirement savings. Retirement may seem far away, but the earlier you start saving the more ready you’ll be when it arrives. If you haven’t started contributing to a 401(k) or individual retirement account (IRA), consider starting one before you accelerate your student loan payments. 

If your finances are stable and your other debts and needs are well managed, paying off those student debts will probably become your top priority and you’ll need to decide which loans to pay off first.

Know Your Student Loans

Before you start prioritizing your loans, you’ll need complete information on every loan you have. Make a full list of your loans, with answers to these questions.

  • Is the Loan Private or Federal?
  • If the Loan is a Federal Loan, is it Subsidized or Unsubsidized?
  • Do You Have a Cosigner on the Loan?
  • What is the Interest Rate? Is it Fixed or Variable?
  • What is the Total Balance on the Loan?

With this information in place, you have a basis for prioritizing your loans.

How to Prioritize Student Debt

If you have more than one student loan you will probably want to select one debt to pay off first. You’ll make only minimum payments on all the other loans and devote all other available funds to paying off that priority loan. When it’s paid, you’ll move on to the next loan on your priority list. 

Here are some strategies for prioritizing your loans:

  • Start with private loans. Any loans that are on your credit report but are not listed on your National Student Loan Data System account are private loans. These loans usually have higher interest rates than federal loans and have fewer relief and repayment options. You’ll want to pay these loans off first. 
  • Prioritize loans with consignors. If you have loans with cosigners, you may wish to focus on clearing those first and releasing your cosigners from their obligations. You can do that by paying the loans off first, by refinancing the loans in your own name or by using a cosigner release clause: some lenders will allow you to release a cosigner after a certain number of payments are made. 
  • Prioritize the loan with the highest interest rate. Purely from a financial perspective, the most sensible approach to prioritizing student loans is to focus first on the loan with the highest interest rate. Pay that off first and move on to the loan with the next-highest rate. The money you save on interest can help you pay off other loans faster! 
  • Prioritize the loan with the smallest balance. Some borrowers find that successfully paying off one loan gives them the motivation they need to focus on the next. If you fit into that category, try focusing on your smallest loan first. Get that one paid, celebrate and move on to the next smallest! 
  • Prioritize loans with variable interest rates. These loans may have competitive interest rates now, but that could change with time. Avoid unpleasant surprises by retiring variable-rate loans early. 
  • If you have federal loans, pay the unsubsidized loans first. Unsubsidized federal loans have higher interest rates than subsidized loans. Pay off the unsubsidized loans first. 
  • Pay subsidized federal loans last. Subsidized federal student loans have the lowest interest rates and the widest range of privileges of any student loans. These loans are costing you the least, so pay them off last. 
  • Consider refinancing or consolidation. If you have private loans and your credit has improved since you got them, you may benefit from refinancing. You can take out a new loan, use it to pay several old loans and lower your rate and consolidate several payments into one at the same time. Federal student loans can be consolidated with a Federal Direct Loan. You will have fewer payments to worry about, but you won’t get a lower interest rate 

There are several considerations here. Paying off loans with high-interest rates makes good financial sense, but if getting a relatively small loan off your back will help keep you motivated or if your priority is getting a cosigner off your record there’s nothing wrong with putting those loans first. You will almost always want to put federal loans last. Their lower interest rates and multiple repayment options make them easier to manage than private loans. 

Remember that even if a loan has a low priority, you still have to make the minimum monthly payment. Your priority list determines where you place any money you have left available for loan payments after the minimum payments on all your loans are made. You don’t want to default on student loans. The consequences can be severe. 

Conclusion

Student debt can seem insurmountable, especially if you have multiple loans and a large balance. It’s not impossible to pay them off. Others have done it and you can too. Get your financial life in order, choose a loan payment strategy that works for you, and focus on paying the loans off one at a time, according to your priorities. It takes time and discipline, but the outcome is worth the effort!

Smart Moves

Get your credit scores and reports from all three bureaus instantly.

Take Action

Shield your credit and finances with up to $1 million identity theft insurance*.

Get Protected

Find out how your score could change if you pay down a credit card or miss a mortgage payment.

Explore Tools

RELATED

How to Defer Your Mortgage During the Coronavirus Pandemic

Will Losing My Job Because of the Coronavirus Hurt My Credit Score?

How to Tighten Your Budget During the Coronavirus Lockdown

What Should I Do If My Information Is Part of a Data Breach?

Tax Season is High Risk

Why Are My 3 Credit Scores Different?

6 Ways to Spend Less This Holiday Season

What is a Write-off and How is it Different From a Charge-off

You are more than just 1 credit score.
Get your credit scores and reports from all three bureaus instantly.
Get My Scores

What's Your Credit Score?

Get Your credit scores & reports from all 3 bureaus, Instantly!**
Get my scores

Sign Up for Our Credit Newsletter

ScoreSense

  • Have an Account? Sign In
  • 1-800-972-7204
  • Mon-Fri: 8AM to 8PM CT
    Sat: 8AM to 5PM CT
    Sun: Noon to 6PM CT
  • customercare@scoresense.com
  • 3400 N Central Expy Ste #110-298
    Richardson, TX 75080

Company

Contact Us
Terms and Conditions
Privacy Policy
OTL*ScoreSense

 

Facebook Youtube

Features

Credit Scores & Reports
Credit Insights
Credit Monitoring
Identity Theft Monitoring
Credit Tools

Resources

Learn About Credit
What is a Good Credit Score?
Credit Score Range

Mobile Apps

© 2001-2025 One Technologies, LLC. All rights reserved.

ScoreSense® is a trademark of One Technologies, LLC.

Do not sell/share my information |

*Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. The description herein is a summary and intended for informational purposes only and does not include all terms, conditions, and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.

**After verification of your identity, your scores are available for secure online delivery in seconds.

 

Scroll to Top