Reduce debt

Should You Pay Off Your Student Loans Early?

June 04, 2021  |  Porte Team

While you may spend your time dreaming about a life without student loans — just think of all the ways you can use that money each month towards something else — there are a few questions to consider before you begin to aggressively pay off those loans.

As with all loans, adding additional money to your student loan monthly payment has consequences. With a bit of thought and planning, you can make sure that all of those consequences are beneficial for you and your journey towards financial freedom.

Today we’re covering the five essential questions to consider before you answer the question, “Should I pay off my student loans early?”

  1. Is your career in a field where your loans will be forgiven? ✨
  2. Do you have any other debt? 💰
  3. Do you have an emergency fund? 🆘
  4. Are you putting money away each month for retirement? 📈
  5. Do you have a budget and plan in place? 📝


1. Is your career in a field where your loans will be forgiven?

If you have a public service career, check to see if your student loans can be forgiven, partially or in full. Often, graduates who work within the public sector in government organizations, non-profits, law enforcement, teaching, or the military may qualify to have their student loans forgiven partially or in full.

Be mindful that there is a list of specific requirements you will have to meet in order to have your student loans forgiven. Often you will be required to make payments on your student loans over a set amount of time and verify that you have worked in the public service sector for a specific number of years (and are currently still working in that field), among other requirements. For more information on student loan forgiveness, to see if you may qualify, and to learn how to apply visit

If you determine that you do meet the qualifications for having all of your student loans forgiven, make the minimum monthly payments and pay nothing extra.


2. Do you have any other debt?

For this question, consider all of your debt. Is the interest on your other debt higher than the interest on your student loans? Often, credit card debt or personal loan debt will have significantly higher interest rates than student loans. This makes paying off the loans with higher interest rates more advantageous since it will save you more money in the long run.

Once you pay off your high-interest rate loans, you can take that money you would have put towards those loans and apply it to your student loan payment. This is the debt avalanche method and can help you knock out debt quickly.

Credit Card Debt Vs Student Loan Debt


3. Do you have an emergency fund?

After a year like 2020, we all know life can be unpredictable. This is why creating an emergency fund is essential. An emergency fund is a stash of money you’ve set aside to cover all of your basic expenses for 3 to 6 months in case of an emergency.

It may be tempting to put all of your extra money each month towards paying off your student loans, but you’ll want to also focus on creating a financial safety net for yourself. You don’t want to create a situation where you need to take out another loan in order to cover your living expenses.


4. Are you putting money away each month for retirement?

Like we just discussed, it might feel great to pay off your student loan quickly by putting all of the extra money you have each month towards the principal of these loans, but what are you potentially giving up in the future by doing this?

While saving for retirement might sound daunting and seem so far off in the future that it doesn’t feel like you need to do anything about it, we suggest that you start saving now. By setting aside a little money each month for your retirement you can make sure that you’re in a financial position to really enjoy your retirement years. Before you start aggressively paying off your student loans, consider what steps you can take to create a financial safety net for your future self.

How to Start Saving For Retirement


5. Do you have a budget and plan in place?

Once you’ve determined that you aren’t in a career that will forgive your loans, your student loan debt is your top priority to pay off, you have a solid emergency fund, and you’re regularly contributing to your retirement account, it’s time to figure out how much extra you can actually afford to put towards your student loans.

Once you have your monthly budget set, take some time to see what’s left over to apply to your loans. If you discover that you don’t have extra money each month to pay towards your student loans, that’s okay! Do what’s best for your financial health.

You can also regularly check in with your budget to see if it is possible to make additional one-off payments. You might discover that while you can’t afford to regularly apply more to your monthly payments, there might be a few times during the year where you can. For example:

  • When you receive a tax refund
  • After you receive a year-end bonus
  • When you receive a raise at work
  • After you pick up a side-hustle


The bottom line

The most important thing for your student loans is to make consistent minimum monthly payments. By taking the time to review your budget and to create a repayment plan for yourself, you’ll be able to discover if paying off your student loans early makes the most sense for you and your journey towards financial freedom.

For informational purposes only and not intended as financial advice. Please contact your financial advisor before making any decisions.

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