Should I Pay More Than Minimum On Monthly Student Loan Repayments?

Up and down street arrows - did you know the average student loan debt is $37,000?

Flickr user Sento

Did you know that the average student loan debt is just over $37,000? It’s an intimidating number, to be sure. While there are ways to lower that debt amount, or even prevent it, most students will have to deal with some amount of debt. So it begs the question: should you pay more than minimum on monthly repayments?

Benefits of repaying more per month

There are usually two different reactions to this question: “Heck no, student loans are already burning a hole in my wallet. I don’t want to pay back more.” And “Absolutely! The faster I pay off this loan, the better.”

By paying more than the minimum amount every month you would finish paying of your loan earlier and get out of debt faster. Not just that – you would also end up saving money on the accrued interest. Seems like a good idea to go for it and pay more than the minimum whenever you have some extra cash on hand.

But here’s the thing, while paying more than the minimum is generally a good idea. It may not always be the best option for everybody. There are a few circumstances under which it may actually make more financial sense for you not to pay more than the minimum.

Ask yourself these questions to help you decide whether or not you should pay more than the minimum on your monthly student loan repayments.

Commonbond company logo.

Consolidate private and federal loans

Variable APR from 1.96% - 7.02% with auto-debit

Learn More

Am I eligible for public service loan forgiveness?

You may eligible for public service loan forgiveness on your federal student loans if you work full-time for a government agency, certain types of nonprofit organizations, or as a teacher in a school in a low-income area. If you think you may qualify for loan forgiveness. It does not make sense to pay more than the minimum on your monthly loan repayments. This is because every extra payment that you make lowers the amount of forgiveness that you qualify for.

Check out the eligibility requirements for public service loan forgiveness and plan your payments in such a way that you get the maximum amount of forgiveness.

Have I set aside an emergency fund?

No one thinks of setting up an emergency fund when things are going well. Unfortunately, by its very definition, an emergency can arise when you least expect it. Whether it’s a natural disaster, an accident, a medical crisis or even home or car repairs. You need to have money to cover these exigencies. Paying every extra dollar towards prepaying your loan and ignoring your emergency fund can be a huge mistake. Make sure you and your loved ones are protected before contributing extra towards your loan repayments.

Do I have other debts or loans that also need to be paid off?

If you have multiple loans or debts, start by making a list going from the highest interest rate to the lowest. For example, federal student loans have lower rates. Private student loans tend to be higher and less flexible.

Put that money towards repaying your more expensive loans first.

When repaying any loans. One important thing to remember is to instruct the lender to put it towards the principal and not the interest. Paying off the principal immediately reduces the amount of interest that accrues in the ensuing months and lowers the overall cost of your loan.

Speaking of low-stress. Use College Raptor to discover personalized college matches, cost estimates, acceptance odds, and potential financial aid for schools around the US—for FREE!


Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.88% - 5.64%*
Fixed APR: 2.44% - 5.79%*
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90% - 5.25%*
Fixed APR: 2.49% - 7.75%*
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 1.80% - 9.99%*
Fixed APR: 2.15% - 9.99%*
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.64% - 5.65%*
Fixed APR: 2.25% - 5.75%*
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 1.96% - 7.02%*
Fixed APR: 2.59% - 6.94%*
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.44% - 5.97%*
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.87% – 5.33%**
Fixed APR: 2.30% – 5.96%**
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94% - 4.84%*
Fixed APR: 2.99% - 4.94%*
Undergraduate and Graduate
VISIT College Ave
Variable APR: 1.86% - 6.01%*
Fixed APR: 2.47% - 5.99%*
Undergraduate and Graduate, Parent PLUS

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

**Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.

Leave a reply

Your email address will not be published. Required fields are marked *