How To Pay Off Student Loans: Start with the Highest Interest

Pay off the student loan with the highest interest first.

Flickr user VIA Agency

There’s a lot of advice out there on how to pay off student loans. The truth is, there is no one way that works best for everybody. You have to take time to understand the options available and choose one that is best suited to your short-term financial circumstances and your long-term financial goals.

High Interest vs Low-Interest Loans

If you’ve taken multiple loans over your college term and each of these loans would have different rates of interest. One of the many decisions you need to make is the order in which to pay off the loans.

The advice regarding this is unanimous—you should pay off the loans with the highest interest rates first. By paying off your high-interest loans first, you will significantly reduce the total interest that accrues over the term of your loans.

Private vs Federal Student Loans

When you compare your loans and the interest rates on each, you will see you’re your private student loans have the highest rates of interest, in addition to which they have less repayment flexibility. It makes the most financial sense then to pay off your private student loans first and then deal with your federal student loans.


Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.99%* +
Fixed APR: 2.98%* +
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90%* +
Fixed APR: 2.95%* +
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 2.13%* +
Fixed APR: 2.58%* +
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.89%* +
Fixed APR: 2.50%* +
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 2.46%* +
Fixed APR: 2.59%* +
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.74%* +
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.95%* +
Fixed APR: 2.55%* +
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94%* +
Fixed APR: 2.99%* +
Undergraduate and Graduate
VISIT College Ave
Variable APR: 2.39%* +
Fixed APR: 2.58%* +
Undergraduate and Graduate, Parent PLUS

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

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