Should You Pay Your Student Loans First?

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If you have federal student loans and want to know if you should pay them off before other debt, this post is for you.

Want to watch the video version of this post? Check it out here!

Like many Millennials, I have student loan debt. I went to college right out of high school, and I got my bachelor’s and master’s degrees. Six months after graduation, my loans went into repayment status. 

I couldn’t afford to make the monthly payments that they expected of me, so I filled out the documents for the income-based repayment plan. I’m still on this plan today.

When I got serious about paying off my debt, I had to think about where to fit student loans in my debt-free journey. I have finally come up with a solution that works for me.

I have added student loans to the very bottom of my debt snowball. Student loans are not my largest debt, but I have added them to the bottom for several reasons.

In this post, I’m going to take you through the process that led me to this decision, and I will also help you figure out how to prioritize paying off your student loans.


Before we get too far into this post, I want to mention the CARES Act and its effects on student loans in 2020. 

It’s important to mention the CARES Act because it may affect how you prioritize paying off your loans, at least for now.

Due to the pandemic, the secretary of education directed the office of Federal Student Aid to provide relief on federal student loans held by the Department of Education. 

These relief measures include suspending loan payments, not collecting on defaulted loans, and setting loan interest rates to 0%. 

The CARES Act administrative forbearance was initially in place for 60 days but has recently been extended until the end of this year.

This forbearance is something to consider when deciding how to prioritize paying off your student loans.

Now would be a great time to either get ahead on student loan payments or take a break from the student loan payments and redirect your money to something else.

If you have questions about how this forbearance affects your loans, be sure to contact your lender.

Now that we have talked about the CARES Act, let’s move on to a few questions that you should ask yourself when deciding when to pay off your student loans.

Questions to ask

To determine if you should pay your student loans before you pay other debt, you need to ask yourself a few questions. 

The answers to these questions will help you decide if you should pay your student loans off first or prioritize other debt pay off or savings goals.

What are my goals?

The first question that you should ask yourself is, what are my goals.

Goals are so important in determining the path of your debt-free journey. Where do you see yourself in the next 5 years? Will you be expanding your family? Purchasing a home? Maybe you plan to move across the country.

Defining your goals will help you prioritize the things that are important to you. 

My current goals are to pay off our car loan and the medical bills in collections so that we can start building equity in our home. 

In five years, I hope to be in a position to put a substantial amount of money towards our home loan each month and eventually pay off our home early.

So, what are your short term goals? Let us know in the comments below.

Do I have an emergency fund?

The next question to ask is, do I have an emergency fund? Having an emergency fund is so important. 

Emergencies are going to happen. The best way to avoid financial setbacks during a crisis is to be prepared. 

The amount you need for an emergency fund depends on the financial security level that makes you feel comfortable. 

Dave Ramsey recommends an emergency fund of $1,000 while you’re paying off debt. I listened to this advice for a while, but I have decided that I need a bigger emergency fund than that. 

I am in the process of saving 6 months of expenses for my emergency fund. Until that happens, I will be saving money while paying off debt.

Do I have money for major life events?

While we are talking about the future, the next question to ask is, do I have money for major life events?

Life events are different from emergencies because they can be planned and anticipated. 

If you plan to start a family, get married, or move soon, you will need to have money saved. 

Last year, I randomly applied for a job across the state because I was bored with my job. I ended up getting an interview and eventually accepting the position. 

We had to have money to travel 5 hours for the interview and food to eat while we were there (my hotel and one meal were paid for by the company). 

My job also did not include relocation expenses for the move, so that was out of pocket as well.

If we didn’t have money saved for major life events, I would have had to miss out on this opportunity or go into debt to take it.

Take some time to think about major life events that could come up. Do you need to prioritize saving for these before putting extra money towards your student loans?

Am I eligible for student loan forgiveness?

The last question that you should ask is, am I eligible for student loan forgiveness?

In certain situations, you have the opportunity for your loans to be forgiven, canceled, or discharged.

This means that you are no longer required to pay the remaining balance of your loans.

If you have federal student loans, there are several types of loan forgiveness. Each program has its own set of requirements. 

As of right now, my husband and I are both eligible for Public Service Loan forgiveness since we work for government organizations. 

We have to make 120 qualifying payments over the course of 10 years to have our loans forgiven. In addition to this, the current forbearance counts towards our qualifying payments.

I have about 5 years left before I’m eligible for loan forgiveness, and my husband has close to 7.

Do I think this program will still be around in 5 years? I’m not sure. In the meantime, I will put this debt on the bottom of my list and work towards my 5-year goals.

If you’re considering student loan forgiveness, visit to see your options. Pay special attention to the tax information for your specific program.

The bottom line

Everyone’s financial situation is different, and prioritizing student loans in your debt-free journey is no different.

Write down your goals and determine the best course of action for your family based on the answers to the questions in this post.

No matter what you choose, you will eventually pay off your loans and become debt free. 

Want to read later? Pin this to your favorite board on Pinterest!

My husband and I have over $100k in student loans. In this video, I am sharing how we got here and why we chose not to pay our student loans first and focus on other debt instead.

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