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The Benefits Of Paying Off Student Loan Debt Early

Last Updated: February 26, 2015 BY Jordann - 54 Comments

Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.

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The Benefits Of Paying Off Student Loan Debt EarlyHere is a post by my staff writer Jordann. She submitted this post before I announced that my student loans are gone, so hopefully that will clear up any confusion below 🙂

Student loan debt is something pretty much everyone reading this blog can relate to. Most people who go to University will graduate with some form of debt, whether it’s federal loans (like mine), bank loans, or a personal loan.

This makes for a sort of bitter-sweet graduation day, where you’re excited to take on new opportunities and possibilities, but nervous about finally having to start paying all of those loans back.

The period after graduation from school, that used to be filled with starting new jobs, buying homes and getting married, is now what I like to refer to as the “Paying back student debt gap years”.

There’s typically no home buying, and no family starting. How can there be? When student loan debt is weighing you down? Most people don’t try and pay their loans off particularly quickly, instead they focus on making the minimum payments and figuring out their life. Not everyone though. Some people take those gap years and run with them.

Michelle is about to pay off her student loans once and for all, go Michelle! She finished up her MBA with a fairly significant student loan debt and has done an admirable job at attacking it.

I’m in the same boat. I graduated from university with the average amount of student loans, $26,720. I was nervous about paying them back, but once I got into a good groove, I managed to get rid of them in 17 months. Since we’re both student debt free now, I’d like to go through some of the great perks of not having student loan debt.

More Freedom

This one is fairly obvious, less debt means more options for your money right? Absolutely! Not having a monthly payment to worry about means I can spend that extra money on things like retirement savings, traveling, or plain old lifestyle inflation.

I can also take more career risks, because I’m not constrained by my monthly debt payments. Naturally, I’m doing something completely boring with it: I’m paying off my car loan.

 

More Access to Credit

Ok, relax, let me speak. I don’t mean “My student loan debt is gone, I’m going to get a nice shiny new line of credit and max that sucker out!” Duh. I mean that when the time comes for me to buy a house, I’m not going to have an outstanding student loan counting against me.

Many people I know have bought homes while still carrying sizable student loans. This definitely affected how much they were qualified to borrow, and subsequently, what type of house they bought.

 

More Peace

On a less tangible note, getting rid of a debt once and for all means, at least for me, that there’s less on my mind.

I can go to the park with my dog without having my mind wander to my student loans. I don’t have to worry so much for my job security, because I have fewer demands on my money.

I don’t have to push so hard to earn extra income, because one of my major goals for that income has already been achieved. I find myself day dreaming about my career, and being excited for the possibilities, not anxiously worrying about how I’m ever going to make enough money to pay off my debts.

Student loans were a huge pain in the butt. I hated them with a passion and wanted to see them gone. It was a really tough 17 months, but I did it. Is it as awesome as I thought it was going to be? Well, there was no parade, no slow clap, no medal at the end of the finish line. But, when I’m driving home at the end of the day, feeling lighter than I have in years, that makes it all worth it.

Do you have student loans? Are you trying to pay them off quickly?

 

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54 Comments
Filed Under: Career, Debt, School Tagged With: Career, Debt, Student Loans

Comments

  1. Jimmy says

    July 11, 2013 at 4:56 am

    student loans are a massive bugbear. A friend just finished paying his back and he’s 32.

    Reply
    • Michelle says

      July 11, 2013 at 8:53 am

      I’m glad mine are gone 🙂

      Reply
  2. Thomas | Your Daily Finance says

    July 11, 2013 at 5:16 am

    Congrats on having taken care of those student loans. Wow to think you got rid of them in 17 months. That is a lot of effort on your part. I can’t wait to be able to come on and not have to think about the money I owe for student loans. Currently the wifey and I are still paying on ours. We need to pick up the pace and knock those things out soon. That extra money would be very helpful.

    Reply
    • Michelle says

      July 11, 2013 at 8:53 am

      When do you think yours will be gone Thomas?

      Reply
  3. Kasey @ Debt Perception says

    July 11, 2013 at 5:34 am

    I have student loans up the wazoo. I’m trying to pay them off quickly but paying interest on interest makes for slow progress.

    Reply
    • Michelle says

      July 11, 2013 at 8:55 am

      I’m sorry Kasey 🙁

      Reply
  4. DC @ Young Adult Money says

    July 11, 2013 at 6:18 am

    I do have student loans, but I am not trying to pay them off quickly. This might change, but right now I want to build up my emergency fund. I am working on side hustles quite a bit to try to increase my overall income, with the ultimate goal of it paying for my mortgage and student loans each month. Not having debt and/or having a higher income to offset it can definitely give you more freedom! Congrats on paying yours off!

    Reply
    • Michelle says

      July 11, 2013 at 8:57 am

      Sounds like you have a great plan DC!

      Reply
  5. Holly@ClubThrifty says

    July 11, 2013 at 6:35 am

    We paid the last of Greg’s loans off last year! It was a relief because it felt like we had been paying on them forever!

    Reply
    • Michelle says

      July 11, 2013 at 8:57 am

      WOOOHOOO Holly!

      Reply
  6. Alexandra @Real Simple Finances says

    July 11, 2013 at 7:05 am

    This is really motivation, Jordann! If I have double the student loan debt as you, then technically I should have it done in 34 months, right? 😉 That’s a nice goal, and it really helps me feel as though this journey is manageable. I hate seeing my balance creep up every month due to interest, and my husband and I are making an aggressive plan to pay these suckers off as quickly as possible.

    Reply
    • Michelle says

      July 11, 2013 at 8:59 am

      What’s your payoff date? Good luck 🙂

      Reply
      • Alexandra @ Real Simple Finances says

        July 12, 2013 at 12:37 pm

        Thanks! I actually don’t have a payoff date. I’m rearranging some other finances to make more room for extra payments. 🙂 After that I will get my payoff date goal and post it everywhere!

        Reply
  7. Amanda @ the giraffe life says

    July 11, 2013 at 7:06 am

    I had 20k in loans and paid them off in about 2 years. 🙂 I figured out how much the interest would cost me and used that as motivation to pay back my loans early. I’m not paying back my car loan early (the interest rate is 0%) so we’re using that money toward the mortgage now.

    Reply
    • Michelle says

      July 11, 2013 at 9:00 am

      Great job!

      Reply
  8. Michael @ The Student Loan Sherpa says

    July 11, 2013 at 7:16 am

    I have a ton of loans from law school, so it will take me a long time to pay them off. I do look forward to the days of freedom from my student loans.

    Reply
    • Michelle says

      July 11, 2013 at 9:00 am

      When’s your estimated payoff date?

      Reply
  9. John S @ Frugal Rules says

    July 11, 2013 at 7:39 am

    We finally paid mine off last January. It felt like forever and it was pretty close to that. 😉

    Reply
    • Michelle says

      July 11, 2013 at 9:00 am

      WOOHOO John!

      Reply
  10. Andy | Income By Example says

    July 11, 2013 at 7:59 am

    I have a boat load of debt and am increasing my side hustles to get it paid off fast. I’m keeping track of it on my blog and its definitely inspiring and makes me feel like I’m finally taking hold of my finances. One day I will feel this freedom too, can’t wait…

    Reply
    • Michelle says

      July 11, 2013 at 9:01 am

      I can’t wait also Andy 🙂

      Reply
  11. Pauline says

    July 11, 2013 at 8:00 am

    I was luck to graduate debt free but I am sure I would have made my best to pay off the loans early. Having that sum looming over your head in your most productive years can really prevent you from moving forward. Better have it out of the way.

    Reply
    • Michelle says

      July 11, 2013 at 9:01 am

      I agree. I was so stressed out about them all the time!

      Reply
  12. Matt Becker says

    July 11, 2013 at 8:09 am

    I think the peace of mind aspect is a huge one. As is the flexibility. I was extremely fortunate to never have student loans, but I can certainly imagine it would have been frustrating to have to dedicate a large chunk of my income to them. Though hopefully I also had more income to dedicate because of them, so it’s a bit of a mixed bag.

    Reply
    • Michelle says

      July 11, 2013 at 9:02 am

      The peace of mind is wonderful!

      Reply
  13. Brian @ Luke1428 says

    July 11, 2013 at 8:22 am

    “I can also take more career risks, because I’m not constrained by my monthly debt payments.” This is a great point that I think many people overlook. Debt prohibits us from taking more risk or pursuing a dream job. Instead we are forced to plod along in a vocations we only half enjoy because we rely on the weekly paychecks so much to pay off debt.

    Reply
  14. Alexa says

    July 11, 2013 at 9:05 am

    I don’t have or haven’t ever had any student loans but I can only imagine the burden they bring. Congratulations to both of you for all of your hard work in getting rid of them!

    Reply
  15. Kate says

    July 11, 2013 at 9:20 am

    Your posts have inspired me to look outside my standing income and look for that “side hustle” to pay off our cars and student loans. I am going to pay off my car by the end of year if it kills me and then I am going to tackle those student loans. They do loom over your head!

    Reply
    • Michelle says

      July 11, 2013 at 10:11 pm

      This makes me happy to hear Kate. Can’t wait until your loans are gone!

      Reply
  16. SuburbanFinance says

    July 11, 2013 at 9:33 am

    If possible, everyone should pay off their student loans early! It’s definitely something I would do if I had federal loans.

    Reply
  17. Done by Forty says

    July 11, 2013 at 10:05 am

    We paid off my student loan right before purchasing our home, and it was a great feeling (though I certainly let them hang around too long.) Congratulations, Jordann! The feeling of being debt free is fantastic, but unfortunately doesn’t show up in P&L statements. It’s real, but hard to measure.

    Reply
  18. SavvyFinancialLatina says

    July 11, 2013 at 10:40 am

    We didn’t have any student loans from school. I’m very glad we didn’t because I know how much people pay in student loans a month, and it’s a scary number! A lot of students don’t think how much student loans will be in the future. The monthly payment seems so far away. But when you consider the amount of bills you end up being responsible for after graduation, the sum is not a small one. Highly encourage students to figure out a way to not get student loans. Some students are lucky, like my hubby, who got parental support for tuition. He worked to pay for living expenses. I received a lot of merit scholarships, and my parents provided a $300-$400 stipend for the first 3 years. If you can get a job on campus (they are relatively easy), get scholarships, and not have unnecessary expenses, you can graduate debt free.

    Reply
  19. Nick @ ayoungpro.com says

    July 11, 2013 at 11:10 am

    Getting rid of student loans (and debt in general) early allows you to harness your greatest wealth building asset, your income, and put it to use to build wealth. The easiest way to build wealth is to invest consistently over a long period of time. 🙂

    Reply
  20. Peter says

    July 11, 2013 at 11:17 am

    Congratulations Jordann. It must some feeling to pay off your loan. I just paid off our two cars, it’s such a great feeling. My student loan is next.

    Reply
  21. Sean @ One Smart Dollar says

    July 11, 2013 at 12:22 pm

    I was lucky and I didn’t have student loans, but if I did they would have been a high priority.

    Reply
  22. Canadian Budget Binder says

    July 11, 2013 at 1:59 pm

    Student loan debt is a big burden for those coming out of school to carry on their shoulders. No matter how much the debt is, debt is debt and any student should want to get rid of it as soon as possible Congrats again on paying your debt off. I paid cash for my educations both times along with monetary awards I won but I know that not everyone is fortunate. Great tips.

    Reply
  23. Victor Björklund says

    July 11, 2013 at 2:27 pm

    I’m not sure how it is in United States but in Sweden the interest on student loans is like 0.5% which means that is much lower than any other form of credit so if one should pay of debt it would be smarter to pay of debt on houses and the car before. =)

    Reply
    • Michelle says

      July 11, 2013 at 2:31 pm

      I wish interest rates on student loans were that low here! Mine were mostly at 6.8%.

      Reply
  24. Lisa E. @ Lisa Vs. The Loans says

    July 11, 2013 at 2:52 pm

    I can’t wait to experience these benefits when my student loans disappear!

    Reply
  25. Cat says

    July 11, 2013 at 3:15 pm

    Nope, but I definitely agree with paying them off early!

    Reply
  26. Newlyweds ona Budget says

    July 11, 2013 at 4:09 pm

    I paid off a big chunk last month, leaving me with about $6,000 left in loans, all 0% interest. Most likely will pay them off by the end of the year and then we’ll be done!

    Reply
    • Michelle says

      July 11, 2013 at 10:17 pm

      I’m jealous of your 0%!

      Reply
  27. Lauren says

    July 11, 2013 at 5:06 pm

    Great post! I’ve pretty much given up paying attention to my student loans. Mine is $50,000 and the interest is so ridiculous that I’m paying the bare minimum (which is nothing at the moment, given how little I need to earn while living in Vietnam) until they get written off 🙂

    Reply
  28. CeCe @Pink Sunshine says

    July 11, 2013 at 5:56 pm

    I paid the minimum and did it in 10 years. I just didn’t have the means to do it any quicker. It was only 16k. I can’t believe I’m saying ONLY because it’s crazy that people have triple that now as the average. Debt period is oppressive. It makes it so much harder to pay yourself first and make strides in savings and home buying.

    Reply
  29. Krista says

    July 11, 2013 at 8:41 pm

    I’m all about paying back those student loans. I also agree that a major reason is it just FEELS better. I’ve been told by many people that because the interest rates on those loans is less than 7% it’s not worth paying them back yet and instead I should invest – but what if I lose my job or my husband loses his? We can always lessen the amount we invest (and I’m all for investing a little each month even when you’re paying off debt) but I can’t just back out of my student loans without major repercussions. Nice work on paying them off!

    Reply
  30. KK @ Student Debt Survivor says

    July 11, 2013 at 9:38 pm

    No student loans, thank goodness. So glad to have them out of my life!

    Reply
  31. Madame says

    July 11, 2013 at 11:10 pm

    I took out student loans to attend school too and actually the first year of university, I ended up dropping out. One of the reasons was because of my fear of having to pay back this money after I finished school. It really stressed me out. I barely had anything saved to my own name, and all I could think about was me not being able to pay off the loan.

    It may have been a good thing that I took a pause from school at that point, as I ended up building a nice cushion and then went back to school in a completely different major. I graduated and paid off my entire student loan once the grace period (for charging interest) was over.

    Reply
  32. GamingYourFinances says

    July 12, 2013 at 6:14 am

    Peace of mind is huge! We’re 311 days away from paying off our mortgage and we can already feel the freedom!

    Reply
  33. JP @ cashsnail says

    July 12, 2013 at 9:35 am

    I had 20K€ of student loan after graduating. It took me nearly 3 years to pay them off… I could have done it faster, but I was traveling a lot & enjoying life in parallel.
    The best part of paying off the loan is that you grant yourself a big “salary raise” 🙂

    Reply
  34. Brian says

    July 14, 2013 at 2:58 am

    I was fortunate in that my undergrad was paid for, however, I am thinking very much about getting an MBA. The problem here is the expense if I want to go to a top tier school. The online options are reasonably priced, although putting that on my resume is a concern. Still thinking!

    Reply
  35. Arianwen says

    July 17, 2013 at 2:52 am

    This is food for thought! I haven’t ever tried to pay mine off, even though I have savings. I guess those savings give me more peace of mind than having no debt!

    Reply
  36. Timothy Hogg says

    August 13, 2013 at 12:15 pm

    If you have student loans in the 3.65% range– isn’t that technically good debt and you should focus on paying down other debts that have a higher percentage to them? I don’t see what the advantage is– that being said I have 40k of student loans and I am 40 now— its going down slowly, but not slow enough– but I feel as if I put that money to that debt, I am actually losing money when everything yields more than that. Am I missing something?

    Reply
  37. Shorething says

    December 27, 2013 at 11:17 am

    That is all she had? That is nothing! Try having 130k in student loans. I could pay off 27k in 17 months too its not hard and I have done it. But since Obama took office, I am stuck paying interest on interest and their aint a damn thing I can do about it. Every time I get some progress in getting answers they sell off my loans and I have to start all over. Im so sick of hearing about these kids with ONLY 27k in student loan debt and crying like it is the end of the world. Having over 100k in student loans and making double payments and seeing little progress since most of it gets eaten up my interest is something to worry about. 27k in loans is something to laugh at since it is easy to pay off and there is a light at the end of the tunnel.

    Reply
  38. Heather says

    June 2, 2014 at 11:31 am

    I may one of the few people that planned ahead for college when I was in high school. We didn’t have much money so I realized I’d have to pay every penny that financial aid didn’t pick up. $20k a year in university tuition is way over the top for $5k I could receive in the same year for the same credits at a community college. I think I’m going to pay the rest of my student loans off this week. I’ve been saving around $15k-$20k a year by not spending over the top or buying $100 jeans and $4 coffee everyday. I’m glad I read this article!

    Reply

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My name is Michelle and I'm the author/owner of Making Sense of Cents. Learning how to save money and make more money changed my life. It allowed me to pay off $40,000 in student loans, start my own business, and I now travel full-time.

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