The burden of student loans can weigh heavily on many graduates, prompting the question of how to best approach repayment. While the desire to eliminate debt quickly is understandable, there are compelling reasons to consider a more measured approach to paying off student loans. Let’s explore the advantages of paying off your student loans over time and the key considerations in making this decision.
Why You Should Pay Off Your Student Loans Over Time
While the desire to eliminate debt quickly is understandable, there are compelling reasons to consider a more measured approach to paying off student loans. Let’s explore the advantages of paying off your student loans over time and the key considerations in making this decision.
Published December 12, 2023
6 min read
When should you pay off student loans?
Determining the right time to start repaying your student loans depends on various factors including your financial situation, career trajectory, and financial goals. Many factors can affect the timing of student loan repayment including life milestones such as relocating, purchasing your first home, or starting a family.
Additionally, financial goals such as building an emergency fund or paying down high-interest debt could be ahead of, or equal to student loan repayment on your list of personal financial goals. We’ll delve into these considerations to help you make an informed decision about your student loan repayment strategy and timeline.
Paying off student loans quickly vs. over time
While there’s no one-size-fits-all strategy for paying off student loans – everyone’s personal financial situation is different – here are some general pros and cons to consider when deciding to pay off your student loans as quickly as possible or over time:
Paying off student loans quickly vs. over time
| Pros | Cons | |
|---|---|---|
| Paying Over Time |
|
|
| Paying Quickly |
|
|
Enroll in a student loan forgiveness program
For borrowers with federal student loan debt, student loan forgiveness through programs such as Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF)1 should be considered as part of your student loan repayment strategy. Many of these programs require a certain number of payments, which can take years, and cannot be sped up by making extra payments ahead of time.
Income-Driven Repayment (IDR) plans
The extended repayment periods offered through Income-Driven Repayment plans could offer major financial benefits to participants who pay off their federal student loan debt over time. For example, the Saving on a Valuable Education (SAVE) plan, introduced in 2023, offers interest relief if your interest amount exceeds your monthly payment amount. Watch this video to learn more about interest accrual under SAVE:
Learn more details about IDR in our resource collection, Comparing Income-Driven Repayment Plans, and use the chart below to quickly compare the details of different legacy IDR plans.
IDR Comparison Chart
| Applications for SAVE, other IDR plans, and loan consolidation are available on http://studentaid.gov. You can also submit a PDF application to your loan servicer by uploading it to your servicer’s website, or mailing it to them. Expect a delay in processing times. The Education Department recommends checking its website for updates – there is no processing time estimate available. | |||
| Plan | Monthly Payments | Repayment Period | Status |
| SAVE (formerly REPAYE) |
|
|
Replaced REPAYE |
| Income-Based Repayment (IBR) |
|
20-25 years, depending on when you become a new borrower | Remains available but borrowers cannot select plan after 60 payments on REPAYE that occur on/after July 1, 2024 |
| Income-Contingent Repayment (ICR) |
The lesser of the following:
|
25 years | Not accepting enrollments for current students; only available to future borrowers with consolidated Parent PLUS loans |
| Pay as You Earn (PAYE) |
|
20 years | Not accepting new enrollments |
Public Service Loan Forgiveness
For those with a career in public service, the PSLF program offers a path to loan forgiveness after 120 qualifying payments. Paid in consecutive months, this would equate to ten years of repayment, but consecutive payments are not a requirement of the program. In other words, if you temporarily left public sector work or took a career break, you could pick up where you left off once you begin making qualifying payments again. Learn more about qualifying and applying for PSLF in our guide, Public Service Loan Forgiveness (PSLF) Explained.
Balancing student loan repayment with other financial goals
Besides potentially being able to take advantage of the cost savings that come with federal forgiveness programs, an extended student loan repayment approach can also empower you to pursue other financial goals. Lower, more manageable payments over time — when properly managed — tend to allow for a better quality of life, less stress, and can free up funds to pursue other important financial goals.
The benefit of paying off student loans over time
While the desire to be debt-free is understandable, paying off student loans over time can be a practical and money-saving choice. By considering factors such as your financial situation, career goals, and the benefits of forgiveness programs you might qualify for, you can make informed decisions about your repayment strategy. Ultimately, finding a balance between timely repayment and pursuing broader financial objectives is key to achieving long-term financial success. Learn how to get clear on your financial goals, plan a realistic budget, and strategize how to balance student loan repayment with your lifestyle here:
For more help creating a student loan repayment strategy, browse our content collections below and schedule a consultation with one of our student loan specialists for personalized, one-on-one guidance.
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