Student loans and the debt snowball
Student loans work in a debt snowball like any other debt, and they usually come last because they're the biggest. But they come with choices other debts don't, and a couple of them decide whether paying extra is worth it at all.
An example with student loans
Here's a plan with a federal loan, a private loan, a credit card, and $150.00 a month beyond the minimums.
| Debt | Balance | APR | Minimum | Payment as target | Paid off in month |
|---|---|---|---|---|---|
| Credit card | $1,900.00 | 22.99% | $60.00 | $210.00 | 11 |
| Private student loan | $9,500.00 | 9.25% | $120.00 | $330.00 | 41 |
| Federal student loan | $24,000.00 | 5.5% | $260.00 | $590.00 | 73 |
Everything is paid off in 6 years 1 month, with $7,286.57 in interest. Paying only the minimums on the same debts takes 10 years 3 months and costs $13,549.39 in interest.
Open the student loan example in the calculator
The credit card is gone in month 11. After that, its payment and the extra roll onto the private loan, then onto the federal loan.
List each loan separately
One servicer often holds several loans, each with its own balance and rate. Put each one in the plan on its own: the smallest become early wins, and you can see which one to target. Your federal loans are all listed at studentaid.gov.
Federal and private loans are not the same
Federal loans come with protections most private loans don't have: income-driven repayment plans, deferment and forbearance when money is tight, and forgiveness programs. Refinancing federal loans into a private loan can lower the rate, but it gives those protections up for good. That's worth weighing before any refinance offer.
If you're working toward forgiveness
If you expect a forgiveness program, such as Public Service Loan Forgiveness, to cancel what's left, extra payments on those loans may only shrink the amount forgiven. In that case, pay what's required, leave those loans out of the plan, and aim the snowball at everything else. Program rules change, so check your options at studentaid.gov.
Make sure the extra goes where you want
- Tell your servicer. An extra payment may be spread across all your loans, or counted as paying ahead so your next due date moves back. Ask for it to go to the principal of your target loan.
- Keep the regular payment going. Paying ahead doesn't save interest; paying down principal does.
- Use the payment you actually make. On an income-driven plan, enter that payment as the minimum. If it doesn't cover the monthly interest, the calculator will flag it.
Try it with your own numbers
Enter each loan along with everything else you owe, and the calculator shows your debt-free date and the order to pay things off. Build your plan in about a minute.