Should I use my savings to pay off student loans?
Using a lump sum of savings to clear student debt removes the mental weight of monthly payments, but it also depletes cash reserves and triggers anxiety about losing liquid funds. Balancing this choice depends on weighing the guaranteed return of eliminating loan interest against the security of keeping cash in a high-yield savings account.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
- 1Paying off the loan in two chunks instead of all at once
- 2Splitting the difference by paying down a portion immediately and the rest over the next few months
- 3Continuing to pay extra on the monthly principal while keeping the lump sum in savings
- 4Making standard monthly payments over a 10-year period
- 5Paying off only loans above a certain interest rate threshold
- 6Waiting until partner graduates and household income increases before accelerating payments
- 7Putting the lump sum directly into the education loan as an early payment
- 8Searching for alternative investment vehicles that yield above 7.5%
- 9Cleaning Airbnbs
- 10Working after school programs
- 11Bartending
- 12Private tutoring
- 13Working at a gym
- 14House sitting and dog walking
- 15Selling homemade goods like sriracha and kimchi
- 16Coaching group fitness classes
- 17paying a monthly amount towards the loans while maintaining savings
- 18comparing loan interest rates to savings APY before making a lump-sum payment
In their words
Unedited, most upvoted first, each linked to the thread it came from.
“I’ve cleaned Air BNBs, worked the after school program, I’m considering bartending a few nights a week.”source ↗
“Should we aggressively pay down student loan debt entirely now? Just pay off everything above 5% right now and become more aggressive after my wife graduates and our income increases substantially? Or say screw it and just do the 600-700 a month payment every month for the next 10 years?”source ↗
“Would it be better to keep putting money into our HYSA or just pay off the student loan all at once? While we have the money, it makes me a bit nervous to take that much out of our savings all at once.”source ↗
“i have recieved like 2.5lakh through one of the central scholarship I'm confused about where to invest/put it to get more than 7.5% interest bcoz i have an education loan of 5,42,000 with 7.2% interest.”source ↗
“What should I do? Should I pay off my student loans and just deplete my savings for now? Pay off the one student loan that has the highest interest?”source ↗
“But repaying it will give me just 7.2% interest and I feel like this money can be used to invest in something that can give me more return”source ↗
Where this came up
People with this problem also raised
- 17Should I pay off debt or start investing and saving?
- 5Should I pay off zero interest debt early or keep the cash in savings?
- 5Should I pay off the smallest debt first?
- 3Should I drain my savings to pay off a car loan?
- 34Why minimum payments don't lower high-interest credit card debt
- 5Should I use my savings or take a loan for college tuition?