Said It Here

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.

  1. 1
    Paying off the loan in two chunks instead of all at once
  2. 2
    Splitting the difference by paying down a portion immediately and the rest over the next few months
  3. 3
    Continuing to pay extra on the monthly principal while keeping the lump sum in savings
  4. 4
    Making standard monthly payments over a 10-year period
  5. 5
    Paying off only loans above a certain interest rate threshold
  6. 6
    Waiting until partner graduates and household income increases before accelerating payments
  7. 7
    Putting the lump sum directly into the education loan as an early payment
  8. 8
    Searching for alternative investment vehicles that yield above 7.5%
  9. 9
    Cleaning Airbnbs
  10. 10
    Working after school programs
  11. 11
    Bartending
  12. 12
    Private tutoring
  13. 13
    Working at a gym
  14. 14
    House sitting and dog walking
  15. 15
    Selling homemade goods like sriracha and kimchi
  16. 16
    Coaching group fitness classes
  17. 17
    paying a monthly amount towards the loans while maintaining savings
  18. 18
    comparing 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 ↗

Capital-Contract-325 · r/Teachers · 2 upvotes

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 ↗

Apprehensive-Size150 · r/personalfinance · 1 upvotes

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 ↗

Halyycon · r/personalfinance

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 ↗

Rich_Delivery_3917 · r/personalfinance

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 ↗

Successful_Season570 · r/personalfinance

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 returnsource ↗

Rich_Delivery_3917 · r/personalfinance

Where this came up

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