Should You Pay Off Student Loans in College?

Paying off loans while in college could get you ahead financially. Learn what to consider when deciding whether to pay loans off while you're still in school.

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by Laura Bengs

Published July 1, 2022

Reviewed by R.J. Weiss

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Should You Pay Off Student Loans in College?
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Student loan repayment looks different for everyone, depending on the total number of loans you have, your interest rates, the repayment deadlines, and your monthly budget.

Many students have enjoyed a no-interest pause on some of their loans for the last two years. However, that break may be ending soon, so now is a good time to rethink your plan once you need to resume loan payments. Understanding your loan terms can help you develop a strategic plan to repay student loans. is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

Ready to start your journey?

Can You Pay Off Student Loans While Still in School?

If you're in a position to do so, you can begin making loan payments in school, especially if you're looking to get a head start on lowering your overall interest. Most loans garner interest, but interest terms can vary widely by loan type.

A direct subsidized loan will not require you to pay any interest on loans while you're still enrolled in school. Instead, the Department of Education pays the interest on your behalf until you graduate.

A direct unsubsidized loan requires you to begin paying interest on the loan as soon as you receive it, whether you're still in school or not. For this reason, students usually prefer subsidized loans, although you can use a combination of these two loan types.

When Do You Have to Start Paying Student Loans?

Your deadline to begin making loan payments varies depending on the loan type. Most loans start to require repayment if you drop below part-time student status or leave school because you graduated (or for another reason).

Many federal loans, like direct subsidized loans, direct unsubsidized loans, and Federal Family Education Loans, allow a six-month grace period following your departure from school before you're required to make loan payments. A Federal Perkins loan allows a nine-month grace period.

Private student loans sometimes offer grace periods, but these terms vary by lender.

Should You Pay Off Student Loans While Still in School?

You'll want to weigh the following factors before determining whether or not to begin making payments while you're still in school.

How Much Do You Make?

Your income is a central pillar of your monthly budget. First, you'll want to look at how much money you're bringing in each month to determine if you have room to begin making payments. If you consistently have room to spare in your budget, you might consider putting some funds toward loan payments.

How High Is Your Interest Rate?

Understanding how student loan interest works may influence your decision. Unless you have a direct subsidized loan, the total interest on your loan will grow while you're enrolled in school. If your interest rate is high, it may grow quickly. If your loan is carrying a high interest rate, it could be a good idea to start making payments as soon as you're able.

Do You Qualify for Student Loan Forgiveness or Cancelation?

If you're pursuing a career in public service or studying to become a teacher, you may qualify for loan forgiveness. In this case, if you meet specific criteria, the remaining balance of your loan could be forgiven after a certain period of time. If you think you may qualify, research the terms and weigh whether getting started early on repayments makes sense.

How to Pay Off Student Loans in College

If you've decided to start paying off loans while still in school, getting a solid plan in place is a good first step.

Get a Part-Time or Freelance Job

Increasing your income can put you in a much better position to pay off loans while you're still in school. Although studying and attending class is a priority, there are many part-time jobs for college students that could fit nicely around your schedule. Or, for more flexibility, you can try finding work as a freelancer.

Set Up a Budget

Create a monthly budget in college by making a list of regular income and expenditures you expect to have each month. Following a few budgeting tips for students can help you stay on track with financial goals and cut back on unnecessary spending, which could let you allocate more money toward your loan payments.

Frequently Asked Questions About Paying Off Student Loans in College

Can I pay off student loans while in college?

In short, yes -- it may be possible to pay off student loans while in college. First, you'll want to understand the terms of your loan. It may be beneficial to start paying some loans sooner. Alternatively, there may be instances where it may make more sense to wait. If you decide to start paying off loans in college, developing some good money management habits can put you in a better position to pay off your student loans while you're still in school.

Is there a downside to paying off student loans early?

Paying off your loans early typically helps decrease the total interest you'll owe on your loans. However, there may be some circumstances where waiting could be advantageous. If you plan on pursuing a career that will help you qualify for loan forgiveness, you may want to wait to understand the forgiveness criteria before beginning payments. Or, if paying loans early will create a financial strain, it may be better to wait until you've graduated.

Is it smart to pay off student loans early?

Paying loans off early can be smart if you're able to do so. Student loans typically accrue interest over time, so the longer it takes to pay off your loans, the more you may end up paying. Getting started early can decrease the amount of interest your loan earns, ultimately decreasing the total amount that you'll need to pay on a loan. However, many loans do not require you to make payments until after you've left school.

Is it better to save or pay off student loans?

Savings and debt are key factors contributing to your overall financial picture. Saving money and paying off student debt can both help build your long-term savings. Whether you'll want to save money or start repaying student loans depends on your short-term goals. If you want to have more accessible income, you may want to consider saving rather than putting more money toward paying off student loans.

DISCLAIMER: The information provided on this website does not, and is not intended to, constitute professional financial advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact a professional advisor before making decisions about financial issues. is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

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