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4 Instances When You Should NOT Pay Off Your Student Loans Early

Sounds crazy, right? No one in their right mind would want to keep accruing interest on their student loan debt. Typically, I would suggest that you should rid of that debt as soon as possible.


Under these categories, it just doesn’t make mathematical sense to pay off your student loans or it’s just not a good time based on the stage of your life. Keep reading to see if you fall into one of them.


You Are Planning To Go Back To School

When you go back to school, you can pause payments on federal student loans if you’re enrolled at least half-time. Keep in mind that if you have subsidized student loans because you can defer them without interest while being enrolled half-time.


You Don't Have An Emergency Fund

lf you have been following my other blogs, you know that I have harped on the importance of having an emergency fund. Having at least $1000 or 3 - 6 months of the cost of your bills saved can be a real game changer when something unexpected occurs like you being out of work due to an unforeseen illness or accident. Being aggressive with paying off your student loan debt will not help you pay for that unexpected car repair or other unplanned expenses.


You Are A Public Service Worker

If your employer is one of the organizations or agencies listed below, than you are a public service worker

  • Federal, state, local or tribal government organizations

  • A 501(c)(3) nonprofit

  • A not-for-profit that’s not 501(c)(3)-designated, but meets other requirements related to public service

  • AmeriCorps (in a full-time capacity) or the Peace Corps

Being a public service worker has the benefit of applying for a variety of student loan forgiveness programs. Yes, you read right, LOAN FORGIVENESS. There are a variety of public service worker student loan forgiveness programs available and they all have different qualifying factors which need to be met before having the loan forgiven.

Why pay more off in your student loan if the balance will be forgiven after say, 10 years of employment???


You Have High Interest Linked To Your Credit Card Debt

If you credit card interest is higher than your student loan interest rates, pay off your credit card debt first. You are ultimately losing money if you stay focused on your student loan repayment. To pay off your high interest credit card, it is important that you pay as much as you can a month. Doing minimum payments will take years to pay off! Another trick is to transfer your credit card balance to another card with a 0% interest rate. The length of the the 0% rate varies depending on the card and offer(s) available. You will save money by not paying interest. Make sure you read the fine print about the balance transfer fees and how much the interest rate will be after the interest free period ends.

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