How to Decide Which Student Loans to Pay Off First

So you graduated college and are ready to face the “real world”. You may have gotten a job (if you’re lucky) and maybe moved into your first non-college apartment.

You enjoy your increased free time for the first few months, then reality hits. Your 6-month grace period on your student loans is over (your grace period is the time after graduation when student loan repayment isn’t required yet).

You now have to start tackling that debt and making the monthly payments that borrowers everywhere constantly complain about.

So where do you start?

How do you pay off your student loans as efficiently as possible?

Well, I have been there, and have learned about student loan repayment the hard way. You will too (trust me) unless you educate yourself about repayment. This is why I am going to release a series of articles all about student loan repayment to help you navigate this trick trek.

First up: how to decide which student loans to pay off first.

Step 1 – Write Out All of Your Loans

The first step is to write out the details of all of your different student loans. Write down the types (federal vs. private), your interest rates, your balances, your minimum monthly payment, and your repayment terms.

Step 2 – Rank Your Loans by Interest Rate

After you have written out all of your loans, you now want to rank them by interest rate – high to low.

Step 3 – Make Minimum Monthly Payments Towards All Loans

Though it would be nice to pay off all of your loans one at a time, this simply isn’t an option. All student loans require some minimum payment eventually and ignoring them will do no good for you.

Step 4 – Put All Extra Money Towards Your Loan with the Highest Interest Rate

The last step is to put any extra money towards your loan with the highest interest rate. Since this loan has the highest interest rate, you will be charged more on this than your other loans. This is why you should pay off this loan first. Some people call this the avalanche method.

Once you pay off your loan with the highest interest rate, you can move onto the loan with the next highest interest rate.

Now rinse, wash, and repeat until you are finally debt free!

Have any questions about this student loan debt repayment strategy? Feel free to comment below and I’ll see if I can help you out!

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