A big question you will face after graduation is when you should save your money, and when you should be using it to pay off your student loan. The graduation day has finally come, after so many years of hard work and sleepless nights. It’s such a relief. Here you are, with a job in your field, earning a decent salary. You are not living hand to mouth, but you have some pocket change to save.

The big question, however, is what are you going to do with that extra money? Are you going to pay off your student loan, start saving for retirement, creating a larger emergency cushion, or even save for a down payment? Regardless of the many temptations of going on shopping sprees, vacations, or spending nights out with your friends, the real focus should be on these two areas: paying your student loan or saving.


If you are among the 71% of students who graduate with student loans, this article will put everything into perspective for you. Not everyone is lucky enough to juggle between saving and loan debt, but if you have already secured yourself a decent job that allows you to have some pocket change, then it's high time you start asking yourself this question: Where should I put my money?

The answer to your question will depend on so many factors. You will have to consider the approach which works best for you, understand your financial situation, and decide what your focus for the future is. Here are some tips to reflect on.

  • If you want to pay back your loan, what are the terms? What about the interest rate? Can the interest rate change?
  • Is it possible to qualify for loan forgiveness?
  • Do you have other debts to settle, like a car loan or credit card debt? What are the interest rates?
  • What is your monthly salary? What are your budget and expenses?
  • What are your short-term and long-term saving goals?

After coming up with concrete answers, you should be able to decide where to channel your money. Whether you add to your savings account or pay off your student loan, the decision will be entirely up to you. However, these are the reasons why we chose to go with the latter.

See, a student loan can take a toll on you in ways you might not expect. From testimonies shared by some students, it's clear that most students who have graduated with student loans have had to put off buying and investments, such as homes, having children, or even getting married.

Reasons Why You Should Pay Your Student Loan Debt First

First of all, you do not want to keep getting those constant reminders that you have to pay off your debt. In this case, it would be advisable to pay off your student loan for sanity's sake. This might not make sense to many people, but it will enhance your psychological and emotional well-being. It will also boost your self-esteem.


According to Mint.com, it is perilous to keep your students loans pending, especially in the case that you lose your job. There is also a possibility of your interest rate shooting up if it is a variable interest rate.

Paying off your student loan will lower your debt income to income ratio. This means that you will have more funds available when you want to invest. It frees up your money, allowing you the opportunity to invest in the best way you deem fit.

Finally, the good news that you ought to know is that any interest that you are paying on your student loan is usually tax-deductible; we are talking up to $2,500. How cool is that?


Having said this, the final decision is up to you. We can only show you both sides of the coin. Otherwise, we hope you make a wise decision that will not affect your credit or any plans that you have for future purchases or investments. When it comes down to the nitty-gritty, you must keep your best financial interests in mind.