Why extra payments work so well
Each month, interest is charged on your remaining balance. Any amount you pay above the required payment goes straight to principal (once interest is covered), so every later month accrues less interest. The savings compound: an extra $100 a month on a $30,000 loan at 6.5% saves several thousand dollars of interest and takes years off repayment.
Make sure extra payments go to principal
Some servicers apply extra money to future payments ("paid ahead") instead of reducing principal right away. Tell your servicer in writing, or use their online option, to apply extra payments to the current principal, and to target the loan with the highest interest rate first.
Avalanche vs snowball
- Avalanche: put extra money toward the highest-rate loan first. This saves the most interest.
- Snowball: pay off the smallest balance first for quick wins and fewer bills. It costs a bit more but helps some people stay motivated.
Should you pay off student loans early?
Paying extra is a guaranteed return equal to your interest rate. It usually makes sense once you have an emergency fund and are getting any employer retirement match. It may not make sense if you're pursuing Public Service Loan Forgiveness or another forgiveness program, since extra payments reduce the amount that would be forgiven.
Frequently asked questions
Is there a penalty for paying off student loans early?
Is it better to make a lump sum or monthly extra payments?
How much interest does an extra $100 a month save?
Last reviewed: 2026-10-09