• Yosi Rahimi

Should I repay my federal student loans or my private student loans first?

Updated: Jan 21, 2019

You can save significantly on your interest payments by repaying your loans in the correct order. The best way to minimize the costs of interest is to repay the highest interest loan first.

A. from Michigan, $44K of student loans debt

A. has a mix of private and federal student loans that he took throughout his undergraduate and graduate studies. After few years into repayment he's now looking to accelerate the process of repaying his debt and become debt free faster. The best way to reduce your interest costs and become debt free faster, is to repay the highest interest loan first, private or federal. This debt repayment strategy is called "debt avalanche" where you allocate as much as you can towards repaying the highest interest loan, and keeping the rest of your loan payment at the minimum.


There a few things that you should consider in doing so:

  1. Beware that you're not increasing your credit card revolving balance, in order to repay your student loans faster.

  2. Sometimes it's better to repay your private loans first, as the federal loans have additional protections in case you're unable to repay your loans in the future.


A. is on the right track towards becoming debt free. How about you?

Want to check if we can help you become debt free faster? Money Compass allows you to easily find the best repayment plan to fit your goals. Click here to give it a try


Have a specific question regarding your loans? Send it to FreeAdvice@moneycompass.io

#studentloans #studentdebt #repaymentplans

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