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How Paying Off One Student Loan Changes Everything

Paying off a single student loan is huge. From both an accounting perspective and an emotional point of view it makes a huge difference.

Written By: Michael P. Lux, Esq.

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Student loan debt may seem overwhelming, but paying off one single student loan can change everything.


No matter how small, erasing a single student loan is a huge step forward. From an accounting perspective, it makes attacking other loans significantly easier. Going beyond the numbers, eliminating a loan makes it easier to follow your plan and stick to a budget.

Monthly Flexibility Makes Repayment Easier

Many borrowers find themselves on the minimum payment treadmill. They exhaust themselves paying the bills as they come in, but they aren’t going anywhere.

Paying only the minimum on student loans usually means two things. First, it means you will probably be making payments for decades. Second, it means you are maximizing lender profits on the loans.

If you can knock out one loan, you free up that monthly payment to attack your other loans. It may not seem like much, but an extra $10 per month can save thousands of dollars in repayment and payoff loans years earlier. Seriously. Click on that last link and look at the charts. Ten bucks can make a huge difference.

If you eliminate an entire loan, you move the needle in a big way. If your student loan payment was $50 per month, it means you have an extra $50 per month to attack your other loans. You could also reward yourself. Pocket $20 as a reward for your success and use the remaining $30 to attack another loan.

Many borrowers can only afford to make minimum payments on their student loans. If you manage to pay off a student loan, it means breathing room. It means that life with student loans just got easier.

Eliminating a Loan Means Lower Balance

The significance of a lower balance should be pretty obvious, but it is worth pointing out an important detail: If you have a smaller balance, you are spending less on interest.

If you are spending less on interest, it means a higher portion of your monthly payment lowers the principal balance. In other words, your regular student loan payment does more damage to your balance.

As payments shift from mostly interest to mostly principal, balances start to drop faster, and borrowers build momentum.

Momentum In Student Loan Repayment (and Physics)

Paying off a single student loan may not seem like much, especially if it is a small loan compared to your other debts.

However, this tiny bit of success can build. If you can pay off a $1,500 loan, knocking out a $3,000 might seem more attainable.

Your building success might look something like this:

Each win builds on the last win. When one loan gets paid off, there is more money to attack the next loan. Each taste of success makes it easier to stick to the plan.

The First Loan is the Hardest to Pay Off

Some might argue that the loan with the largest balance or the highest interest rate is the hardest to pay off. Those loans might be the most expensive, but in terms of difficulty, that first loan is probably the hardest.

As students, we build up large student debt balances. These balances grow because we take out new loans and because the existing loans generate interest. Upon finishing school, we get a “grace period.” During that time, the loans continue to grow.

For some borrowers, loan balances continue to grow even though they are making payments.

At the point you pay off that first student loan, the trend reverses. Instead of growing, your balance starts shrinking. With each passing month, things get a little bit easier. Knocking out that first student loan is a huge milestone and a clear sign that things are getting better.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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