Why and How to Pay Off Student Loans In Your 40s and 50s

FT Contributor
A couple in their 40s and 50s speaking to a financial advisor about paying off their student loans.
Reading Time: 4 minutes

A college degree may be the ticket to a better career, but student loans can haunt your career, plaguing you for years on end with mounting interest. The incredible debt is enough to make many budding students wonder whether college is worth it at all.

As you age into your 40s and 50s, greater financial priorities — such as a home and family — take center stage, and it becomes that much more important that you pay off your student loans sooner rather than later.

Why Pay Off Student Loans in Your 40s & 50s?

Middle age presents more expenses and responsibilities than your 20s or even your 30s. By the time you are in your 40s and 50s, your college career is distant in the rearview mirror, and you don’t want to pay student loans back when you have other pressing expenses to focus on.

There are other reasons why you should prioritize paying off your student loans in your 40s and 50s.

Less Interest

It’s simple: the faster the pay your student loans, the less interest you pay. As you pay down the principal of your loan, you end up paying less interest than you would if you paid it off over time. Paying off your student loans early could save you thousands of dollars in interest that could instead go to your family.

Financial Freedom

Your student loans could be holding you back from buying a new home, a new car, or even starting a new career. Perhaps, you have your own child’s tuition that has come due. Either way, your student loans could be holding you prisoner in a life you don’t want but are powerless to change, simply because you can’t afford to do it.

Eliminating your student loans will help you achieve financial freedom and could significantly help your credit score, just like leaving them to accumulate interest is very harmful.


One of the hardest parts of holding student loan debt is also finding ways to save for your retirement. You could benefit from a 401(k) plan or IRA account, but first, you must find the funds to grow it. Employee benefits such as employer match contributions to your retirement account can be hugely helpful in building a nest egg while also paying off your student loans.

How to Pay Off Student Loans in Your 40s and 50s

The good news is that you are not trapped by your student debt. There are many solutions designed to pay off your student debt fast so you can better enjoy the fruits of your labor.

These are some of the best practices for paying off student loans:

Avoid Certain Repayment Plans

Not all student repayment plans will resolve your students loans faster, with some more beneficial for you than others. There are both standard and income-based repayment plans, as well as graduated and extended programs which offer deferred payment arrangements.

You want to make sure you choose a payment arrangement that meets your monthly budget and doesn’t significantly add to the debt you already have. For example, if you commit to paying a certain amount each month but then receive a pay cut, you could default on your loan because you can no longer afford to make your payments. It’s important to consider what life changes may impact your future ability to meet your repayment obligations.

Avoid Taking on More Debt

It’s only natural to worry about how long it will take to pay back your student loans, but you should take care not to open additional accounts in the meantime. While buying a new home seems necessary or buying a new car is tempting, the additional debt can lower your credit score and prevent you from paying off those student loans that much faster. With such a heavy financial burden already, the last thing you want to do is add to it and overextend yourself.

Create/Update Budget

When you are feeling overwhelmed by your student loans, creating a budget is a great way to relieve both your stress and your debt. By outlining your income and expenses, it may be easier to show restraint when it comes to your shopping habits and how you spend your money.

Make Extra Payments

A great way to pay off your student loans quickly is to make extra payments when you can. As you pay down the principal, you eliminate the additional interest that you would have to pay otherwise. However, it’s important not to overextend yourself, or you could end up disrupting your carefully planned budget and fall deeper into debt.

Make Bi-Weekly Payments

If you can afford it, making payments every two weeks instead of once a month is a great way to pay off student loan debt more quickly. You’ll cut your balance down in half the time and end up paying less interest on your loan overall.

Pay Off Capitalized Interest

Capitalized interest is a form of unpaid interest that is added to your total student loan debt principal. You have the option to pay off compounding interest before you pay your student loans. By paying the capitalized interest as soon as possible, you are only responsible for the amount you borrowed and the interest it will accrue, not the interest that the capitalized interest will otherwise continue to accumulate.

Refinance Your Loans

As you grow older, your life can begin to stabilize: you make a higher salary and you own more assets such as cars or properties. You could receive a better interest rate on your student loans by refinancing now, and the money you save on interest could pay off your loans that much faster.

Set Up Auto-Pay

Automatic bill pay

 is an easy way to ensure that you make your payments on time. By signing up for an auto-draft from your checking account or savings account, you ensure that you never miss a payment, so your credit score doesn’t suffer and you don’t face late payment penalties. Auto-pay is an added convenience that will help you remain on time with your student loan payment schedule.

Take Advantage of Tax Deductions and Credits

If you’re paying interest on federal student loans, you can claim that paid interest as a deduction of up to $2,500 a year on your federal income taxes. Claiming this deduction can help to lessen the impact of student loans on your bottom line each year.

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