Launch the confetti cannons and blow the party horns — you’ve paid off your student loans! Your paid student loans are no longer a worry and you’ve accomplished a task that may have been 10 or more years in the making. With the average monthly student loan payment hovering close to $400, your last payment likely freed up significant room in your budget. But, before you blow those extra funds on a weekend getaway or luxury purchase, take a breath and figure out your next financial steps.


Check Your Credit Reports

Lenders and creditors rely on your credit history report to determine what type of credit risk you may be. If your credit is in good shape, you’re more likely to receive loan and credit card offers with the lowest interest rates and most favorable repayment terms.

Review your credit reports to ensure your student loans are shown as paid in full. An outstanding student loan balance can influence your credit score and factor into future credit approvals. Your next financial steps should be focused on lowering your financial risk. Evidently, the less debt you have, the lower your perceived financial risk.


Revise Your Budget

Paying off your student loans doesn’t happen by accident. You probably followed a budget to make sure it happened, even if it was an informal budget. Now is the time to update your spending plan, given the additional money you now have available each month. Before committing to a new budget, determine your financial priorities.

For example, if a wedding or home purchase is on the horizon, you might redirect your former student loan payment into one or more high-yield savings accounts. Remember to stay intentional with your budget for continued financial success.


Build an Emergency Fund Account

During your repayment years, you (like most people) probably had a costly emergency or two that forced you to perform financial gymnastics to cover the expense. You may have even needed to borrow money, which put you in further debt.

Your next financial steps should be to use your former student loan payment to create an interest-free financial cushion for yourself. Grow your account until it equals at least three months of living expenses. The next time you’re hit with an unexpected expense, you can turn to your financial safety net instead of loans or credit cards.


Ramp Up Your Retirement Savings

You might be able to secure some help in making your retirement savings grow quickly. If your employer offers a matching 401(k) plan, you could be an enrollment form away from free money. These retirement plans typically offer to match up to 3% of an employee’s contribution. If you paused your retirement savings while you focused on student loan repayment, now is an excellent time to get back on track.


Pay Off Other Debts

Consider making more than the minimum payments on your other debts. If you have an auto loan, credit card debt, or other repayment obligations, create a plan to pay them off as soon as possible. When you’re debt-free, you’ll have even more cash available in your budget to achieve other financial goals. An early payoff could also mean paying less in interest charges.

Decide whether you want to focus on paying off the debt with the highest interest rate or the one with the lowest balance. The former is likely to save you the most money, while the latter can give you a quick win and keep you motivated.


If your last student loan payment is a few years away and you’re having difficulty making payments today, refinancing might bring financial relief. Free up more room in your budget by securing a lower minimum monthly payment. LendKey can help you find a repayment option that fits your finances. Apply for refinancing today!

Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.