The CARES act puts the interest rate for federal student loans at 0% until December 30th and there are no mandatory payments for student loans until that time.

I owe $32,000 in federal loans, normally at an interest rate of ~4.6%.

I owe $60,000 in private loans, at interest rates ranging from >6% to <11%.

If I'm trying to best take advantage of the CARES Act and reduce the total amount I'll be paying (I plan on continuing to pay more than the minimum even after Covid-19), should I:

  1. Pay the minimum for the private loans and pay as much as possible of the federal loans, so that when the interest starts accruing again next January, it will be accruing on less. Also, when the interest starts accruing I would go back to paying the minimum for federal loans and making extra payments to the higher interest private loans.
  2. Don't pay the federal loans while CARES Act is in effect and pay as much as possible to the private loans, paying everything more than the minimum to the private loans with the highest interest. This way I pay off the loans with the highest interest fastest and they have the least amount of time for the interest to accrue.
  1. Another option I didn't think of. I'm open to options haha.
  • Don't your federal loans have less interest no matter whether they're currently accruing it or not? Commented Aug 14, 2020 at 18:45
  • @user253751 Yes, my federal loans are normally around 4.6% while my private loans range from over 6% to less than 11%. I know that normally its better to pay off the loans with the higher interest rate, but normally you don't know that interest rate for a loan is going to increase on a certain date by a certain amount so my question is: since I know the interest rate for fed loans will go up 4.6% in January, would it be more advantageous to pay off as much as possible of them before the interest rate goes up or to continue focusing on the higher interest private loans.
    – Marcellus
    Commented Aug 14, 2020 at 18:54
  • 3
    Well the 4.6% loan is always going to be the lowest interest rate therefore you should pay it off last no matter whether the interest rate is currently down or up! I'm not sure why the fact that it's going to go up will be important for you - because even after it goes up, you should still pay it last! Commented Aug 14, 2020 at 18:56
  • @user253751Okay gotcha. I think I was just overthinking it. Thanks! If you submit that as an answer to the question I'll mark it as correct!
    – Marcellus
    Commented Aug 14, 2020 at 18:57
  • Does this answer your question? Why would anyone want to pay off their debts in a way other than "highest interest" first?
    – Brady Gilg
    Commented Aug 14, 2020 at 19:05

2 Answers 2


Your federal loans have the lowest interest rate even after they start charging you interest again.

Therefore, after they start charging you interest again, you'll still be paying them off last.

And right now, they're even cheaper than that! They're even cheaper than a level of cheapness that would make you pay them off last! So why wouldn't you pay them off last?


Mathematically, every dollar you pay toward debt is "paying off" interest at the rate of that debt (even if the interest is accruing but is deferred), so you should pay off the highest interest rate debts first, all else being equal.

This is all contingent on you paying as much as possible towards the debt. If you were to instead just pay the minimums on the private debt and use the forbearance for other expenses, it would be a different story.

Now, if the federal loans were to start accruing interest at, say, 20% after the grace period, then it would be a different story (which is why credit card statement balances should be paid off in full each period if at all possible). Then you would pay them off to avoid having that huge bump in interest after the grace period.

  • the first para is a great insight, thanks for that!
    – Fattie
    Commented Aug 14, 2020 at 19:14

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