Should you wait to start saving while you’re still paying off your student loan debt?

To pay it off or to save? If you have student loan debt, you’ve probably wondered whether you should finish paying it off before you prioritize putting away money for retirement, building a rainy day fund, and focusing on other financial goals.

The answer: both! While there’s no one-size-fits-all solution, building savings while you pay down your student debt is an effective strategy for many borrowers.

Here are four reasons why student debt repayment shouldn’t hold you back from saving:

Saving early is key to building a retirement fund.

When it comes to retirement savings, starting monthly contributions as soon as possible is key to maximizing compound interest — or returns on your investments and returns on those returns — over time.

However, 41 percent of millennials cite their student debt as the reason why they’ve delayed saving for retirement. With the average borrower taking twenty years to finish repayment, those who delay saving until their student debt is paid off will miss out on decades’ worth of compound interest.

Even waiting just five years to start saving for retirement makes a significant difference. Case in point: if you save $100 a month in a traditional IRA with a 7% annual rate of return from the time you start working at age 22 until you retire at age 65, you’ll have earned $279,914 in compound interest on top of your monthly contributions. If you don’t start saving until you’re 27, you’ll have earned $183,184 in compound interest— $96,730 less — by the time you retire.

You never know when you’re going to need to dip into your emergency fund.

The pandemic has proven that anything can happen — and building an emergency fund is one of the best ways to prepare for the unknown. Unfortunately, 43 percent of millennials say their student debt has prevented them from starting a rainy day fund.

While paying off your student debt as fast as possible can save on interest over time, you’ll likely wind up wishing you had saved that extra cash if you find yourself unable to afford manage essential expenses — like rent, utilities, groceries, transportation, childcare, and pet food — or pay unexpected bills — whether from a stay in the hospital or car repairs — in the event of an emergency.

Plus, once you’ve set aside the recommended three to six months’ worth of expenses, you’ll feel even more confident pursuing other financial goals knowing you’re covered if the worst were to happen.

Student debt isn’t necessarily bad for your credit score — and it can even help it.

Student debt does impact your credit score — but that’s usually not a bad thing.

While falling behind on your student loan payments can be detrimental to your credit score, making your required minimum payment on time each month can actually give you a boost. And because student loans appear on your credit report as installment loans — just like auto loans and credit cards — having student debt can improve your “credit mix”, which accounts for 10 percent of your score calculation. In fact, your credit score might even experience a slight drop when you finish paying off a student loan.

A good credit score has dozens of benefits, from lower insurance premiums and interest rates and perks like eligibility for premium credit cards to making it easier to rent a house or get a job. All of these factors can make it easier to set aside savings and maintain your overall financial wellbeing.

The Milford Bank can help you balance student debt repayment with savings goals.

For many borrowers, building savings while paying off student debt is easier said than done — but you don’t have to go it alone. The Milford Bank is partnered with Candidly to take the guesswork out of student debt while providing solutions to build long-term financial health.

Whether you want to find ways to lower your monthly student loan payments (and free up cash for savings), explore debt forgiveness programs, or pay down your student debt with cash back rewards and spare change, Candidly has the tools you need to reach your goals. Visit to learn more about this value-added service and activate your free account today.