Paying off student loans early doesn't always pay

If you have some extra cash at the end of the month and are carrying burdensome student loan debt, you might be considering paying down those loans early.  But in some cases, it may be better to keep paying the loans according to your current payment schedule. Here are some examples of when it's smarter to put your money elsewhere.

High rate debt

Student loans tend to carry lower interest rates than other kinds of debt. So if you've taken on additional debt bearing a high interest rate, like a big credit card balance or an auto loan, financial experts say paying off that burden should be a priority.

"I believe you should look at all sources of debt you have first," financial adviser Rebecca Conner told CBS MoneyWatch. Does the student loan have the highest interest rate? If you currently have credit card debt you carry from month to month, it may be more expensive to pay credit card fees while paying off your student loan."

Emergency fund

Most financial experts say a three- to six-month emergency fund should be an immediate savings goal for a person who's just starting out in the job market or getting back on their feet financially. That "rainy day" fund is there to help tide you over in case of an unexpected medical expense, job loss or other emergency. Without it, many people end up using credit cards or other forms of high-interest loans and go further into debt.

Though it's tempting to pay down student debt immediately, if you have some money left over every month, put it in that emergency fund first and then look to pay down loans once you have enough of a cash cushion.

Investing

If you still have cash to spare (lucky you!) before sending it toward those student loans, you may want to consider investing it.

Let's say you have a 10-year repayment plan for a $34,000 loan, at 4 percent annual interest, with a payment of $372 per month. You also have $5,000 in your retirement fund earning 5 percent annual interest. If you have an extra $200 each month to put toward loans, you would be done in 5.5 years and save $2,600. 

But if you put the extra $200 a month into your retirement account, you would earn an extra $5,800 over the same time horizon,

"I don't believe in putting other financial goals off just to get out of debt immediately, especially when dealing with a mortgage and with student loans," financial adviser Jeremy Torgerson told CBS MoneyWatch. "That very low interest rate is often lower than they could earn investing some of their extra money toward other goals, like college savings or beefing up 401(k) or IRA contributions."