Good question, what is your current interest rates on your loans? Are any of them subsidized by the government(meaning they'll pay the interest while in-school? Unless you were one of the lucky ones to fix your rate back when they were 2-3% chances are you can't get a better return at this point unless you invest very wisely. How are you going to pay for school now, loans, out of pocket, tuition reimbursement? But here's another question, what do you have in savings right now? If something were to happen where you needed a large amount of money (car repair, unemployment, etc) would you survive? Here's what I would do: Payoff anything higher that you have for debt (car loan) first. Then determine how you'll pay for school now, if out of pocket use the 5000 to pay tuition since interest rates for new loans are most likely higher than what you have they're 6.0 to 6.8 for fed loans. If not out of pocket but you have no, or very little, savings I would put some of it in a high interest savings, then put the rest towards your loans. Pay off the ones that will accrue interest while you're in-school first. Student loans are not bad debt, the interest you pay is tax deductible and you don't lose value like you would on a car.
