Fed Financial
Should i begin to pay off my student loans?
Im finishing up my second year of college with 25k in sallie mae student signature loans....i have built up 15k over the years which i currently have sitting in a bank CD at about 5%. My four loans run anywhere from 7.25-9.25% with accumulated interest so far of 1,500. Would it be best to begin paying off some of my loans (or maybe just the interest) or should i keep saving? Interest rates are variable
Public Comments
- that depends, if that money is going towards the loans later pay later. Unless the interest is going to be so much when your done college. Hey if you pay 15k now, less interest when u graduate. I personally would pay some now so it accumlates less interest then pay the rest when after i graduate
- how are u going to pay for next two years? do u have emergency funds (1000$) do u have 3- 6months expenses available? Yes? then all the rest is extra. your loans don't pay for rest of school? visit daveramsey.com to learn what isn't taught in colleges - how to own ur money not be owned by it.
- This is a tough question. The idea of having less debt is certainly appealing. However, if you're able to defer your loans it may be best to hold on to them and save your $15k as an emergency fund. Just remember, the student loans can go into a temporary nonpaying status (deferment or forbearance) if you get into financial trouble. If you have no emergency savings, you may be forced to use credit to get you through a tough time.. which is way way more expensive. If you had some extra cash and wanted to pay off the interest accruing at least then it wouldn't get capitalized in.. which can really save you over time. And.. if you choose to pay off some of them.. don't forget to check out the tax benefits of doing so. Also check out the power pay programs available on the web. When I graduated from college I needed a plan to tackle the loans. You can run all sorts of scenarios. It will make you feel much better to have a plan. Good luck!
