I have three private student loans for college right now. I am making enough money now that I can start paying them back early.
I know I can pay them off early without penalty and I definitely want to pay off as much of the principal as I can while in school still.
Here is my question. Of the three loans, the first has a lower interest rate than the second and third. The third loan is half the size of the first two.
The interest is not being added to the principle yet. Am I better of paying back the first loan first because it is larger or the last two loans because the interest rate is higher?
Always pay off from highest interest to lowest. If you can afford to pay off one of the bigger ones, pay off the high interest one and half of one of the others.
Also, since they are all private loans, try to consolidate into a lower fixed rate if you can and then pay them off on all at once when you can. If you have variable i think you can lock in the rate at like 3-4% now
so they are private unsubsidized loans which are accumulating interest but you don’t need to make payments until you graduate, right?
first of all, do you have any savings… if not, work on that.
after that, if you can pay off any of the loans in their entirety, then I’d probably do that. After that, then I’d work towards paying the higher interest loan.
Typically, you have the option to wave payments for 6 months after graduation. When you get to that point, you can lock the rates into a low fixed rate so you have one payment with one intrest rate at once that wont change.
Yeah, but I do not graduate for two years. I want to start paying the loans off now. I want a lower payment after college because I will be buying a house.
Or am I better off just saving up for a large down payment on a house instead?
I figured starting to pay off the loans would improve my credit as well.
Interest and payments on Student Loans are extremely low. Add in that they are tax deductible and you will be better off not paying them off and saving that money for the house. Once your AGI exceeds the limit for the tax deduction it will make more sense to try and pay them off. Until then, throw the money in a savings or CD and hold on to it.
Paying off the loans will not appreciably affect your credit.
while it’s true, the counterpoint is that the $100 a month in pocket from paying off one of the loans is worth a lot more than saving one year at the end of 30.
