How much should I pay for my student loan?
Every month, you conscientiously pay student loans. You know that you can pay more than the minimum, but is it a smart thing?
How long do you have to pay for your student fee? This is a question facing many of today’s borrowers.
Unfortunately, as in most things in life, the answer to one size does not fit. What suits you may be catastrophic for me.
What for? Because it’s all about the context and your personal situation.
For example, I have no children, home or car. My financial position and repayment strategy is necessarily different from those who have children, and mortgages.
Although there is no perfect answer, there are ways to figure out how much you should pay off your student loan. Here are three steps to determine how much to pay with financial experts.
1. Start with your interest rate.
When you figure out how much you should pay for your student loans, start by examining the interest rate. Your interest rate matters because it can help you decide whether you should pay off your debt or save and invest.
If you have a low interest rate, as on my student loan (2.3%), then it makes sense to spend your money on high-interest debts, such as credit card debt and PLUS graduate loans. Borrowers can also consider refinancing their loans to find out if they match the best rates.
“If refinancing with a good rate is not possible, we recommend clients to put all their energy into the game as soon as possible,” says Daniel Rennes, Wrenne’s certified financial planner in financial planning.
“The exception to both of these options is if they are going to forgive a petition for public service. If so, we recommend paying the minimum payments required for qualification (and, of course, investments, savings or repayment of other debts with the rest), adds Rennes.
However, what if you have a low interest rate on student loans? In this case, Wrenne recommends making the minimum payments until you create an emergency fund. At this point, borrowers should focus on paying off high-interest credit card debts and saving on long-term goals like retirement.
Once these financial goals are met, Rennes encourages borrowers to devote the remainder of their time and resources to paying student loans.
PJ Wallin, founder and lead advisor of Atlas Financial, offers a different plan for borrowers facing low interest rates: “If someone doesn’t mind debt and has low rates, a fixed payment for 10 years [Standard Repayment Plan] with good 6 -12 months of reserve payments on an emergency account is enough. ”
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