Situations when you pay student loans early is a bad idea

I have outlined four of these situations below. So, before you pay off student loans earlier and get rid of them, first make sure that one of the following situations does not apply to you.

1. You have high credit card debt.
If you have high interest rate credit card debt in addition to student loan debt, it is best to win credit card debt first before trying to pay off student loans at an early stage.

Credit card debt obligations can be very complicated, especially if average interest rates exceed 15%. If your student loan interest rate is less than this, then you need to pay your credit cards. Otherwise, you are essentially losing money.

To pay off credit card debt with a high interest rate, pay off as much as you can afford each month, and not just a minimum. If you pay only the minimum amount, you will need years to pay off your balance.

Another strategy is to transfer the balance to a 0% card within 12 months to avoid generating more interest while you repay your debt. Just keep track of commissions for balance transfers, as well as interest rates after the end of the 0% interest period.

If necessary, or if credit card debt is astronomical, you may need to talk to a credit counselor to find out what options are available to you. These options may include negotiating with your credit card companies to lower their fees and lower interest rates to help you win your debt.

If your business is serious, then they can also recommend bankruptcy.

Related : Everest College Student Loan

2. You can return to school
If you think you ever want to go back to school, but you just don’t know when, then I would postpone large payments on a student loan. Instead, create a large savings account.

What for? When you return to school, you can suspend payments on federal student loans if you are enrolled at least part-time. Keep in mind that if you have subsidized student loans, you can postpone them without interest, being paid part-time. On the contrary, if you have subsidized loans, then know that they will accrue interest while you are at school.

In addition, you may need the money that you would have spent on repaying your savings loans.

Returning to school often means rigging work and study and trying to live on a very limited postgraduate scholarship. If you are expecting a situation like this or something like this, in which you don’t have a lot of extra money, save up in advance to make life a little easier while you are in school.

Related : Le Cordon Bleu Student Loan

3. You need to save the emergency fund.
Emergency funds are an extremely important part of being out of debt. When an emergency happens – and they happen – you will need to have the resources to pay for expenses without having to remove another credit card. In this sense, emergency funds help keep your credit healthy.

If you have a family or you want to start a family soon, then emergency funds are especially important. Although you never want to imagine the worst that can happen, if it happens, and it can be – then you need to be financially prepared.

I was diligent and saved when my husband and I decided to have our first child. At the first ultrasound, we found out that we had twins. Needless to say, this was a real shock, and I immediately stopped paying an additional $ 800 a month as part of my aggressive strategy to pay off student loans, but instead invested it in a children’s fund.

It is good that I did. Our twins were born prematurely and in need of great medical care. The early payment of my student loans hardly mattered when I needed money to take care of my children. Obviously, a savings account may be more important than being free from debt, depending on your stage of life.

Related : Corinthian colleges Loans

4. You work in public service
There are many types of forgiveness of student loans, including plans for forgiveness for Teachers and plans related to income that offer forgiveness after a certain number of years.

The federal government also offers forgiveness of public debt for late payment, forgiving your student loans after you worked in the public service for 10 years and met eligibility requirements.

This program is much better than the standard income-based repayment plan, which frees up your remaining loans after 25 years. In this case, it is often not worth waiting for 25 years, but it is better to pay as soon as possible.

If you want to get the right to participate in the pardon program for public services, you will need to

work in the public service. This includes many non-profit and government organizations. It also includes active participation in the armed forces or a member of the Peace Corps.

There is no reason to pay more for your loans when you enroll in this program, because after 10 years of successive payments, your remaining loan debt is forgiven, regardless of the amount. Why pay money that you don’t just have to pay student loans before?

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