Paying off student loan

[SupraTurbo2jz]

I should know the answer to this but wanted to confer with the community. My wife and I are selling our home and should close the end of Feb if not sooner. My question is I've had a student loan thats been off and on in deferment since 2006. the princple is 4994.00 per the bureaus however I show a balance of 5449. Should I just pay it down  to like 50% and make payments on it or just pay it off and be done with it? We will have more than enough to do so so I'm trying to get everything right when paying stuff off. 

[Anonymous]

As a general rule I'd say if you can not pay interest on something, why continue to keep carrying a balance?

I guess the question is: What is the alternative? If you don't pay it down/off, what will you do with the money? Will you pay something else? If so, I'd look at what that interest rate is vs. your student loan interest rate (and factor the possibility of student loan interest deductions).

Also, if your loan isn't paid off, the monthly payments will continue to count against you in a Debt-to-Income calculation. This means if you want to get a mortgage soon, you may qualify for a lower mortgage payment/loan.

Finally, your post is in the bankruptcy forum. Are you planning on filing bankruptcy? If so, paying off your student loans vs. another type of unsecured loan may be strategic, as student loans are generally not dischargable in bankruptcy. I'd speak with an attorney on this particular strategy though, as the timing may raise concerns of fraud.

[SupraTurbo2jz]

nope bk was discharge 05/15 so this may be in the wrong section. we will have enough to pay all debt minus cars in full. after the sale if i pay it off we will only have our car payments and what small balance is carried for util purposes. I was just trying to get back on track to the "700 in 2 years" since my 2 yr anniversary is coming up. I agree that paying it off will make debt to income better for a new mortgage which i plan on doing after our 2 year mark. I was more worried about score vs debt to income but will pay it of since i still have an installment loan