Paying Off Student Loans

[Anonymous]

I have a few questions regarding paying off student loans. I would really appreciate some guidance.

Here is the situation:

I have about seven loans with different companies/institutions. Some are private some are Fed.

My parents are cosigners on some of these loans. They want to pay off their share.

As far as my score goes, is it best that they pay off these three or four loans in full or is there a better strategy? 

Do the loans still show up on my report for years to come even if they are paid off completely?

Does my installment debt utilization ration take a hit if they are paid in full and closed? 

[SMikulski49]

From what I know it will help you if you pay off your loans. Plus  you will eliminate any future problems, and you will eliminate your debt  quicker, as well as  not waste a lot of monay on interest. The loan will stay in your history for the next 7-10 years and it will show paid off and in good standing, so it will only help you for the next 10 years or so. 

In my case I still have 3 loans with balances between 1500 and 3000. The interest on them is .14% and I end up paying like few cents a month in interest so I just keep them and pay the minimum payments so they will stay in my history for longer time. But If i had bigger interst I would just pay them off. 

Since you have so many loans, I would not worry about the ones your parents want to help you out with and pay off for you, you will still have other loans that you will be making payments on which will help you with history as well. This is just my opinion and what I would do. 

[SCF]

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@Anonymous wrote:

I have a few questions regarding paying off student loans. I would really appreciate some guidance.

Here is the situation:

I have about seven loans with different companies/institutions. Some are private some are Fed.

My parents are cosigners on some of these loans. They want to pay off their share.

As far as my score goes, is it best that they pay off these three or four loans in full or is there a better strategy? The impact of paying off installment loans on your report is small.  You may see a bump from having fewer accounts open, you may not.  What paying off loans will do is lower your debt-to-income ratio, which lenders do consider, especially for things like car and home loans.

Do the loans still show up on my report for years to come even if they are paid off completely? Yes, they should be there for around 10 years.

Does my installment debt utilization ration take a hit if they are paid in full and closed? No.  Utilization doesn't work the same way with installment loans as credit cards, the impact is very minimal on your score.  When the loans are paid off, they will show 0% utilization and closed, which is exactly as it should be.  Overall, having the accounts there with a positive record for 10 years is what will have the most impact on your score.

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I'd reccomend paying off the private loans first.  Unless they have MUCH lower interest rates, it will be worth it to have them paid off.  Private loans have almost none of the protections of federal loans and are just as difficult as any other student loan to dismiss in a bankruptcy if something were to happen to you.  Federal loans have different payment plans, hardship deferrments and other features that are invaluable if you ever need them.

[Jatindrj]

SMikulski49, I'm curious...where did you get your student loan? I would love to have an interest rate as low as yours.