Paying off early

[Anonymous]

I have student loans theough Sallie Mae and I was wondering if I started to pay them off early (I'm still in school) would it affect my credit score in a good or bad way? I thought maybe a small monthly payment to lower my total debt might be a good idea but I know that I might end up needing loans again in the future. Does anyone know if paying off student loans slowly while in school would be a good idea?

[laz98]

anytime you can pay towards your student loans, you should.  if nothing else, it will keep your interest down.  i strongly suggest it. 

[Peach8321]

Be careful doing this, Sallie Mae can be weird about it - make sure you read carefully the info on their website (I think mine went into repayment a month early because I tried to send a payment while in deferment).  

As for your credit score, if you have in school deferment, it won't make much of a difference, although it will lower your overall debt a bit, thus a good result.

I would suggest, IF they are not currently increasing (ie, you don't pay the interest), that you save the money into another account until you have to start paying on them, and then make a lump payment.  Especially if you anticipate needing more money, saving some and lowering the need for loans later might be better.  Avoiding debt is great, paying early is good, doing nothing is bad.  ;-)

[smc733]

This is weird, actually.  One of my oldest accounts was a PNC student loan that I paid off.  It shows as closed on EQ and EX, but my TU took a hit because it was removed completely?????

[castlefox]

"As for your credit score, if you have in school deferment, it won't make much of a difference, although it will lower your overall debt a bit, thus a good result.

Yes it wouldnt have much of difference to your credit score but I belive interest keeps adding up with those loans are in a differment status.

I wouldnt suggest thinking about paying it off early if you dont have an emergency fund for atleast 3months, 6 or more would be preferable.

[Peach8321]

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@castlefox wrote:

"As for your credit score, if you have in school deferment, it won't make much of a difference, although it will lower your overall debt a bit, thus a good result.

Yes it wouldnt have much of difference to your credit score but I belive interest keeps adding up with those loans are in a differment status.

I wouldnt suggest thinking about paying it off early if you dont have an emergency fund for atleast 3months, 6 or more would be preferable.

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This is only true if you have unsubsidized loans....if your loans are subsidized by the government, no interest adds up.  But if you do have to pay interest, pay it and save for the emergency fund!

[smc733]

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@Peach8321 wrote:

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@castlefox wrote:

"As for your credit score, if you have in school deferment, it won't make much of a difference, although it will lower your overall debt a bit, thus a good result.

Yes it wouldnt have much of difference to your credit score but I belive interest keeps adding up with those loans are in a differment status.

I wouldnt suggest thinking about paying it off early if you dont have an emergency fund for atleast 3months, 6 or more would be preferable.

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This is only true if you have unsubsidized loans....if your loans are subsidized by the school, no interest adds up.  But if you do have to pay interest, pay it and save for the emergency fund!

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Its always been my understanding that Subsidized Stafford Loans have the interest picked up by the school, thus why they are considered part of financial aid.

[Peach8321]

smc733 - nope, the interest is paid by the government - my private university would never have paid it! ;-) 

But as long as someone else is, don't both paying early!