Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
@andre181 wrote:
@FocusedAndDetermined wrote:Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
Subsidized means the Federal government is paying the interest. The OP has no obligation to pay the interest while they are in school or in period of deferment.
Correct - overlooked that detail.
@Commandolam wrote:
@FocusedAndDetermined wrote:Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
Thanks for your input. Ignoring the interest and investment thing, would you say having a student loan balance is why they keep saying my total debt to limit is too high?
That would be my guess, since you state your utilization is around 4%. You can wait for a response from a more seasoned expert, but I have the same notation on my reports, and my utilization is at or below yours. My installment loans are the only accounts with "high balances", but are way down from starting point. I pay well above the required amount.
So, my situation was very similar to yours when I started applying for credit cards, and I found that my loan balances actually were holding me back.
See, on your credit report, your loans are reporting at their credit limit because you have made no payments on them. Credit scoring doesn't seem to understand the nature of deferment, so it appears that you are basically a degenerate borrower. It was my assumption that my credit score was being hit by this. For example, I had I subsidized loans that were reporting a balance of over $16,000 and an original credit amount of $15,000. I was being dinged for that it seemed. I also had subsidized loans reporting a balance of $5,000 and an original amount of $5,000. Once I paid ALL of the loans down to about 80% of their original amount, I was approved for 3 great cards at great limits.
However, I can't guarantee that all of this was correlated. But I stopped getting the "loan balances are too high" message. So it must have done something.
My advice to you is to not worry about any of it too much for the time being. Use your funds for more important things, and only pay down your student debt when you are ready to do so and after you leave school. Obviously, you want to save on interest charges, so the sooner they are gone the better. But if you are still in school, you will just have to deal with the consequences of how credit scoring interprets your loan balances.
Good luck!
See, on your credit report, your loans are reporting at their credit limit because you have made no payments on them. Credit scoring doesn't seem to understand the nature of deferment, so it appears that you are basically a degenerate borrower. It was my assumption that my credit score was being hit by this. For example, I had I subsidized loans that were reporting a balance of over $16,000 and an original credit amount of $15,000. I was being dinged for that it seemed. I also had subsidized loans reporting a balance of $5,000 and an original amount of $5,000. Once I paid ALL of the loans down to about 80% of their original amount, I was approved for 3 great cards at great limits.
However, I can't guarantee that all of this was correlated. But I stopped getting the "loan balances are too high" message. So it must have done something.
My advice to you is to not worry about any of it too much for the time being. Use your funds for more important things, and only pay down your student debt when you are ready to do so and after you leave school. Obviously, you want to save on interest charges, so the sooner they are gone the better. But if you are still in school, you will just have to deal with the consequences of how credit scoring interprets your loan balances.
Good luck!
