Posts: 143
Registered: ‎04-11-2012
Re: Pay off full student loan balance ($4.2k), or continue to make $480 payment per month?

SCF wrote:

I'd say pay off the loan.  Paying it off probably won't impact your score much either direction, but the good history from the account will remain for about 10 years (and in the interim, you'll hopefully build history with other accounts to replace it when it finally does fall off your report).  In terms of a financial decision, you'll save a good amount on interest depending on your rate.  You'll also never be at risk of missing a payment (due to forgetfulness, error or anything else) and have one less thing to worry about each month.


It sounds like you'll still have plenty of money left on-hand for an emergency afterward, so I would just pay it off.

Thanks for the response. I just realize I did not even mention the rates of the loans... 1 of the loans is around $1k @ 6.8%, and the rest is at 4.2%.


What about the tax deductions from the student loan? Can you explain when it is beneficial to keep a student loan? Is it only beneficial when you have other higher priority loans/expenses, and pay less on the student loans because they usually have lower APRs and can get the tax deduction making the effective rate even lower?


Regarding the missing payment statement that is really not even a consideration because I have the money automatically being pulled out of my account.

IT (11500 CL), Freedom (5000 CL), Zync (500 CL), PFCU (500 CL)

Starting Score: 699 EQ (4/11/12)
Current Score: 761 EQ (8/15/12)
Goal Score: 800+ EQ