topic Re: Should I pay off student loans? in Student Loans

Should I pay off student loans?

credit_endurance — Fri, 27 May 2016 04:25:36 GMT

I currently have 2 navient (formely Sallie Mae) loans which I've had since 2004.

Both totaling around $2,800 total paying around $34.00 monthly. I am very tempted to

Pay them off but, have heard that it would affect my AAOA.

Should I pay them off completely? Or maybe perhaps pay down the balance? And if so, would doing so severely effect my AAOA?

Re: Should I pay off student loans?

dragontears — Fri, 27 May 2016 16:31:31 GMT

@credit_endurance wrote:
I currently have 2 navient (formely Sallie Mae) loans which I've had since 2004.
Both totaling around $2,800 total paying around $34.00 monthly. I am very tempted to
Pay them off but, have heard that it would affect my AAOA.

Should I pay them off completely? Or maybe perhaps pay down the balance? And if so, would doing so severely effect my AAOA?

It will have no effect on your AAOA since the accounts will stay on your report for ~10 years after closing them (will effect the average age of open accounts that places like CK uses but that is not your real AAOA)

It will effect your credit mix if you don't have other loans and most of the time your score will drop when you pay off/close a loan (even if you have other loans), how much is dependant on your profile.

I also have small student loan I am still paying on, currently it is at 1.5k which I could pay off if I wanted to but with the open date in 1999 I am going to keep paying it at the scheduled pace so by the time it closes it will be ~20 years old and give me the AAOA boost for a really long time.

Re: Should I pay off student loans?

credit_endurance — Fri, 27 May 2016 19:04:09 GMT

Yes, I do have another loan through a credit union for around $4k in which Im making monthly payments.

I just look at these small loans as adding more interest the less that I pay them and might as well just pay them off.

That's good to know that it won't effect my aaoa as that was my biggest concern. And yes, I do refer to CK for my lastest reporting but mybe I shouldn't put to much

faith into them.

Re: Should I pay off student loans?

dragontears — Fri, 27 May 2016 19:16:54 GMT

@credit_endurance wrote:
Yes, I do have another loan through a credit union for around $4k in which Im making monthly payments.

I just look at these small loans as adding more interest the less that I pay them and might as well just pay them off.

That's good to know that it won't effect my aaoa as that was my biggest concern. And yes, I do refer to CK for my lastest reporting but mybe I shouldn't put to much
faith into them.

I use CK and really like them, just need to keep certain caveats in mind, such as their AAoA is really AAoOA, their recommendations are purely marketing and their score is not used by any lender but they are great for keeping tabs on your reports.

If the loans are costing you a lot in interest then pay them off/down. Luckily for me I got my loan when interest rates for student loans were low so I only pay $1-2/month in interest