Keeping Student Loans Around

[Anonymous]

Are the loans federal or private?

[jmcherr]

---

@Anonymous wrote:
Are the loans federal or private?

---

They are Federal, does that make any difference?

[Anonymous]

Just in terms of getting an accurate answer. Federal loans are one thing but a private student loan... The devil can be in the details. You might make plans to do something reasonable and they would get you in the fineprint.
There was actually an article about this, paying down you loans steadily but not too quickly. I can definitely see the benefit if it. Just keep in mind that servicers Often do wrong and if you don't keep a close eye on it you could easily end up with the loan past 30 or 60 days late because they don't usually report them. Good luck.

[jmcherr]

Yeah the possibility of ending up with a late payment does scare me a bit. That's why even though I'd be paid ahead I was thinking of making monthly payments, like a total of ten dollars as long as they let me make that low of payments. That way I don't forget about it all together and can also monitor anything wonky going on.

[Anonymous]

That's sounds like a better idea. There either thing would be to monitor the distribution of that money. You mentioned you have multiple loans. @Calyx could better direct you on how to make sure the payment goes to each loan and not just one (if it's necessary).

[calyx]

Definitely *definitely* keep a close eye on things if you do go for it.
I think I give @Sabii minor attacks when I start thinking/posting about playing games with my student loans because not only do we both know how horrible they are, but I've been burned before (so it's especially crazy for me to try to do that again).   

I will say, that I'm willing to do the "pay it down to almost nothing" scheme because I've been pretty obsessive about watching what my loan is doing while I'm paying it down, all the way to the little details, just to be sure nothing horrible happens.   They are NOT reporting correctly (because I'm paid ahead, they're reporting to CRAs as "deferred," which... they're not - and NSLDS is correct on the pay ahead), and there are all kinds of quibbly little things happening that do not negatively impact my score or my financial health (which is more important than FICO), so I'm just keeping an eye on them and keeping that data noted.    At the end of the day, I don't want to pay any interest I don't have to, and my SL's are my highest interest loan, so if I paid it down to, say $100 and something hinky happens, I'll just pay it off and move along to my next loan.

Which is to say - playing games with servicers can backfire - always have an exit plan.

And yes, you can pay off individual loans, even if you *normally* pay one lump sum that the servicer distributes.  Some of the servicers even allow you to direct where you want payments to go on the payment site itself, which is a nice option if you want to work on one loan at a time to see how it goes (if your servicer has this option - otherwise it's going to be the CSR for you).

[SouthJamaica]

---

@jmcherr wrote:

Hi, first time poster

I was wondering if I could get a fresh take on the idea about keeping my student loans open at a low balance. Now I was reading a post (Should I bother keeping student loan accounts open?) which also lead me to the Share Secure Technique. However I understand everyone has different credit profiles so I was hoping to get some advice on my situation.

A little information about me:

I really started taking a good look into my credit reports and scores about a year ago and have found this site extremely helpful.

I have 3 credit cards, ages 11 months, 5 months, and 1 month (if AMEX ever reports it)

1 car loan 2 years 8 months and I plan to pay it off this month

3 student loans which are my oldest open accounts 8 years, 8 years, 7 years

2 closed paid-in-full student loans that were charged off and should drop off my report in the next year.

I keep my credit card utilization low between 1-10%

I have the ability to pay off my student loans in the next 3-4 months, and started to wonder if it would be a good idea to keep two of them open at a lower balance maybe a couple hundred dollars each. Over the course of 6 years I would pay about $50 in interest (less then $1/month). I also understand that sometimes if the balance gets to low the creditor might right it off. I don't know how to find out if this will happen or not, but if it does I could look further into Share Secure Technique.

I believe and correct me if I'm wrong this would benefit me by having 2 open in good standing installment loans (with low balances), and also could help my credit age in the longer run. If I close them now they will continue to age for 10 years however if I keep them open they could potentially age for 16 years.

Now my goal is to buy a house but its still a bit down the line 3-4 years I plan on only getting 1 more credit card in that time and letting all HP drop of my report.

So my question is should I keep them open will having open installment loans, with low balances help my credit when applying for a mortgage, or should I close them now possible take a hit on my score now and probably bounce back by the time I'm ready for the mortgage?

Thanks in advanced any and all advice is appreciated.

---

It depends on the percentages. FICO 8 scores reward you when your overall installment utilization percentage is at 9% or lower. If your aggregate will stay at 9% or lower, you can drop all but one of your loans without consequence.