How Much Should I Pay Down My Student Loans

[Anonymous]

Ive been rebuilding my credit since a Chapter 7 bankruptcy in 2014 due to medical bills.

I’ve followed soulmaster’s guide and: opened several credit cards that I pay off each month, opened & paid off a couple credit builder loans, and rebuilt a decent savings towards a house. At this point I only have: my car (2.25%), student loans (6.25%), and a small furniture loan (0%).

I’m not worried about the 2% car interest but the student loan interest has been adding up. There’s little chance they’ll ever be forgiven and I make just enough to not be able to deduct the interest. I have them paid down to a $15k subsidized loan & $7k unsubsidized loan. It looks like I will be moving at the end of the year so I’ve decided to hold off a little longer on the house and that's freed up some of my savings for now.

I’m tempted to pay off my student loans BUT they are by far my oldest open lines of credit (the only loans that survived my BK) so I don’t want to close them completely. Instead I want to pay them way down & change my repayment plan to stretch the loan out and reduce my monthly payments.

So my question: how low can I pay them down to minimize interest while still getting the maximum scoring benefit from my on-time payments on my student loans? Should I pay off one of the two loans or keep them both open? Any other tips or suggestions are appreciated.

[Anonymous]

I dont know why you want stretch it.  Not a good idea! I would pay them off to $0 and get rid of them.

[Anonymous]

---

@Anonymous wrote:

I dont know why you want stretch it.  Not a good idea! I would pay them off to $0 and get rid of them.

---

Not sure about OP's situation, but for me it is:  2 student loans 14+ years AoA each.  After that, my oldest card is only 4 years old.  I want to stretch my student loans out until retirement age if I can.  For one - because paying it off sooner costs more than extending it out (IBR plan), two - missed opportunity costs of extra up front money that could earn, three - they are by far my oldest lines of credit.

Now if I become wealthy enough by coming into large cash or got a job high enough salary to not qualify for IBR, I would pay them off sooner.

[Anonymous]

I'd pay things down to about 18-24 months worth of payments on the student loans and let the accounts age some more. Once the studen loans show the reduced balance go on an app spree and collect the cards you plan on acquiring. Then before you close those loans out take a shot at CLI's across the board and any other cards you want. Then say goodbye to those old accounts. You just can't keep them forever.