Hello all,
I’m looking for a good strategy to reduce student loan debt. I applied for a couple credit cards but I got declined because of:
1- too many accounts with balance
2- the remaining balance on installment loans are relatively high.
I have 19 federal student loans, oldest is 12 years old and newest is one year old. I’m still in school and finishing school in 2025.
I owe 120-150% of the original loan amount on the older loans because of the accumulation of interest.
Total debt is 96K and total interest so far is 12.5K. The ones with 150% balance is $4500 ($3000 the original loan) and those with 120% are around $1400. I have some $7600 balances with 130% repayment and the most recent ones are two $15,200 with no interest on it.
Right now I can pay around 1000-1500 a month, so I need your advice to come up with the best strategy to pay down the debt and improve my credit as well while I’m building my emergency funds (for two months so far).
1- should I pay off the smaller accounts with the highest interest or should I pay them down to 91% and leave the account open in order to get a better score?
2- My other option is to pay down all the accounts to 89% to lower the utilization to the next level.
Right now the payments are on pause and interest is zero, and this can help me a lot.
I really appreciate your input!
