2 answers

What's the best way to approach student loans?

Updated Hamilton Township, New Jersey

As we are all gonna graduate with a pile of loans, what's the best way to approach them? Is it best to consolidate all loans or pay them one company at a time? #loans #college #debt #financial-planning #college-advice

2 answers

Jacob’s Answer

Updated Cleveland, Ohio

Hi, Stephanie,

If consolidation or refinancing is not a feasible option for you then I would recommend focusing on high interest rate loans first. Paying down the principle on those will enable you to avoid high interest payments, even if the balance is lower than your other loans. For example, if you have two loans, one with a balance of $11,000 and an interest rate of 3.2% and another with a balance of $4,000 and an interest rate of 5.6%, it would make sense to pay off the $4,000/5.6% loan first since it will accrue interest faster than the $11,000/3.2% loan.

Kristin made a good point about checking for early payment penalties - understanding the terms of your loans is critical to prevent extra fees.

I hope this helps - good luck!

Kristin’s Answer

Updated Huntington, West Virginia

Hey Stephanie, I actually got a personal loan with a lower interest rate with a steady monthly payment that had an options to pay more if I ever wanted to, you would want to check if there would be any penalty to pay off your loans early of course. You would just use a personal loan and pay all of the loans off and only have the monthly payment. I would possibly check this link out www.lendingtree.com . Check with the company your student loans are through and see if there is a penalty, I would add up all of it and model a loan with this website figure out how much your monthly payment would be verses what you are paying right now.

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