Wednesday, August 12, 2009

Pay off a student loan?

Both Husband and I each have multiple student loans, and we each have to pay two separate student loan payments. The biggest loans are federal Direct student loans, through the government. They're on 20-year repayment plans, so the monthly payments are fairly manageable. 

I only owe $1329 on my other loan (I think it was originally $2500). If I kept paying according to the schedule, I'd have almost three years left. My plan was to pay off my credit card first (currently $7400), and then pay off the smaller student loan - both by January 1st. 

I was thinking about taking either this or next month's credit card payment and instead just using it to pay off that loan instead. I'd still pay the minimum credit card payment, of course, but I could use the extra and pretty much get rid of that loan altogether. I don't think it'll make much difference overall (the credit card has a slightly higher interest rate, but in terms of actual interest paid it would be only $3 or so "extra" to pay off the loan vs. pay down the credit card). It might affect my credit score, but I would guess that would be ever so slight if at all. 

Are there any other considerations I'm missing? 

2 comments:

  1. Do you follow Dave Ramsey's advice? I think he would say to pay off the lowest balance first, and then add that monthly payment to your debt snowball.

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  2. I think since you can pay it off, go for it! Then it's one less thing to deal with.

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