Sudent Loan - pay off or payments?
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Sudent Loan - pay off or payments?
| Sat, 01-24-2009 - 11:57am |
Thank you everyone for all your previous advice.
| Sat, 01-24-2009 - 11:57am |
Thank you everyone for all your previous advice.
Hi - coming out of lurkdom.
I wouldnt borrow to pay off student loans. For one thing, the interest on them is tax deductable, so the savings - if any - would be less than 1%. Plus, having an up-to-date account in your name is important for your credit score. Third, student loans remain in your name only. If something happened to you (hopefully not, of course :) the loan would be canceled and DH wouldnt be responsible. If you take out another kind of debt, in the same situation he would still be responsible for paying it off.
Thank you, this is what I wanted to hear.
Jennifer
You do need a credit history for a good FICO score The student loan would be a great start in building up your own credit for that house. Make sure you get a credit report on yourself before going house hunting to make sure enough time as passed that all the bad stuff is off.
Mary Ann
You've heard all the reasons that I agree that it is a much better idea to keep this loan in your name and as a student loan. I wanted to add that there is no reason why you cannot pay extra so if you both decide you want to pay it off faster, there's no harm in that. Also, I don't know where DH is getting this money but if it is from a retirement account, I doubly object to doing that. I would NOT borrow against retirement funds for almost any reason but I really, really wouldn't do it to replace a loan with such generous benefits as a student loan has.
Peg
I am not sure either what he meant about "borrow" he said he could get the money for the student loan and when the interest rates are all worked out he would be making 1%.
Hmmm...well, if it was a true fee and not just accrued interest (a payoff amount always includes a certain amount of interest that has accrued since the last payment), there might be a prepayment penalty. This would be good for you to make a call and try to tackle this. You should be able to phone whoever is servicing the loan and ask about prepayment penalties. If you do that and determine there is not a prepayment penalty, go ahead and ask them the best way to make additional payments on the principal.
If it is a federal loan, I'm pretty confident you don't have a prepayment penalty but you might if it is a private loan. If there is, I would figure out how much it would be and then maybe save up the money in a separate account and make one big payment.
Peg
Okay I went back and looked
the fee I saw is not charged, it is just a line but it says "n/a" so they don't charge, they also don't charge for adding extra to the payments - yay.
For your store cards, cut or shred the cards, then just leave the accounts open.