Many people with several types of debt wonder if they should worry about paying their student loans now or later. After all, student loans often have lower interest rates with more options available for repayment compared to usual debt. The answer depends on your financial situation and how you would like to manage your debt. However, if you feel like bankruptcy is a concern, then speak with a Chattanooga bankruptcy attorney for advice.
Should I Pay Student Loans Early?
Student loans can be a heavy weight on our shoulders. This is what drives many people to want to pay off student loan debt early. Others respond to financial stress by avoiding the problem. What this looks like is delaying student loan payments or using various repayment options to delay paying the usual amount.
Unlike some forms of debt, paying back student loans early has no penalties. Some people like to pursue the option of prepayment in full when they pay off a student loan in full. Feel free to reach out to your loan servicer if you have any questions about how this works.
Paying off student debt not only comes with the benefits of no penalties and less debt overall but may also help you better prepare for your future. Without monthly payments from student loan debt, you might be able to achieve your financial goals significantly faster. These goals may include moving out, buying a car, buying a home, or paying off other debt.
Some people like to start paying off loans even earlier than graduation. This can look like paying student loans while in college or saving for a college fund before attending college. There are no penalties for paying student loans before graduation. Direct Subsidized student loans do not build interest as long as you are still in college.
Powerful Debt Payment Methods
If you find yourself overwhelmed with student loan debt after college, do not panic. You have several financing options. The government provides various forms of repayment plans, and student loan lenders often work with your unique financial situation. There are also two powerful budgeting methods you can try:
Snowball method
Highest interest rate method
The snowball method involves putting the most money into the lowest debts first. Many student loans are made up of smaller loans. Find out what those smaller loan amounts are and use the snowball method by paying more money to the smaller loans first. This builds motivation and momentum.
The highest interest rate method focuses on loans with the highest interest rate rather than the lowest loans. This means you would pay more money to the highest interest rate loans first, no matter how large the loan is. Part of the logic behind this is that higher interest rate loans grow faster.
Call Tom Bible Law for Legal Help
Facing enormous student loan debt can be overwhelming. Start by contacting us at Tom Bible Law by dialing (423) 424-3116 for a consultation today about your finances. Our dedicated team of Tennessee bankruptcy lawyers is prepared to help you escape debt by exploring various options for bankruptcy. We can be found throughout the Tennessee cities of Chattanooga and Tullahoma.