Before you put an aggressive strategy into play, make sure it makes financial sense.
While paying off your student loans early is a great way to save some money, you want to be sure that you don’t jeopardize your financial stability to do so. Paying your other bills, setting up an emergency fund, and starting to save for retirement might take precedence over paying off your student loans early.
Also keep in mind that it doesn’t make a whole lot of sense to pay a bunch extra on your student loans that have interest rates in the 3% – 5% range, while making minimum payments on a credit card with $5,000 of debt and a 18% interest rate. Remember, student loans (especially federal student loans) are likely to have a more favorable interest rate than other forms of credit (a mortgage or car payment can be an exception).
All that being said, there are some great ways to minimize the amount of interest you pay, thereby minimizing the total overall cost of your student loans.
While paying off your student loans early is a great way to save some money, you want to be sure that you don’t jeopardize your financial stability to do so. Paying your other bills, setting up an emergency fund, and starting to save for retirement might take precedence over paying off your student loans early.
Also keep in mind that it doesn’t make a whole lot of sense to pay a bunch extra on your student loans that have interest rates in the 3% – 5% range, while making minimum payments on a credit card with $5,000 of debt and a 18% interest rate. Remember, student loans (especially federal student loans) are likely to have a more favorable interest rate than other forms of credit (a mortgage or car payment can be an exception).
All that being said, there are some great ways to minimize the amount of interest you pay, thereby minimizing the total overall cost of your student loans.
