SHOULD YOU PAY YOUR STUDENT LOANS FIRST | debt payoff | CARES Act
When it comes to paying off student loans, the biggest question most borrowers have is which ones to pay off first. With multiple student loans out there, it can be difficult to decide which loans to prioritize. Knowing which loans to pay off first can help you save money and pay off your debt faster.
When it comes to student loan repayment, there are two basic strategies: the “snowball” method and the “avalanche” method. The snowball method involves focusing on the loan with the lowest balance first and then working your way up to larger balances. This can be a great way to get a quick win and feel motivated to keep going. The avalanche method involves tackling the loan with the highest interest rate first, which can save you money in the long run.
First, it’s important to understand the difference between federal and private student loans. Federal loans have certain protections, like deferment and forbearance, that private loans don’t. Federal loans also have fixed interest rates and more flexible repayment plans.
Private loans, on the other hand, are not backed by the government and may have higher interest rates and fewer repayment options. Private loans are typically more difficult to discharge in bankruptcy.
For most borrowers, it’s best to tackle federal loans first. Paying off federal loans before private loans can help you take advantage of federal loan protections and avoid the possibility of defaulting on a private loan.
The next step is to decide which repayment strategy to use. If you want to get a quick win, the snowball method is the way to go. Start by paying off the loan with the lowest balance first, regardless of the interest rate. Once that loan is paid off, move on to the loan with the next lowest balance. This can help you stay motivated and make progress toward eliminating your debt.
If you’re more interested in saving money in the long run, the avalanche method might be the better option. Start by paying off the loan with the highest interest rate first. This will save you the most money in the long run, although it might take longer to pay off.
No matter which method you use, it’s important to make sure you make your payments on time. Late payments on student loans can have a negative impact on your credit score and can lead to late fees and added interest.
In addition to focusing on federal and private loans, you should also consider consolidating your loans. Consolidating your loans can help you simplify your repayment process and potentially lower your interest rate. This can be a great way to save money and make it easier to manage your debt.
When it comes to paying off student loans, it’s important to know which loans to prioritize. Start by paying off federal loans before private loans. You can also use either the snowball or avalanche repayment strategies to help you make progress on your debt. Additionally, you should consider consolidating your loans to simplify the repayment process and potentially save money.
1. Start by paying off federal loans before private loans.
2. Use either the snowball or avalanche repayment strategies.
3. Consider consolidating loans to simplify the repayment process and save money.
People Also Ask:
Q: Is it better to pay off student loans with the highest interest rate first?
A: Yes, it is typically better to pay off student loans with the highest interest rate first, as this can save you money in the long run.
Q: Should I pay off federal or private student loans first?
A: It is usually best to pay off federal loans before private loans, as federal loans have certain protections that private loans do not.
Q: Can student loan consolidation save me money?
A: Yes, consolidating your student loans can potentially help you save money and make it easier to manage your debt.
Which Student Loans To Pay Off First – Highest Rated?
My husband and I have over $100k in student loans. In this video I am sharing how we got here and why we chose not to pay our student loans first and focus on other debt instead. Are you on a debt free journey? Let us know in the comments and if you are paying your student loans first!
Want to read the blog version of this video? Check it out here: https://wellbalancedwallet.com/pay-your-student-loans-first/
Student Aid: www.studentaid.gov
My Debt Free Journey: https://youtu.be/3Dl0Q0RsNWk
Debt Snowball Toolkit: https://wellbalancedwallet.com/debt-free-journey/
1:58 CARES Act
3:07 Questions to ask
4:11 Emergency fund
5:25 Major life events
6:29 Student loan forgiveness
7:44 The bottom line
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