Pay Student Loans While In School To Increase Credit Score

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Pay Student Loans While In School To Increase Credit Score

Postby zrussell » Tue Oct 22, 2013 2:32 pm

I am currently enrolled in school. I have ~$5,000 in Stafforod Loas (Federal Student Loans). They are currently not due since i'm still in classes. I have the ability to pay these while i'm still in classes as I'm employed in my own company (which is profitable).

I want to know if it is possible, and if so, is it wise. To change the repayment from deferred to active while i'm still in school. I know having an installment loan can help my score, and since I only have 9 credit card accounts, I was wondering if this would be something worth doing. The payments would be ~$67/mo.


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Postby zrussell » Wed Oct 23, 2013 3:49 pm

Any feedback on this would be greatly appreciated.

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Postby SClay » Wed Oct 23, 2013 4:15 pm

Hey there!

In my opinion, it would definitely be wise to start paying off your student loans as soon as you can. While this will improve your credit score over time, you should note that paying them early isn't going to give you any extra advantage besides having your debt paid off. As long as you don't default on your loan and aren't late on a payment, your credit score will reflect the same regardless of what time you choose to start paying it off.
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Postby Midori » Wed Oct 23, 2013 8:51 pm

Honestly, if it was me, I would leave them alone until they came due... what is it, six months after graduation?

I wouldn't want to start having to repay a set of loans while my primary focus was graduation. Having your own company is an awesome thing, and having your own profitable company is a fabulously awesome thing, but student life still has a good chance of being unpredictable and unstable, financially speaking, whether full-time or part-time.

I've never heard of anyone benefiting from "starting the clock" early. I've also heard, anecdotally speaking, that student loans are perceived differently than credit cards, mortgages, auto loans, etc, since the whole purpose behind student loan debt is to better yourself and (presumably) make yourself more employable. Suppose you go car shopping, and want to take out an auto loan... if they saw you had $20k of credit card debt, $20k owed, that would be a bad thing. $20k of student loan debt, $20k owed, not so much.

All that being said, once I was out of school, and the notes came due, I would start paying it down as aggressively as possible. Saving interest and getting out from beneath debt is more important to me than any benefit to my score from just paying the minimum (for example, length of time reporting). Same thing with an auto loan, same thing with a mortgage, etc.

So, yeah. Focus on getting real life taken care of first-- get what you need from your classes, get your diploma, save your money, keep cultivating your biz. Pay attention to the student loans when Sallie Mae (or whoever) tells you it's time to pay attention to them, because there's no penalty for starting on the start date, and there's no benefit I'm aware of for starting early.

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Postby cashback » Wed Oct 23, 2013 10:50 pm

Im not that familiar with student loans, but if Stafford loans have no interest while deferred, don't pay them.
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