There are thousands of students around the nation that end up graduating college with student loans. Even though they are no longer in school they still are holding on to the burden of this debt. For individuals in this situation you may be wondering if you can pay off your student loan in advance. The answer should be an obvious “yes”, but the question you should ask though is: should you?
There are several advantages to paying student loans ahead of their due date. Below are several advantages to keep in mind:
1. Paying early will allow you to have a lower income-debt ratio. No matter how you look at it, having less debt and more income is the best way to go about in life. The earlier you get rid of your debt, the earlier you can increase your holdings. This will also allow you to increase your chances of obtaining other loans when the time is right, such as a car loan, home loan, personal loan, etc. Getting rid of this debt will allow you to have additional funds and may give you an opportunity to start saving.
2. Advance payment will provide you with more money to invest. The earlier you pay your debts, the earlier you can invest your money on something that will allow you to double or triple it. Instead of using your income to pay debts, you will be able to use it to create more money.
3. The older you get, the more you will need your money. It will be better if before you reach your 30s you already have the means to buy a house, start a small business or raise a family. This might be difficult if the income is still being applied to past loans. Getting rid of debt as quick as possible is wise for anyone no matter what the situation may be.
4. Student loans have to be paid, period. If you’re hoping that, if in the future you go bankrupt, you don’t need to pay this loan anymore, you are sadly mistaken. Believe it or not, not having the money to pay will not exempt you from paying it. You might get a deferment, but we all know that’s just delaying the inevitable. This is your responsibility and you cannot avoid it forever.
5. Worst case scenario: a one-time or bulk payment. In most countries that offer student loans, refusing to pay up can lead to a court order wherein you will be required by the courts to issue a one-time payment.
Some have offered arguments in favor of not paying student loans early. If you’re torn between what to do, just imagine the relief of not having any debt before making that personal decision. Remember that this will need to be repaid sooner or later so why not ease this burden as soon as possible and move on with your life. Paying off your student loans early will also allow extra funds just in case an emergency happens to arise.