Confusion about student loans

To clear up some confusion about student loans.

Can  they affect your credit?

Student loans can affect your credit in 2 different ways. If you pay the loans on time , they will go on your credit report as a positive credit history. If you default or pay them in an untimely manner, they will adversely affect your record.

If you run into problems, you should contact the lender and request a deferment. The deferment will not affect your credit report.

I am confused about paying off my loans

Should I use savings?

The monthly payment seems to drain you. Some research says that the stress of loans can affect your psychological health. Your savings are important.  You need to have an emergency fund , in case you run into problems, If you have no savings, you will never be able to buy a house. You also need savings for retirement. Trust me, it gets here faster than you think.

Loan Forgiveness

This is available on some loans. You should check your loan to see if it is available to you. Also Federal loans often offer forgivess after l0 years of payments, if you are involved in Public Service.

Income based repayment

These plans cut your payments to 10 or 20% of your income and allow you to increase your savings.

Once you are underway, try to automate your loan payments, and then try to pay a little extra.

Should I pay off credit cards first ?

In general you would pay off the loan with the highest interest  rate first. But you should consider that the student loan interest may be tax deductible, depending on your income. Even if you have a promotional low rate on the credit card, you must look at what you will be when the rate expires. Also credit cards often have penalties for late payments , that can erase the promotional rate.