Paying off student debt is a huge financial goal for many people across the globe. However, many people find that they need help to pay off their student debt as soon as they want because of their current financial situation. This can be frustrating and cause other financial issues to snowball into more debt. Apart from a student loan, there are many expenses that a new graduate should think about and plan for.
One of the challenging things for a fresh graduate is making ends meet while still trying to pay off student loans. When paying off student debt, the quicker you do it, the better.
There are many reasons to pay off your student loan debt as fast as possible including lowering your interest rate, avoiding penalties and fees and making sure that you have enough in your account available when you need it. The trick to paying off your student debt is to be frugal, but not cheap. If you are also one of the students that are interested to know more about student debts and whether or not it is a good decision to pay off early then stick to the end.
Although the popular belief is that it is better to pay off your student debt early, the reality is far from it. Yes! You heard it right, it may not be the right decision to pay student debts early. Now, this statement would have confused a lot of people. Stick to the end of this article to find out the pros and cons of paying student debt early. One thing that you should do before deciding to pay off your student loans early or not is to weigh the pros and cons and then make the right move.
What are you waiting for? Let’s get started then.
Pros
Stress will reduce
Student loans can cause a lot of stress for people. As they are freshly graduated and are still trying to get equipped for the adult world they may already be undergoing stress. Adding student loans to the mix for a long time can truly become hard to deal with. At the beginning of their career, although they are stressed they will be able to manage it.
But as time goes by along with student loan stress they also have to manage work stress, family and more. So they will unnecessarily be more burdened and think they have a huge weight on their shoulders. However, if they pay off student loans early they will have one less thing to worry about. As you already know removing financial stress will reduce how much burden on an individual.
Opportunities to try new things
One of the major problems with student loans is that you have to make good pay your priority. If you have a student loan then it becomes highly important for you to earn good money every month as you have to pay your debts on time but the problem that comes with this is that you really can’t jump to an interesting opportunity or new things as you will be bound by your paycheck.
However, if you pay off your student loans early you will have the freedom to try new things or take up new opportunities when you come across them. Another thing that can happen because of this is you can make decisions without any financial stress, this allows you to try things that you want without any burdens.
Save good money
If you can afford to pay off your student loan early then it is better to do that as you can save money in the long run. Although the interest rate is low on student loans you are still paying a certain percentage of interest on your debt right? So if you pay it off early and save a lot of interest amount that you will be needed to pay it off in the future. Also, another benefit of paying off your student loan early is that the amount of EMI you will be paying every month will open up for your monthly expenses. Dont you think it is good?
Cons
Rack up debt with high-interest rates
Once you pay off your student loan completely then you will become more open to taking other loans and substantially all other loans have more interest rate charges compared to the student loan. This will become a problem in the future as any loan you will take out will have high interest and this become a bigger burden for you. If you have other loans apart from student loan then it is highly advisable to make the extra payment towards the loan that has high interest instead of paying it towards your student loan
Miss out on deductions
As a citizen making a payment towards your student loan, you can claim deductions when you file your returns (tax returns) if you fall under the tax bracket. The deductions will reduce your tax payment but once you pay off your student loan early then you will lose this benefit. However, just because of tax deductions you cannot keep your student loan active.
One thing that is best in this situation you can consider everything and makes calculations to see how much you save by paying off your student loan early and not paying it off early. And once you make comparisons you will see the numbers clearly and based on that you can make appropriate decisions.
In a nutshell,
Student debts can be a source of financial stress for many fresh graduates. Apart from handling becoming part of the adult world they also have to find a well-paying debt to pay off student loans. However, if you are in a position where you can pay off your student loans early then it becomes a dilemma whether to take this step or not. So if you are someone who was suffering from this dilemma then we hope that this solution has provided you with the necessary understanding. If you are interested in more such articles and want to save money or earn money then check out the zeen website.
