Sometimes the young generation has to make few hard financial decisions for a better future. Today some of us are entering the early stage of adulthood, the most awaited part of our life. After becoming a self-sufficient adult, every youth has some dreams to fulfill - like owning a car, buying a home or achieving their financial independence.
On the other hand, we’re very hopeful and enthusiastic about our long-term financial prospects. The last recession also complicated our financial life very badly. So, now the thing is, what should a young student borrower do?
So, we must make a list of pros and cons to choose what is right for us. We must decide whether or not it is right to postpone our life purchases and provide the extra dollars towards paying off student loans. Let’s find out the truth.
1) The PROS
a. We’ll be free of a major debt - We’ll feel very good when you see the $0 due balance in your student loan account. Practically, it’ll give us relief from our tension caused by the major student debt. Getting rid of our stress can help us to concentrate on our studies, and it could even help us to improve our family relationships.
b. We’ll save money - If we pay off the student loan early, it can save our wallet heavily by saving the extra amount we need to pay if the loan goes full term. We can use that money to fulfill other financial needs. Practically, we’re paying less interest, and saving more dollars.
c. Saved money from interest can be used in future - It’ll save a lot of money that we may utilize for future life purchases. This depends on a person’s own mindset and true patience. If you can remove all of your student loan payments, then the saved money can be used for something new, may be for a new car or downpayment for a new home...isn't it?
2) The CONS
a. We might make delay for some good things - The best example would be a home. Think if you borrow a 30-year mortgage for buying a house at your 30’s. At the time of collecting the house documents from your lender you’ll be at your 60’s. If you somehow become late for more 5 years, you’ll be 65. So, think, how much you’re willing to step back to grab your major life purchases?
b. We can’t claim tax deduction from student loan interest - Presently, the IRS permits their borrowers to deduct the interest on student loan up to a certain amount at the time of your tax filing. If you want to know the details on you can get tax deductions on student loans, you must ask about it to your tax filing expert.
Things to remember
Student loans are one type of installment loans that we usually pay off through certain monthly installments. If you go for a student loan (installment loan) and a credit card debt (revolving credit) both, it’ll be a wise decision. It is very good if you can maintain combined credit accounts, it’ll help you to grow a decent credit rating. If you pay off small amount of debts, that doesn’t have any major affect on your total loan amount. But if you take required steps to reduce high debt balances from your account, you surely have to pay off your student loan as soon as possible.
At the end, it is certain that if we sacrifice a bit now and avoid spending money on big life purchases, we can definitely use that fund to clean the student loan debt once and for all. It’s a good options for every individual students , who want to seriously become debt free and live a peaceful financial life.