Student loans can be a burden to your finances when you’re in school. How long do you have to pay off student loans? You can take a considerable amount of time to do this. As per Lantern by SoFi professionals, “The average student takes 20 years to pay off his or her student loan debt, according to a recent report.” But the good news is that it’s possible to get rid of this burden if you pay off your student loan early. Not only will paying off your student loan early save you from accumulating interest on the balance, but it will also improve your credit score, give you more freedom to invest money elsewhere and reduce future financial burden
Save on interest
If you have a student loan and are paying it off slowly, the amount of interest you pay will be much higher than if you can pay it off early. Interest rates on student loans are typically lower now than they were in the past, but they still can change.
A good rule of thumb is to try to pay off your loans as fast as possible while still saving money. The more you can put toward paying down your debt, the less interest (and time) it will take for you to reach financial freedom!
Improve credit score
It’s true. Paying off your student loans early can do wonders for your credit score. A higher credit score means you’re likely to be approved for loans with lower interest rates and better repayment plans, which will help you pay off debt more quickly and save money in the long run.
So what exactly is a good credit score? It varies depending on who you ask, but most experts say that anything above 720 is considered “excellent.” If you have a score below 620 (especially below 580), it might not be worth paying off your student loan early—you’ll only end up paying more in interest than what you could’ve saved by paying off the principal balance early.
Reduce financial burden
One of the biggest advantages of paying off student loans early is that you’ll have less money to pay each month. That’s a win for your budget and credit score since it reduces the amount of interest you’re charged on your debt.
Paying off student loans early can also help reduce your overall debt load by saving hundreds or thousands of dollars in interest payments over the life of your loan, depending on how much you owe. The longer you wait to repay student loans, the more money lenders will make from them.
More freedom
You might wonder, “What is the benefit of paying off your student loan early?” Well, there are many benefits. First and foremost, you will have more discretionary income available to you every month. You can use this money for anything you want—whether that be investing it in an IRA or other retirement account or saving it for a rainy day, or even simply buying yourself something nice!
Don’t let the small amount of money you pay for student loans keep you from paying them off. You’ll save more than enough money in interest and other fees by paying off your loans early; plus, it can help improve your credit score and relieve some of the financial burden associated with student loan repayment.
