Private College Student Loan

Education loan does not need to be paid until after graduation, bad idea to start paying now?

I have an Education Loan for my freshmen year at a University. I am going into my Junior year and I would like to start paying the loan off now, but I'm being told by some of my family that if I don't have to pay it until I graduate from college not to worry about it. I am financially stable enough to start paying it now... so should I wait to pay and why?

Public Comments

1. Yes, I do think you should pay it now, I had one, and started being billed for it, but the set date was later and was told the same thing as they are telling you, I should have started when I started getting billed early, it got bad, I finally got rid of it, but thats why I say now.
2. Yes, you should wait to pay it. Since the loan is given to you at a very low rate and the interest won't accrue in the meantime it is a better idea to take the money you would use to pay back that loan right now and invest it. Depending on your risk tolerance there are many different types of investments you can make and even though the market isn't at it's best there is always money to be made. Instead of paying off the loan, defer that payment as long as you can and use your money to grow itself. You'll have even more money in the future when you are repaying the loan AND when you graduate and get a job you will have a greater income and the interest you are paying on the loan can be used as a tax write-off... so there's another benefit to waiting. Keep YOUR money as long as you can and let it work for YOU!
3. If you have an unsubsidized loan, you might want to start paying because otherwise you're accumulating interest throughout your time in school. A subsidized loan may also be a good idea to start paying on; you don't accumulate interest during school, but I believe you do once you graduate. The more you can pay down, the better (less extra money you have to pay later).
4. Logic dictates that graduating with the least possible debt is best. But, educational debt is "good debt" and you shouldn't worry over it too much. Some of your loans may be accruing interest each year (even while you are in school) and the interest is being added to what you owe. Pay those off now. Some of your loans will have no interest due until 6 months after you graduate. In the case of those, that's free money - keep it until it's not free anymore. At the rate of inflation presently (which is higher than the interest you're probably going to be paying on subsidized loans), it's financially more effective (for you - not the bank) if you pay those off as far from now as you can. As inflation devalues the dollar over time - you are paying back less than you borrowed in real dollars. ☺