Do federal student loans affect positively or negatively on your credit?
November 10, 2010 by admin
Filed under Student loans
I took out a subsidized loan for $3,000. I really didn’t need it though. And i regret it, I thought it would build my credit. I am afraid of paying it off right away because than the gov. will think i don’t need any help. And i will loose my pell grant among other things.
Subsidized means I don’t pay a dime of interest until after I graduate, having the money in hand allows me to pay this loan off before it accrues any interest.
Pay it off and avoid the interest. You will not loose your pell grant.
Having a loan won’t necessarily impact your credit, rather how you pay back your loan. If you make your payments on time consistently, that positive payment history will help your credit score. If you miss payments, your credit score will take a hit.
I wouldn’t recommend taking out a loan you don’t need just to build your credit. You’re paying interest on this loan, which in effect, means you’re paying money to build your credit. There are other ways to do this that don’t cost a thing, like responsibly using a credit card.
I don’t know about the repercussions from the government for paying your loan off right away, but if there are truly negative consequences, then simply make your monthly payment on your loan on time every month until you’re out of school. The positive payment history will help you and when you no longer need student loans, you can then pay off your loan in full. Good luck!
They will not do anything bad if u pay it early! they will jsut use the money to give to someone else,
but you could put the money in a 4 year cd, gain 2% interest! and then you 3k loan will be making u money after 4 years, $240 you will have made and pay the loan off as soon as u out of college, so u don’t oay interest, the goverment doesn’t care, they pratically throwing away money into the economy to get it started, so u should take advantage of it! but if u try to buy a house before pay the loan, it might be bad because ur debt to income ratio will be high, but in college and not planning on making big purchases, it is ok and after u pay it off ur debt to income ratio will go back down and u will be $240 dollars richer!
or put it in the stock market if u feel lucky, GHI is yielding monthly 8%.
jkeller4 had a great idea. . . minus the stock tip. You don’t want to play in a sandbox where you don’t know the owner!
That was my thought as well. . . invest it in some sort of high yield savings until it’s time to pay the loan back. Don’t use it for anything else, and don’t let your buddies know you have it!