What is the best strategy for paying off a student loan with high interest?
Having a student loan with high interest can be a hassle. High interest rates are usually a result of private student loans, since federal students loans have fixed interest rates and the majority of them do not run credit checks. Getting a student loan with a high interest rate is usually caused by getting a private student loan while having a less then impressive credit score.
If your interest rate is really high your monthly payments are most likely going to be high. If there comes a point when you are struggling to make your monthly payments, in danger of defaulting or just barely able to make the minimum payment it is time to do something. Letting your loan go to collection would be a bad idea, it would only cause more headaches for you and cause your credit rating to plummet which would raise interest rates on any other loan you try and take out in the near future. Consolidating your student loan can lower your interest rate and monthly payment. It will increase the length of your loan, but at least you will be able to make those monthly payments and no longer have to worry about high interest rates.
You can not consolidate your federal student loans while still in school, but you can with your private student loans. Even if you are not yet paying your private student loan, if you have yet to graduate, it still might be a good idea to start thinking about consolidation. Getting a good interest rate is going to be key for you when you have to start paying it off, so do whatever you can. Don’t wait until it is too late. If you are a parent and are having trouble paying off a student loan with high interest there you could always take out a home equity loan. The equity on your house could easily help you pay off those high interest loans, and home equity loans usually come with much lower interest rates. Do whatever you can to lower those interest rate.