If I consolidate mу loans before thіѕ June 30 deadline, аnd thеn repay mу loans, еіthеr іn full before 6 months аftеr I graduated οr іn раrt sometime аftеr thаt, wіll I bе penalized? In οthеr words, аrе thеу penalities fοr eraly repayment аftеr consolidation?
Tags: additional, below, consolidation, details, Loan, question
not unless so stated in the new NOTE
Typically there are no prepayment penalties for consolidated loans. However, as I told an earlier questioner, it may not be the best idea to pay off the student loans. Here’s a copy of that:
“Although carrying debt can be emotionally troubling for some, from a strict financial standpoint, you’re unlikely to ever have loans at a lower rate, especially if you consolidate. Also, student loans are not looked upon unfavorably when attempting to make other purchases, such as a house, while credit card and other debt is.
I encourage my clients with student loans to pay the minimum amount on the loan each month. If it can be stretched 30 years, you come out way ahead. First, for many the studen loan interest is tax deductable. Second, the rates that you borrow at are lower generally than the interest you can recieve on a good quality bond. So if you borrow at 6% and have an I Bond yielding 6. 75%, you are making money by not paying off the loan. Especially considering the tax benefits fo the loan and the tax deferred status of an I Bond.
On a $50k loan given that scenario you could come out up to $20,000 ahead over 30 years by not paying the loan early.
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Hope this helps,
Jason”