Hello All-

I have about $2935.00 left to pay on a student loan. I have about $1600.00 to put towards it. I'm trying to determine if I want to use the $1600 as a Pre-payment (which will prepay it for the next 2.6 years) or just use it as 1 payment (making my new balance $1335) to bring down the balance and still make my $50.00 payments each month.

Both sound pretty good to me but I'm still undecided.

Any suggestions?

Bump!

Prepay would be my advice. although it will move due date into future, you can always pay before the due date if able. There is no prepayment penalty, and whether they tell you to move due date ahead or not it would still be applied the same way.

I would invest it, maybe lock it in to a high interest CD until you have to pay your SL. You'll have to pay penalties to touch it (which would possibly discourage you from doing so) and in the end you'll have earned even more money to help pay it off your SL.

Just my two cents.

The decision sounds like it should be primarily based on the interest rate of the student loans. If you can afford to prepay now, and the interest rate of the student loan is greater than the interest rate to invest the money (after taxes), prepay it. If not, invest it.

Likely you've done something with the money by now, but I'd say pay against the loan and continue at $50 per month. Likely your $50 per month will do more damage if the balance is lower.

Save up a bit more and pay it off ASAP, interest is a killer specially when its a graduated loan.

++ Apply what you have as a one time payment and overpay as much as you can each month... faster you're out of debt, the more money you can put into investments etc.