Saying that student loans are a pain to pay off is an understatement. Right off the bat, you graduate with a ton of responsibility on your shoulders.
You’ve got to pay it off as soon as you can. Otherwise, you’ll be suffering the consequences even way later into life.
If you have an alternative cash source like an annuity investment, would it be smart to use that to pay off your student loans? Let’s find out.
Understanding annuity and student debt
Annuities are insurance products that you can gain from a couple of ways. You can buy it, inherit it or be awarded one after serious lawsuits.
Basically, you get a sum of money consistently for years.
Assuming you have other sources of income and you absolutely have to pay off your student loans right now, using annuity cash could help you out a lot.
You can get the money through a couple of options. If your student loan bills and annuity payments have similar schedules and balances, then you don’t have do anything to change your annuity.
Just take the income from your unity and use it to pay off your loans. You have to do this diligently and not miss a payment.
But if your annuity only has payouts every 5 to 10 years, you have to understand that you’d be sacrificing the value of payments to receive the money right away.
You have to surrender payments or sell them to an annuity buyer.
What are the advantages and disadvantages of using your annuity?
- If you take care of take care of your student loans now, you’d be saving yourself from paying accumulated interest down the road. This essentially means that you’d be paying less for it.
The longer you take to pay it off, the bigger the debt is going to be. Some student loan rates can go as high as 12%.
Aside from limiting the amount you’re going to pay, you’d also be getting it out of the way. Paying off student debt is something that a lot of graduates carry well into their 30s.
Instead of being a part of that statistic, do everything you can to pay it off while it’s still early. This could mean that paying in annuity can boost your retirement.
- Another advantage to using annuity to pay off your student debt is avoiding late payment fees.
If you ignore your debt or let it go on for longer than it has to, you’re most likely going to keep that attitude with your credit in general.
Avoid developing that habit and just nip it in the bud.