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Prioritizing student loans in relation to credit card debt

Faced with serious debt issues, many Washington residents are uncertain how to proceed. They may be acutely aware that they need to embark on a path toward debt management, but knowing where to begin is another matter entirely. When considering various options, one of the most important things for people with student loans to consider is how to prioritize those debts in relation to credit card debt.

There are cases where credit card debt should be addressed before turning one's attention to student loan repayment. An example is for individuals who qualify for flexible or non-standard loan repayment plans. Individuals who plan to take advantage of the Public Service Loan Forgiveness program may also want to hold off on paying down their student loan debt. Consumers should also consider the tax benefits that come with claiming student loan interest payments prior to making a decision.

In other cases, it makes sense to pay off student loan debt before attacking credit card balances. For example, individuals who have student loans with very high interest rates may want to tackle those balances first. Student loans with relatively low balances are also good candidates for early repayment. Finally, individuals who are seriously considering filing for personal bankruptcy may want to focus on repaying student loans, as other types of debt are eligible for discharge through the bankruptcy process.

Washington consumers who are trying to gain control over unmanageable debt should begin by creating a smart and thorough plan of attack. Prioritizing student loans in relation to credit card debt and other financial obligations is a great place to begin. Once a consumer has all of the information in hand, ranking debts in order of priority can help determine which steps are necessary to achieve a favorable outcome.

Source: Forbes, "Student Loans Vs. Other Debt: Find Your Most Powerful Debt Payoff Strategy", Andrew Josuweit, Aug. 27, 2017

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