Pay off student loans immediately or wait?

leadsupplier

leadsupplier

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Aug 11, 2009
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i have 27k in student loans ... fuckin sweet right? my interest rate is 6.8% - straight from the govt, also sweet

I have 10yrs to pay them off, if i make minimum payments that whole time i'm out an extra 10k in 10 years from interest

to those of you that have/had student loans, what do you do? let them ride or try to pay them off immediately?

I could eliminate a nice chunk of that 27k and not go broke, but i'd have to cut into my savings which i really don't like doing..

on a side note i have a 401k that i'm seeing 8-10% returns on, no idea if that is relevant though since i can't touch that money until i'm dead or retired, whichever comes first :)
 


stmadeveloper said:
Go ask Dave Ramsey.
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That's funny. I'm a big Dave Ramsey follower. His ideas make a lot of sense.

@OP: Pay-off all of your debts as quickly as possible. Being debt free is a very nice feeling. I personally have less than $1,500 to pay for my student debt.
 
If you haven't already, get them consolidated and put them into deferment (basically on hold) you can do this for up to 2 years, then call and offer a settlement for about 50% of your balance in a lump sum payment.
 
sumohax0r said:
If you haven't already, get them consolidated and put them into deferment (basically on hold) you can do this for up to 2 years, then call and offer a settlement for about 50% of your balance in a lump sum payment.
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Yeah your first major loan should end in a not paid in full settlement! Great advice if you want to buy a house or anything in the future.
 
sumohax0r said:
If you haven't already, get them consolidated and put them into deferment (basically on hold) you can do this for up to 2 years, then call and offer a settlement for about 50% of your balance in a lump sum payment.
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i didn't consolidate, but did have deferment for 6 months or so i believe. Is that really possible though? to offer a settlement of 50% lump sum?
 
TabControl said:
That's funny. I'm a big Dave Ramsey follower. His ideas make a lot of sense.

@OP: Pay-off all of your debts as quickly as possible. Being debt free is a very nice feeling. I personally have less than $1,500 to pay for my student debt.
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I was being serious - go ask Dave Ramsey for real. Or just get an idea for the general rules and you'll do fine. Debt is the devil in the long run.
 
Pay it off as you can, no one likes debt. My student loans are at 4.5% interest right now so I don't care much about them. When you have a good month just put more into your debt.

I have a monthly number that I am comfortable with and if I make over that I use the extra to invest in making more money or paying off debt. Its much better than just making a normal payment. Since I can at times pay 2-3k chunks off of debt.
 
OP, goes without saying, but if you have higher-rate debt, pay it off first.

You shouldn't be pumping extra cash toward a 6.8% note when you're carrying $5,000 on a 13% card. Even with points and rewards.
 
I am literally debt free besides the student debt. I'm pretty smart with my money, but this is just a tough one as it's all new to me

i have no credit card debt/car payment/house payments, etc..

If i neede to i can probably drop about 10k toward either my student debt, or my 401k, a lot of ppl tell me to invest in my 401k at my age, and i already do, but putting 10k in a roth would probably be well invested as well
 
leadsupplier said:
I am literally debt free besides the student debt.
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That's great to hear. I'm always stunned by the consumer debt people carry.

leadsupplier said:
If i neede to i can probably drop about 10k toward either my student debt, or my 401k, a lot of ppl tell me to invest in my 401k at my age, and i already do, but putting 10k in a roth would probably be well invested as well
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This is an area that deserves a lot more finesse than a forum conversation can offer. Putting $10,000 toward a retirement vehicle needs to based on:

1. the investments you choose

2. your time preference for the cash

3. short, mid, long-term goals for the cash (pay bills, buy a boat, buy an island)

4. immediate uses for the cash, such as growing your business.

That stuff is nearly impossible to flesh out on a forum. A pad of paper, a free afternoon, and a spreadsheet is better.
 
Here's what it breaks down to. If you're paying 6.8% on the loans and you're not making more than that in interest on what you have in savings, then if you can pay a chunk off without depleting your reserves it makes all the sense in the world to do it.

Now if you were making 10% on your banked money, then it would be a different story.

Moral of the story; Reduce high interest debt, acquire females, disregard everyone.
 
^^^^this

If you can, in essence, subsidise the debt service with earned interest on something else -- whether investing, an offline business, your online marketing or whatever -- then it's dumb to pay down such cheap debt. While being debt free certainly has merit, properly managed debt is a tool, and it works in your credit's favour to pay the loan back according to its terms, if you can do so in a manner that the extra $10k that money is going to cost you can be offset by the money you have now being put to work for you.

One of the only good things about fixed-rate debt is the fact that inflation works for you -- sure, it will cost you $10k over ten years, but what does that translate to in actual value of your money today vs. your money over the course of ten years of having the life sucked out of it by inflation? It's probably closer to $7k in today's dollars, less if we go into a deeper recession or a full-blown depression.


Frank
 
pay em off as soon as you can. start with the highest interest ones first.

the power of compounding interest is something that took me a while to realize.

i never consolidated but that could be a better option.
 
Keep at least 6 months income in a savings (you never know when shit will hit the fan) and then pay off the debt as fast as you can.

If your going to use the money you have saved to make you more money than dont pay it off. Put it to work for you and use the extra income it produced to pay down the debt. If you think you will piss off your savings money (be honest with yourself) then pay down the debt.
 
makes me think YAAAAY that I lucked out on 0.5% interest on my student loan consolidating it before all banks went cuckoo!

Though as people have said before if interest is > 7% (i like the no 7) pay off asap any lower, pay as much as you can, may it be more monthly or lump sum so debt free asap.
 
stmadeveloper said:
Yeah your first major loan should end in a not paid in full settlement! Great advice if you want to buy a house or anything in the future.
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You can negotiate a "Paid in full" status when dealing with a settlement, it might cost you a few bucks more but its possible.

I worked in student loans for 2 years and the bottom line is the Gov't is fucking students left and right, Not only that but College's are overcharging there students as well and making some hefty profits on it.

Fuck them both.
 
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