So uhh.. screw 2011.. I think I am going to pay off my school loan by, oh, December.

[LordJezo]

Bah.

Stupid interest rates.

Just got off the phone with the loan people and they say the only thing I will be losing by paying off my loan 8 years ahead of time is extra payments.

If I pay off the loan early I don't get hit with any early payment penalties or extra interest rate.

I'll take a hit now but in the long run it will pay off.. especially since it is a variable interest rate and can go as high as 8.5% if the FED decides it.

Hooray for less debt!

 

[Deeko]

Are your loans subsidized? Meaning, is your interest picked up by the government until after you graduate? If so, and you have the money to pay them off, why not throw that money in a CD or mutual fund or something, and then take it out after you graduate, when you actually start accruing interest?

 

[LordJezo]

Originally posted by: Deeko
Are your loans subsidized? Meaning, is your interest picked up by the government until after you graduate? If so, and you have the money to pay them off, why not throw that money in a CD or mutual fund or something, and then take it out after you graduate, when you actually start accruing interest?

Un-subsidized. Interest payments have already been several $100 in just the past few months since it has been building up for a while now.

Only thing I have is that they dont start to demand payment until the 15th.

 

[dpm]

Ouch. In the UK the loans are tied to inflation. So I took out one loan that I needed to live on, and took out another to make a little interest on. Luckily I don't make enough money yet to have to pay it back. You can defer repayments till you earn about £23,000, so I'm still making interest. Not much, mind, but it doesn't hurt

 

[randomlinh]

yeah... gotta love loans... i have a heafty loan bill coming up.. and yeah... no real job outlook

 

[dullard]

Can you convert it into a fixed rate loan? If so you'd be far better off in many cases by not paying it. If not still keep it, but pay it off when the variable interest rate gets too high.

Think about it this way. Suppose you have $10,000 in student loans at 3% interest. Now suppose you want to buy a car and a house. You could pay off that student loan and then turn around and get a 8% loan for the car or a 6% loan for the house. OR you could use that $10,000 towards the car/house and save thousands of dollars.

Or you can invest the money. In the long run you average about 10% interest in the stock market. So investing that $10,000 nets you 7% in your favor!

Many finiancal planners say a student loan should never be paid early for those reasons. Of course if you aren't buying a car, aren't buying a house, and aren't investing - then pay it off.

Edit: also think about CC debt. If you have CC debt at high interest pay that off - don't pay off the low interest student loan.

 

[djheater]

I used to say don't pay off low interest loans early, but I'm starting to like the pay down debt philosophy. There's something to be said about living debt free, it's a goal of mine.

<---20g in school still left.

 

[CrazyDe1]

Originally posted by: LordJezo

Originally posted by: Deeko
Are your loans subsidized? Meaning, is your interest picked up by the government until after you graduate? If so, and you have the money to pay them off, why not throw that money in a CD or mutual fund or something, and then take it out after you graduate, when you actually start accruing interest?

Un-subsidized. Interest payments have already been several $100 in just the past few months since it has been building up for a while now.

Only thing I have is that they dont start to demand payment until the 15th.

I took out a 5500.00 student loan and had my dad invest all of it since I had the money to cover my school anyways. Well, 10% of my downpayment on a house came from that student loan money that had grown...

 

[nebula]

I've had my student load for a few years now, so unfortunately, my interest rate is a fixed 8%!! :Q Luckily, I just got a letter from them saying since I've made 4 years of on time payments, they've lowered my interest rate to 7% I still hold a $30k balance so this debt is killing me. I'm debt free on everything else, but just re-financed the house so I have little equity. I would love to get rid of that student loan, or at least get a lower interest rate.

Any ideas anyone? Make larger payments is the only thing I can think of.

 

[dullard]

Originally posted by: nebula
I've had my student load for a few years now, so unfortunately, my interest rate is a fixed 8%!! :Q Luckily, I just got a letter from them saying since I've made 4 years of on time payments, they've lowered my interest rate to 7% I still hold a $30k balance so this debt is killing me. I'm debt free on everything else, but just re-financed the house so I have little equity. I would love to get rid of that student loan, or at least get a lower interest rate.

Any ideas anyone? Make larger payments is the only thing I can think of.

I'd think you could get a line of credit since you own a house and use that to pay off the student loans. My parents just got one and it is 4% (on a special, you probably won't find any that low). Any loan less than 8% would likely save you money (assuming you don't find a loan with heavy fees).