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Student Loan Question...wouldn't this idea work?

B

BagOfWalnuts

Member
OK, I have several different student loans, with varying interest rates on them. I have the option of several different levels of monthly payments, including interest only. Even the highest payment is still largely only interest. SO here's my idea; for the loans with the lowest interest rate set the payment to interest only, and take the extra money I would have paid on the principal of those loans to the principal of the higher interest loans. Wouldn't that work out in my favor, instead of paying off smaller portions of ALL the loans each month? In this case the disparity in interest rates is enormous; several of them are around 2-3% and another portion is around 8.5%.
 
Given there is no deadline for paying off the loans (because the interest-only setting will mean the payoff date is Never), I give your strategy a thumbs-up.
 
I don't mean to hi-jack the thread here but I have some student loan questions of my own. I am in need of a small loan of about 2k, in the next 2 months but am deciding to continue my education with a different school. In the future I will need to obtain more loans through the new school. Is it possible to choose a loan that will allow me to borrow more money as its needed when I enroll in the new school? Whats the best option for student loans that enable the lowest payments over the longest time frame? Stafford Loans? PLUS Loans? Private Bank (No-Fee) Student Loans? Credit Unions?

I have the money to pay the school directly for the degree program in the next 2 months but i realize when I continue my education I will be needing to borrow more money so I think it makes sense to stash the money away in savings and get a loan instead to pay it back since school loans offer low interest rates compared to car loans or mortgages...
 
bignateyk said:
I thought you could consolidate all your student loans into one low interest rate federal student loan?
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you can't mix and match loans when you consolidate. In other words, if you consolidate federal loans, you cannot combine them with private loans.
 
fleshconsumed said:
Yes it would and it's precisely what you should be doing.
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Those financial gurus on TV mention this every time. When you have debts to pay, pay the highest interest ones first. Even if it's only a $5 debt, you pay it off first if it has the highest interest rate. What kind of dumb ass would do it the other way around? Would anyone try to pay off their mortgage first and make only minimums on their credit cards? It's madness I say!
 
Just do the math since you know the parameters, it sounds like this one will end just as you described
 
do you own a home? take out a heloc and pay off the student loan.
or max out your cc to pay the loan.

then BAAAAMMMMM!!! foreclose or bankrupt. student loans disappeared.
 
Nebbers said:
This is no place to be discussing your sexual practices
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oh+you.jpg
 
ViviTheMage said:
I think it matters how they originated...if it was subsidized, or unsub?
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Nope, I have both sub and non-sub consolidated. No private loan consolidation allowed and there is a FEW government loans that cannot be consolidated.

I got a 6.5% rate, -.25 for paperless auto pay/ -.25 for 6 months of timely payments = 6% rate.
 
amdhunter said:
What's wrong with just paying off the loan with cash today?
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My opinion is that there is nothing wrong with it if you have enough expendable cash, but why not slowly pay it off over time while taking the cash you have today and invest it in the future. Since the interest is not so great to really be a huge disaster on your finances..
 
bignateyk said:
I thought you could consolidate all your student loans into one low interest rate federal student loan?
Click to expand...

You could, but considering that he has some 2-3% interest rated loans there probably wouldn't be a point. The current interest rates are above 6% now I think since they changed the way that they decide the interest rates on the loans.
 
Born2bwire said:
You could, but considering that he has some 2-3% interest rated loans there probably wouldn't be a point. The current interest rates are above 6% now I think since they changed the way that they decide the interest rates on the loans.
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it used to just float around a bit, now it's all stuck at a statutory rate.
 
BagOfWalnuts said:
OK, I have several different student loans, with varying interest rates on them. I have the option of several different levels of monthly payments, including interest only. Even the highest payment is still largely only interest. SO here's my idea; for the loans with the lowest interest rate set the payment to interest only, and take the extra money I would have paid on the principal of those loans to the principal of the higher interest loans. Wouldn't that work out in my favor, instead of paying off smaller portions of ALL the loans each month? In this case the disparity in interest rates is enormous; several of them are around 2-3% and another portion is around 8.5%.
Click to expand...



Yes ...

Let us know how it goes if you decide to take this route ...
 
SandEagle said:
do you own a home? take out a heloc and pay off the student loan.
or max out your cc to pay the loan.

then BAAAAMMMMM!!! foreclose or bankrupt. student loans disappeared.
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So says they expert that can not pay his bills and is unaware that Federal student loans can not be discharged via BK

Best to keep your "expert financial advise" to your own troll threads.
Credit weltching is right up your ally though :thumbsdown:
 
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EagleKeeper said:
So says they expert that can not pay his bills and is unaware that Federal student loans can not be discharged via BK

Best to keep your "expert financial advise" to your own troll threads.
Credit weltching is right up your ally though :thumbsdown:
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He means take a HELOC on the house, pay the student loan, the BK the obligations on the mortgage/credit card/HELOC.
 
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