Order of Paying Off Student Loans

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
volley
Posts: 11
Joined: Mon Feb 18, 2019 8:31 pm

Order of Paying Off Student Loans

Post by volley » Wed Aug 14, 2019 10:20 am

Hello,
I have a few different student loans to pay off. Everything except the $9913 is all from undergrad and the $9913 is from my first semester of grad school which starts next week. I was just notified that I was granted deferment of the first three loans listed below which means they will not be accruing interest.

My plan to paying back my loans before the grad school and the deferment was paying the highest interest off first ($600-$1000/mo). But with this new deferment, should I continue that strategy (which has me now paying my grad school loan first), or change it up?

$1646 4.66% subsidized until 8/2020
$4209 4.29% subsidized until 8/2020
$5144 4.45% subsidized until 8/2020
$1845 4.45%
$9913 6.00%

Silk McCue
Posts: 3473
Joined: Thu Feb 25, 2016 7:11 pm

Re: Order of Paying Off Student Loans

Post by Silk McCue » Wed Aug 14, 2019 10:24 am

Your plan to pay the highest interest loan makes perfect sense to me. It doesn't matter that it is the most recent.

Cheers

CommitmentDevice
Posts: 69
Joined: Tue Apr 02, 2019 3:25 am

Re: Order of Paying Off Student Loans

Post by CommitmentDevice » Wed Aug 14, 2019 10:54 am

I agree with the previous poster - pay the highest interest loans first. If by deferment, you mean not accruing interest, then consider those as 0% interest during the deferment period.

CommitmentDevice
Posts: 69
Joined: Tue Apr 02, 2019 3:25 am

Re: Order of Paying Off Student Loans

Post by CommitmentDevice » Wed Aug 14, 2019 10:57 am

Also, it is worth looking into refinancing. There are +/- to pay attention to, and your ability to quality will depend upon credit score, etc., but you might be able to get a lower rate.

gclancer
Posts: 642
Joined: Sat Apr 27, 2013 10:34 am

Re: Order of Paying Off Student Loans

Post by gclancer » Wed Aug 14, 2019 11:02 am

Even though it’s a lower interest rate, I would knock out the unsubsidized $1,845 loan first due to the low balance. Once that monthly payment is gone, apply that same payment amount to the 6% loan. Defer the other loans as long as they remain subsidized.

rj342
Posts: 590
Joined: Tue Apr 30, 2019 12:21 pm

Re: Order of Paying Off Student Loans

Post by rj342 » Wed Aug 14, 2019 11:58 am

gclancer wrote:
Wed Aug 14, 2019 11:02 am
Even though it’s a lower interest rate, I would knock out the unsubsidized $1,845 loan first due to the low balance. Once that monthly payment is gone, apply that same payment amount to the 6% loan. Defer the other loans as long as they remain subsidized.
THIS. Hybrid approach of debt snowball plus conventional finance POV that only looks at interest rates.

benaaye
Posts: 35
Joined: Wed Jun 27, 2018 10:13 am

Re: Order of Paying Off Student Loans

Post by benaaye » Wed Aug 14, 2019 2:23 pm

mathematically the higher interest one should be the priority. if a goal is to really axe the debt then it's a good strategy but if you need emotional wins then a hybrid approach with the lowest balance might make sense.

Post Reply