Help me decide if I should payoff low rate variable interest student loan

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JRB22
Posts: 16
Joined: Fri Dec 30, 2016 9:31 pm

Help me decide if I should payoff low rate variable interest student loan

Post by JRB22 » Wed Sep 11, 2019 3:09 pm

My student loan currently has a duration of 3.5 years remaining, with a balance of $41,500 and a variable interest rate that is sitting at 2.83%. I had planned to knock the whole thing off by now, but with interest rates being so low, I am no longer sure if it makes sense financially to do so. I am interested to see what others on the forum think. Thanks!

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Phineas J. Whoopee
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Joined: Sun Dec 18, 2011 6:18 pm

Re: Help me decide if I should payoff low rate variable interest student loan

Post by Phineas J. Whoopee » Wed Sep 11, 2019 4:24 pm

The answer boils down to what else you would do with the money if you didn't use it on the loan. Paying it off gives you a guaranteed nontaxable 2.83% for the remainder of the term, adjusted for any available tax deductions of course. If you have a better safe after-tax opportunity it would be worth investigating. Liquidity matters as well.
PJW

JoeRetire
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Joined: Tue Jan 16, 2018 2:44 pm

Re: Help me decide if I should payoff low rate variable interest student loan

Post by JoeRetire » Wed Sep 11, 2019 4:26 pm

Phineas J. Whoopee wrote:
Wed Sep 11, 2019 4:24 pm
The answer boils down to what else you would do with the money if you didn't use it on the loan. Paying it off gives you a guaranteed nontaxable 2.83% for the remainder of the term, adjusted for any available tax deductions of course. If you have a better safe after-tax opportunity it would be worth investigating. Liquidity matters as well.
This

SRenaeP
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Joined: Tue Jan 19, 2010 9:05 pm

Re: Help me decide if I should payoff low rate variable interest student loan

Post by SRenaeP » Thu Sep 12, 2019 7:43 am

Are you maxing out all tax-advantaged accounts available to you? If not, it most likely doesn't make sense to pay off the student loan early.

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