Paying off student loan during loan forbearance? Now, or is there any reason to wait?

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Cranberry44
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Paying off student loan during loan forbearance? Now, or is there any reason to wait?

Post by Cranberry44 » Fri May 22, 2020 2:46 pm

CONTEXT:
  • My only debt is a $6,940 student loan at 6.25% interest.
  • There is a forbearance on this loan due to COVID-19. Interest is 0% until September 30, 2020.
  • I have about 10k in BLV ((Vanguard Long-Term Bond ETF; ER=0.07%) — which is currently 15% of my AA.
After reading advice in my Portfolio Review Request, I’ve decided to sell enough from this fund to pay off the student loan debt.

QUESTIONS:
1. Due to the forbearance, is there any reason to wait until September to sell from BLV and pay off the loan?
2. Any other general thoughts on this plan?

Thanks!!

gch
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Re: Paying off student loan during loan forbearance? Now, or is there any reason to wait?

Post by gch » Fri May 22, 2020 3:08 pm

You could get ~$23 in risk free interest throwing it into a savings account paying an after tax 1% for four months.

Probably not worth it, but that’s up to you. I would definitely pay it off over investing in bonds that are unlikely to return >6.25%, just doing it now vs at the end of Sep will cost you a little bit.

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Cranberry44
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Re: Paying off student loan during loan forbearance? Now, or is there any reason to wait?

Post by Cranberry44 » Fri May 22, 2020 4:10 pm

gch wrote:
Fri May 22, 2020 3:08 pm
You could get ~$23 in risk free interest throwing it into a savings account paying an after tax 1% for four months.

Probably not worth it, but that’s up to you. I would definitely pay it off over investing in bonds that are unlikely to return >6.25%, just doing it now vs at the end of Sep will cost you a little bit.
Got it. Thanks, gch!

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Toons
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Re: Paying off student loan during loan forbearance? Now, or is there any reason to wait?

Post by Toons » Fri May 22, 2020 4:24 pm

Do the right thing
Which in my opinion is
Pay off the debt.
Personally I would be relieved and
would sleep better
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Cranberry44
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Re: Paying off student loan during loan forbearance? Now, or is there any reason to wait?

Post by Cranberry44 » Fri May 22, 2020 6:07 pm

Toons wrote:
Fri May 22, 2020 4:24 pm
Do the right thing
Which in my opinion is
Pay off the debt.
Personally I would be relieved and
would sleep better
:mrgreen:
Thanks, Toons. I've never thought of paying off the loan as "the right thing to do." I've only thought of it as a nuisance that I resent, but you're right, paying it off is the right thing to do. That helps -- Thanks!

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Toons
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Location: Hills of Tennessee

Re: Paying off student loan during loan forbearance? Now, or is there any reason to wait?

Post by Toons » Sat May 23, 2020 8:21 am

Cranberry44 wrote:
Fri May 22, 2020 6:07 pm
Toons wrote:
Fri May 22, 2020 4:24 pm
Do the right thing
Which in my opinion is
Pay off the debt.
Personally I would be relieved and
would sleep better
:mrgreen:
Thanks, Toons. I've never thought of paying off the loan as "the right thing to do." I've only thought of it as a nuisance that I resent, but you're right, paying it off is the right thing to do. That helps -- Thanks!


You are quite welcome
Once paid off ,
You will eliminate those nuisance thoughts and
they will be substituted with "Positive Thoughts"
Check back once completed
:wink:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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