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Do you get paid every other week? Method I've taken to loans is instead of paying once a month, I make 2 payments of 1/2 each month. You have to remember that it's also based on time. Seems to lessen the bank account a little bit that way as well, I know it's just mental, though.
I was fortunate that the Army paid off all the principle on my student loans with the exception of my smaller $2,000 loan and any interest from loans. I have to pay the $2,000 myself but it's only a $40/month minimum payment so it's easy to overpay on that every month. The Army has paid back nearly $60,000 for me so I can't complain.
I have $28,970 in student loans. My payments are around $250.00 per month. i want to pay off my loans in five years will the U.S dept EDU allow this? also Will my loans still accumulate interest after my grace period ( six months after graduation) Also if I pay on time will my loans still accumulate interest?
What is your interest rate? It might not actually be in your best interest to pay them off quickly with the way the stock market is (i.e - if you took that money and got a 7% return in the stock market as opposed to paying off a 4.5% loan).
What is your interest rate? It might not actually be in your best interest to pay them off quickly with the way the stock market is (i.e - if you took that money and got a 7% return in the stock market as opposed to paying off a 4.5% loan).
Risk v. reward. The 4.5% is a sure return. 7% is a possible return, and nobody can predict the future. People lose sight of that, all the time.
Student loans should not be a source of stress. It's like a car payment or insurance. Sure, it sucks paying for them but the alternative is not having a college degree. If you can reasonably expect to pay them off quicker because you can afford higher payments do it, but otherwise don't stress. Don't put your life on hold by not having a car, decent place to live, or not take vacations just because you have student loans.
Agreed. I was wanting to chuck more cashmoney at mine every month. My loan balance isn't bad, nor is what I pay over minimum every month hurting me by any stretch. My friend who lived on loans from start until his masters doesn't sweat that "second mortgage" as he puts it, because the gubmint will just put your overpayment to interest, anyway. So, why bother going overboard unless you have lotto winnings to throw at it?
I only have $22k and grad school at U of Florida would be about $17k. I should be able to swing that.
Risk v. reward. The 4.5% is a sure return. 7% is a possible return, and nobody can predict the future. People lose sight of that, all the time.
And people lose sight of the LONG term implications of not having money invested as early as possible. I have to agree, if the loans were subsidized, the interest rate is below 4%. At $250/month for a payment, even working at a $10/hour job he should have no issues paying on those loans, provided the rest of his expenses are reasonable. It's not a clear cut answer not knowing the whole picture....but in the last couple years the stock market has gone from 6500 to 15,000==would have been a shame not to take advantage of that just because you might not get 7% return.....
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If you have a parent live with them your first 1-3 years and dedicate half or more of your paycheck to the loans ( that is if you can even find a job paying a livable wage). Maybe deffer them and save the money and pay all at once before interest sets in .
If you have a parent live with them your first 1-3 years and dedicate half or more of your paycheck to the loans ( that is if you can even find a job paying a livable wage). Maybe deffer them and save the money and pay all at once before interest sets in .
The problem is college loans start to accrue interest in those first four/five years while you are in school. Now sure you can pay it off quicker if you can get the job, the issue is with the way hiring is now, the $10 an hour job ROTC is not really much of a reality.
If you can overpay, then I'd focus on any private loans or higher interest rate loans first, especially if you have private loans with a variable rate. If you have any loans that haven't capitalized the interest yet, then those might be good to focus on as well depending on your other loans and rates.
There may be some calculators on websites such as finaid.org.
And people lose sight of the LONG term implications of not having money invested as early as possible. I have to agree, if the loans were subsidized, the interest rate is below 4%. At $250/month for a payment, even working at a $10/hour job he should have no issues paying on those loans, provided the rest of his expenses are reasonable. It's not a clear cut answer not knowing the whole picture....but in the last couple years the stock market has gone from 6500 to 15,000==would have been a shame not to take advantage of that just because you might not get 7% return.....
We'll have to agree to disagree. Everyone has different comfort levels. My comfort level, the thing that makes me sleep soundly, is in not having debt. I don't think carrying debt is a good idea unless it is absolutely unavoidable: student loans before you're out of school, mortgage, MAYBE a car loan if you absolutely must.
People invest all the time in 4% or less vehicles: bonds, CDs, etc., and in many cases to mitigate market risk of the market swings inherent in stocks.
Functionally, there's no difference between paying off a loan early, even at that low interest rate, and doing those low-interest vehicles-plus, you know, interest won't accrue on a loan you've paid the minimum on if you get laid off.
If someone really wants to get investing, I don't see a problem with paying the loan and putting a little away on the side, but paying the minimum on a loan is rarely a way to get ahead, even at a very low interest rate: human nature is such that we always plan to invest the difference we save by paying the minimum on low interest rate stuff, and never do. We spend it on Starbucks, movie tickets, toys, and clothes.
FWIW, I am 80% invested in index funds and individual stocks and 20% in bonds. I started really putting it away AFTER I paid my student loans off. I used the amount of the student loan payment I was used to paying monthly (as I paid more than the minimum). My only debts at the moment are mortgages, and I plan to keep it that way (and yes, pay them off early).
We'll have to agree to disagree. Everyone has different comfort levels. My comfort level, the thing that makes me sleep soundly, is in not having debt. I don't think carrying debt is a good idea unless it is absolutely unavoidable: student loans before you're out of school, mortgage, MAYBE a car loan if you absolutely must.
People invest all the time in 4% or less vehicles: bonds, CDs, etc., and in many cases to mitigate market risk of the market swings inherent in stocks.
Functionally, there's no difference between paying off a loan early, even at that low interest rate, and doing those low-interest vehicles-plus, you know, interest won't accrue on a loan you've paid the minimum on if you get laid off.
If someone really wants to get investing, I don't see a problem with paying the loan and putting a little away on the side, but paying the minimum on a loan is rarely a way to get ahead, even at a very low interest rate: human nature is such that we always plan to invest the difference we save by paying the minimum on low interest rate stuff, and never do. We spend it on Starbucks, movie tickets, toys, and clothes.
FWIW, I am 80% invested in index funds and individual stocks and 20% in bonds. I started really putting it away AFTER I paid my student loans off. I used the amount of the student loan payment I was used to paying monthly (as I paid more than the minimum). My only debts at the moment are mortgages, and I plan to keep it that way (and yes, pay them off early).
The big difference is that once you pay off those student loans early, you don't get that money back ever.
When you graduate college, you generally have little to no savings. You gradually build that up through investments, savings accounts, CDs, 401(k)'s, or IRAs. If you take those savings and use it to prioritize student loan debt, you actually put yourself in greater risk for bankruptcy because you have no cash for emergencies.
If after 3 years, you end up with no student loan debt, no savings, and then suffer a serious life issue like being laid off, a serious injury or medical issue, etc., you will then rack up serious debt quickly. The issue is that unlike the Dept of Education, which allows for pretty easy deferments if you are sick or unemployed, your new creditors will come after you hard and destroy you.
If you instead saved 6 months to a 1 year's worth of expenses in an investment vehicle where you can get the money back (i.e. IRA, mutual fund, 401(k)) in a pinch vs. repay student debt beyond the normal repayment schedule, you'll avoid racking up bad debt during these trying times.
If nothing catastrophic happens, no big deal, your savings hopefully grew in your retirement accounts or investment accounts.
Not to mention that student interest is deductible when you don't make that much money, so your effective rate of interest for student loans may be very, very low.
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