Hey guys, I'm sure there are college grads out there and with some loans under their name... I'm just curious as to how everyone is or has attacked their school loans? I have approximately 37k in school loans... My payments are near 400$ a month... My loans haven't bothered me much until recently as I am going to be a father, I have a house and a significant other to help and provide for while she is pregnant and is still working toward her career... I haven't consilidated them as of yet, which I will, but I have thought of different ways to get rid of them, such as using the equity on my home, and even thought about selling my home and using the proceeds to knock them off completely, and start over and move into an apartment, or guest home and save up for a new home... Just curious what people have done, and if my ideas of getting rid of them are even viable...
Kind of the same thing as the refi question. You could use equity in your home (if you have enough to still keep you at an 80/20 loan-to-value ratio), but then that 37 K is being paid over 30 years. How long is left on the student loans? If you can afford it, an extra 100 bucks a month towards those loans makes a pretty significant difference in how long they take to pay off.
Klay Thompson had school loans, and recently disclosed how he got rid of the payments. Spoiler: Secret Method
Would I sell a home to pay off a $37K school loan? no. Absolutely not. What is the interest at ? Like @Savory Griddles said, I'd throw an extra $50 - 100 at that loan. Doing that and it'll be paid off in 6 years. People buy cars for more than that. Treat it as such. I throw extra money at whatever has the highest interest rate. Tackle that and move onto the next debt. Feels good to get things paid off. Key is to not incur more debt in the process. I'm in the minority on this, but I have no problem with student loans. It's an investment in yourself, so that is never a bad thing. Do it while you're young so you can enjoy your retirement years. No one is giving out retirement loans.
Exactly. I forgot to say, don't sell the house. If you like your home, you don't know where the real estate market will be when you can buy again, nor what the interest rate will be. Home loans are at such a ridiculously low rate right now, giving that up for the next 30 years for some relief over the next 5-7 or however long you owe on the student loan is short sighted. In CA, prop 13 also locks in your property taxes. If you sell your current home and buy the same size/value house in a few years for 100,000 more, you have added not only the extra mortgage cost and likely a higher interest rate, but an extra 100 bucks a month in property taxes that will never go away. Best bet is to just throw an extra 50-100 bucks a month at that loan's principal every month. Here's a calculator: http://www.calcxml.com/calculators/extra-payment-calculator?skn=38
I do appreciate your guys' responses... Yeah I really do like my home, I have a super low interest rate, its in a nice area, and my home is just gaining more and more value... It was just an idea because I know my payment will be going up and it upset me because while I do feel I make pretty good money, that's 380-450 a month less I'll have to spend... but thanks, I think you guys talked me out of selling my home to get rid of my loans... I think I'll just keep tackling the refi/consolidation... And I do pay about 50 bucks more than what my minimum is.. that, or I need to win the lotto or win a jackpot at the casino lol... if people don't mind sharing, how much are you in school loans? Or too private?
I went to Cal State Fullerton back in the late 90's so the entire education was only like 15k including books. So I didn't rack up any debt. My wife on the other hand...she got two Masters degrees from Chapman (private school here in So Cal). We're at about 600 bucks a month for another 4-5 years. Can't complain though. I know she got an extra 10k a year at her current job because of those degrees (she was actually told this by the person who hired her).
My daughter is going to school right now and she'll be about $70,000 in debt when she's done with her Master's degree. However, she'll start out at $60K and be in the 100k range about 4 years later. She's currently making $12 an hour as a pharmacy tech, so to her, that is HUGE money. If the loan takes her 10 years to pay off, who cares? She'll have made $750K in that time frame. Nice return on the investment.
Prepare for every college age poster on this site to bombard your inbox hoping for a future Sugar Mama.
I have about $27,000 left of various loans that range from 3 - 6 % interest. Balance started at about $33,000. So far, I've just been paying the minimum of $350 every month which has resulted in me paying about $8000 total in 2 years. $5000 towards the principal balance and $3000 towards interest. This is a good thread. I'm pretty dumb financially. I'm gonna start looking into this more. From what I've gathered, a good strategy would be to start paying more than the minimum and put that extra money towards the loans with the highest interest rates? Any other suggestions for my situation? I'm generally fine with paying the minimum every month (and slightly more) so I'm not considering anything major like loan consolidation (no idea what that really is to be honest), I just don't want to end up paying more/longer if it can be avoided.
Like what has been said earlier and you alluded to, paying more than the minimum makes a surprising difference if you are consistent with it. I think it goes without saying, but just in case somebody isn't aware, a lot of student loans are tax deductible.
What I've been doing is actually keeping my payments at the minimum, and instead investing any extra money in stocks. Depending on the interest rate, the return on the money could potentially outpace the interest.
