Question

I owe 85k in student loans. I just gaduated with my second masters degree and the loans are currently in their 6 mo grace period. We have a good chunk of savings and will get a significant amount back in taxes. Should I bite the bullet and just pay a huge chunk of this off? We do want to buy a bigger house down the road. and I'm just so attached to this savings account that has been growing and growing that I wish was going to my dream home rather than the inflated costs of higher education. :-/ but I feel the best bet is to get these paid off ASAP and start saving (pushing our dreams and the need for a bigger home off into the sunset). Tips? Advice? Solidarity?  

Answer 1

I took out 89k in student loans. Graduated in Dec 2017. Waited my 6 mo period and have made my payments ever since. Today I owe 98K. No advice here, I feel ya and hopefully my experience can help yours.  

Comments

@sacha what a scam I have about 25k in student loans to start paying in a few months. Sad to see the balance never goes down

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@sacha that’s so awful, from what I’m hearing you have to pay well over the minimum payment to get it down  

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The standard repayment for me would be 1, 000 a month for 10 years and it would cost me like 112k at the end of the day.  

Answer 2

Personally I’d keep the savings for the house. I owe a similar amount and at this point I’ll probably die before I can pay it off. The size of the debt and the lack of return on the investment has got me feeling like I’ll just make payments and do what I can to live my life aside from just paying the loans.  

Answer 3

Pay debt first, be gazelle intense. Then re-save for your home

Answer 4

I would definitely put it toward the debt. You must be aggressive with student loans because they grow like a wild fire  

Answer 5

The thing with a degree is we’re not guaranteed to make enough to pay back these student loans that don’t go away easily. Can’t even get rid of them in bankruptcy easily. But houses, you can buy and sell at different points in your life. I’d say put it towards the debt.  

Comments

@heinrich204 a consideration though is my debt to income ratio. getting approved for a loan

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@kohima58529 student loans are an annoying piece of home loan approval as well.  

Answer 6

Put toward the debt. When the debt is paid off you will feel more free than you do with a savings account. and once those are paid off you can start finding your savings account again, this time without those loans hanging over your head

Answer 7

Pay it! Keep an emergency fund and everything else needs to go to debt! You don’t want to be dragging a big student loan with you when you have a mortgage.  

Answer 8

Put it towards the loan. Get rid of the student loans as quick as you can.  

Answer 9

LOAN! I’ve been making minim payments on my consolidated low interest student loan for 10 YEARS. Almost 400 a month. My balance hasn’t even dropped 2000. The interest you pay is insane.  

Answer 10

Put it toward the loans that have the highest interest rate! Dont pay on all the loans you have. Or pay the ones that accrue interest before the 6mo grace period is over!  

Answer 11

Pay off the loans as soon as you can. They will haunt you and suck the happiness out of your new home.  

Answer 12

Throw everything you have at that student loan in the grace period. After it’s up, the interest is so much to keep up with, taking anything off principal is difficult.  

Answer 13

Chunk it out! It’s better to do that. Save some in emergency fund but Pay it as fast as you can. For the next few years make this your mission and let everyone know- never know who will gift you something to help PAy it down. I say someone who paid off similar student loan debt in 3 yrs just buckling down and grinding it out. Sucks but the more you pay now the fast you get your house. Then again if Bernie or EW win they’ll wipe it all out! Lol

Answer 14

Start paying student loans ASAP compounding interest is NO JOKE!  

Answer 15

Pay off the student loan first it is a small expensive mortgage already.  

Answer 16

Not sure what your interest rate is on your student loans but possibly You could look into Lending Club, Prosper, Freedom Plus personal loans and consolidate as much as you can then pay the balance off if you have that much saved. I’ve used a few of these lenders during my divorce process and it was easy and I was able to pay twice a month so it kept the interest down. Note: I didn’t consolidate student loans just personal debt we had to split during the divorce.  

Answer 17

Story Time: I graduated at 25 (2004) with a Masters in Accounting. I had $85K in student loans. I purchased my first property in 2010. I soon rented it out and moved to a cheaper place (much cheaper). The tax benefits from being a landlord vs an owner occupied yielded me way more tax savings. Fast forward in 2014, I paid off the full $85K. I used my savings and 401k. (Unconventional approach I know). Now in 2020 I have a growing real estate portfolio, 834 credit, and I max out my 401K. In addition to 2 years living expenses in the bank. Financial comfort is possible if you "sacrifice" a little now. Dont think "bigger house" think financial freedom.  Just a little advice from a corporate tax pro, accidental investor, and someone whose been where you are.