I have the ability to pay off my student loans completely now and be done with it. It would almost completely wipe out my savings, but I would be debt free. Also I would save about $8,000 in the 20 years if I paid it off in full now. Just asking for feedback.
I hear three main theories from friends/family.
1. Keep paying the loans as is because it will show a good credit history, and it's very important to have savings in the bank.
2. Pay them off because you never know what will happen in the future and no debt is good debt.
3. Pay off extra each month. That way there's credit history and also savings on interest and in the bank.
The hospital I work for does not offer loan repayment contracts. So that option is out. And I'm financially lucky enough where I don't qualify for almost all loan forgiveness/help from third parties. What do you all think? Any feedback?
As long as you have a way to get money in an emergency (like a relative who would lend or give to you if you lost your job or got sick), pay it all off tomorrow and save yourself $8K. If not, pay if off as quickly as possible while still saving some money in the bank each month. "Credit History" is BS, it's an invention of the financial industry to encourage us to take on debt. Your credit history will be fine as long as you pay off the loans and pay your credit cards in full each month.
Dave Ramsey is also fond of saying that people keep student loans around forever, like they are some kind of family pet :)
I would keep $2-3k and use the rest to pay off the debt. If you want to be very conservative, figure out how much you would need to survive (bare minimum) for about 3 months of expenses and then use the rest to pay off the loan.
Can you split the difference and create a plan to pay them all off in a year or some other faster schedule while also replenishing the savings you have?
my debt will be 60K, wish I could pay it in full....
I know, right? I'm envious of the position the OP is in for sure! But hey, I made my decisions and nothing to do about it other than make the best of it and when I have kids try to steer them to be a bit smarter than I was :)
Specializes in Tele/med surg/step-down, Cardiology.
I feel everyone needs to have money in savings, for the what if's. You could pay a little chunk and then make larger payments. I don't know what your interest rate is, but if you just graduated it has to be better than my 7%! Keep credit cards paid off as they usually have the higher interest rates. Good luck!!
Pay them off, or atleast 75% off. I havent read the other comments, but it comes down to..
1. You dont know what will happen in the future. You may lose your job? Then how will you pay the loans? You may have a child. Wo knows. So many variables. Yet, you may never be in the situation again to pay them off in full.
2. As for as looking good on credit? Please. Get a store credit card and charge $50 a month and pay it off, if you're worried about that. The only thing student loans is doing is increasing your debt to income ratio. People buy cars, houses and all sort of things without extensive credit history.
3. Rainy day cushion? If you pay off all your loans tomorrow, the day after- start saving up.
DisneyNurseGal, BSN, RN
568 Posts
Interest payments are tax deductible, so be sure to look at how this will effect you at the end of the year.