Pay Off My Student Loans In Full or Make Monthly Payments? - page 5

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... Read More

  1. by   hiddenheart
    Keep a small cusion, but put as much as possible on the loan to bring down your balance, I will give you an example, on a 20 year loan, if you only borrowed $20,000 at only 5% interest you would have paid back over $31,000, WOW!. if you put that $20,000 in the bank at 0.5% interest and let it gain interest, you would have only earned just over $1000 (Yes, I know we don't earn that much interest in our savings accounts and probably you are paying more than 5%interest on the loan and you probably own more than the $20000, but is is just an example). I don't believe in giving away my hard earned money, by bringing down the balance you won't be paying as much in interest.
  2. by   joanna73
    Everyone should have a savings account, if possible, especially in this economy. I'm also paying loans, but I make sure I pay myself first. Sure, you could be debt free, but if you can manage 3-6 months savings, that's ideal. Pay more than your minimum payment. You could even make an extra payment once in a while, but keep some savings.
  3. by   Jennie.K
    Quote from Piglet08
    I think you're asking the wrong people. Find a financial adviser, or get some books on the topic. How do you know any of us know what we're doing with money?
    I definitely agree with this.
  4. by   joanna73
    We don't claim to be financial advisors, but the OP asked a reasonable question. You don't need a degree in finance to make good financial decisions, either. Overall, the majority of posters agree....keep some savings, while paying down the debt.
  5. by   nursie_nursie_415
    If you can, PAY OFF THE LOAN. You have no "savings" if you're already in debt. Fluidity accounts for some peace of mind but really, any money you "save" is not helping you out of debt. If you pay off your loan & find you need some cash, there are always credit cards (not the best choice but still better than owing a crooked loaner). Worst case scenario: you cannot find work & you file for bankruptcy because of credit card debt which you CANNOT do with student loans. Student loans are the devil & need to be eliminated pronto. Better to suffer from 7 years of bankruptcy on your record than a lifetime of student loan debt that probably can never, EVER be erased & will only grow into an uglier monster. (Google: Student debt horror stories.)

    I used credit cards to pay for LVN school & then LVN-RN school. I was able to pay them off quickly on 0% interest (given they were paid within a year I believe?) after transferring the balance to another credit card. I lived with my parents & maintained a frugal lifestyle (thankfully no children or outstanding expenses to deal with). When you take out a student loan, you don't have as much control as compared to other ways of financing your education. I have been blessed & fortunate to be able to have the option to use credit cards to finance my lifestyle (I even purchased my first vehicle with 2 credit cards & paid them off in the same way within 5 months while living with my parents & working my butt off). I know my decisions are not fit for everyone's situation but it worked VERY well for me & I hope this post can help at least one other person on this site to gain some insight, hope & alternative mindset. Good luck to everyone in pursuing this expensive education.
  6. by   Aongroup1990
    Pray, god will take care of anything and find resources.. Try not to take out too much.
  7. by   MrChicagoRN
    What interest rate are you paying? Remember that student loan interest is tax deductible, even if you don't itemize.

    Its important to have cash reserves in case of emergency. Its great to be debt free, but it's even better to be able to maintain a steady cash flow for a few months if diversity strikes. Build an emergency fund, maybe throw a few bucks extra towards the loan every month then make accelerated payments.
  8. by   DoGoodThenGo
    FWIW student loan debt is often referred to as "good debt" in that the interest rates are often low (when compared to credit cards for instance), and the record of on time payments builds an excellent credit score.

    If you can replace your savings easily and are comfortable living without for the duration, then by all means pay off your student loans. Or, consider simply doubling up the payments as with a mortgage to knock down some of the interest charges and pay off the loan sooner.

    Would advise however if you have any other debt such as credit cards to pay them off first.
  9. by   evolvingrn
    The beauty of nursing is there is flexibility with our least where i have worked i can almost always pick up extra.... .and if not agency jobs are just a call way. with that in mind i wiped out our savings to pay off my college loans in a year (30 thousand plus) sooo worth it. For my next degree i hope to take out minimal debt. That is just my preference though.
  10. by   morte
    make sure any extra you are paying, is actually going to principal, and not simply paying ahead on the next installment due.
  11. by   aachavez
    some loans qualify for forgiveness after 10 years for public service workers, check into that and see if it changes your situation any.

    I vote for option 3 as well, don't totally deplete your savings, but pay your debts faster.
  12. by   Jory
    I'll tell you what a financial advisor will tell you:


    Rationale: Let's say, your student loans were at 5% interest?

    Do you know of a bank that will pay you 5% interest in a savings account?

    I don't either.

    Then, after you pay them off, TAKE THE MONEY that you would have otherwise used for your student loan payment and REBUILD your savings.

    Never, ever carry debt if you don't have to.
  13. by   Race Mom
    Pick up (or loan from the library) Dave Ramsay's book, Financial Peace. You will have a clear mind after reading it. Very simple process. So simple...most don't even think to do it! The borrower is slave to the lender.