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

  1. 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?
  2. Visit whitecat5000 profile page

    About whitecat5000, RN

    Joined: Oct '09; Posts: 45; Likes: 84
    from AZ


  3. by   TheCommuter
    I'm paying an additional amount toward the principal on my student loans every month. My monthly repayment is $170, but I usually pay $300 per month. My loans are amortized over 10 years, but the extra principal will enable me to have them paid in full in less than five years.

    Although no debt is good, my opinion is that everyone needs a rainy day savings account for cushion against the unexpected emergencies in life such as being fired, major car repairs, major home repairs, medical bills, etc. In this economic climate, nobody is guaranteed a job tomorrow.
  4. by   not.done.yet
    Keep a cash cushion.
  5. by   rubato
    I'm a big fan of being debt free. If your current employment situation is stable, I'd pay them off.
  6. by   CrzySexyCoolRN
    Quote from rubato
    I'm a big fan of being debt free. If your current employment situation is stable, I'd pay them off.
    ABSOLUTELY AGREE! Pay them off and never worry about again. No harm in that. There are many other ways to build a good credit history. Buy a car, house, etc
  7. by   DEgalRN
    Never ever wipe out your savings. Better to have student loan debt then credit card debt if you wipe out your savings then have to use a credit card in an emergency.
  8. by   itsmejuli
    I'm with extra on the monthly payments and keep a cash cushion.
  9. by   Hay, RN
    I choose 3. Pay off extra each month. That way there's credit history and also savings on interest and in the bank. (:
  10. by   umcRN
    I had this decision to make recently. I am young and so wanted all my loans paid off instead of dragged out over the next few years, I had the opportunity to pay off one, which would just about wipe my savings. I didn't do it though. Thank god for that because I soon found out what savings are for, about 2 months after making that decision I started getting pretty sick & severe headaches. I finally saw someone about it (aren't nurses the best patients) and was diagnosed with a massive brain tumor. I was out of work for three months, my medical bills are still popping up monthly and with MRI's for the rest of my life & possible recurrence those bills are never likely to go away. I haven't saved a cent this year and have dipped very deeply into those savings.

    Now I'm not saying everyone is going to have some big emergency crop up and need their savings, but they're VERY good to have when the crisis hits. JMO. I now pay the amount due on my loans and when I can a little extra.
  11. by   Stephalump
    I'd say put a bit more money in savings and then pay them off. I think getting rid of them completely is great, but having some sort of money cushion is more important. We never know what tomorrow will hold. Student loans can be put in forbearance. Bills cannot.

    I'm not a huge "debt free life" proponent...I can attest that car/home buying is a PITA when you have zero credit, so I'm all for having something showing good crest history, but I wouldn't choose student loans for that. Too costly. I'd use a credit card and pay some little recurring monthly bill with it or something
  12. by   tyvin
    Be smart now and pay it off. You can build it back up better without having a monthly student loan looming over your head. Why pay off all that interest when you don't have to.
  13. by   llg
    Keep a cash cushion. While no debt is "good," some debts are better than others. As others have said, you don't want to eliminate your cash cushion and then find yourself having to run up credit card debt (or take out a personal loan or whatever...) to cover an emergency, buy a car, etc. At least your student loan debt interest is partially tax deductable.

    Also, you might want to put some of that extra cash into a retirement savings plan and take advantage of the tax deferred or tax free growth options there. Over time, you might make more profit from an investment in retirmement than you would be saving in interest by paying off the loan early. Are you participating in your employer's retirement plan? Does your employer match any of your contributions? (If they do match, that's "free money" they are offering that you should probably not pass up.)

    I paid my student loans off early -- but always kept a generous cash cushion so that I could sleep at night. I paid them off in about 4 years rather than 10. I am doing the same thing with my mortgage. I'll save on the interest ... but I am also investing fully in my retirment and also maintaining a cash cushion so that I have never had to borrow money for any other purpose.
  14. by   Pets to People
    Absolutely pay them off if you have the opportunity. You can build credit in so many other ways and yes you need a cash cushion of about 3 to 6 months worth of expenses as an emergency fund, but you can take what you would be paying into your student loans every month and put that away in your savings and you will have your emergency fund in no time.

    Just think of all the money you will be saving by not having to pay all that interest, it adds up quick.

    There is nothing better than having the peace of mind that comes with not having debt
    , believe me, I know and I wish I could get that piece of mind, but I will have to wait quite a few more years.