Student loan help.

[rpaskie]

I am trying to figure out the best way to tackle my debt most effectively.

I have several student loans. they are handled by two different servicers.

Sallie Mae: $15000
Nelnet : $35000

Sallie mae is consolidated, nelnet is six loans with averaging interest rates from 5-7%

Right now we are in deferrment on the Nelnet. With that said we have paid some debts off and now have more money to pay it down.

We have approximately $1200 to throw at these. My question is; Would it be better to take that $1200 and aggressively pay off the Sallie Mae loan and defer the Nelnet account. Then begin to pay the Nelnet in 12 months aggressively.

Or do we pay the minimum on Nelnet ($400) per month and pay approx $800 on Salliemae??

I am new at this Mustachian thing but I want to kick this debts ass.

Thanks for the help ahead of time.

[rpaskie]

The reason I am unsure of deferment is because the interest will compound and capitalize.

[Unionville]

I'm not able to answer your question, but HOW IN THE HECK do these student loans get away with charging such a high interest in an economy that has very low interest rates? Unbelievable. I'm so sorry that students have to put up with this.  I'm sure others have a lot of good advice on this forum.  It sure has helped me, so hang in there.

[Catbert]

Okay, I don't know all the ins and outs of SLs so maybe I'm missing something.  However, if interest is accruing while payments are deferred I would likely start paying the Nelnet loans *now.*  Pick the one with the highest interest rate and start to work.  If you have more than one at the same interest rate then pick the smallest one.

[chicagomeg]

How exactly will you defer the loans? All other things being equal, I prefer to pay off unsubsidized loans over subsidized. They usually have higher rates and continue to accrue interest even during the deferral period. So, I would put any subsidized loans into deferment and then put the money towards the loan with the highest interest rate.

[Mazzinator]

Did you look into IBR? It's based on AGI , family size and state. The biggest benefit is the potential interest savings.*

*Interest payment benefit—If your monthly IBR payment amount doesn’t cover the interest that accrues (accumulates) on your loans each month, the government will pay your unpaid accrued interest on your Direct Subsidized Loans or Subsidized Federal Stafford Loans (and on the subsidized portion of your Direct or FFEL Consolidation Loans) for up to three consecutive years from the date you began repaying your loan under IBR.