# The Money Mustache Community

## Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: kylemoney on August 05, 2016, 07:25:07 AM

Title: student loan interest question
Post by: kylemoney on August 05, 2016, 07:25:07 AM
My loans are all at the same percentage and broken up by semester. My math is awful, btw. If I aggressively pay down the one with the largest balance over my additional payments being spread evenly over the loans will that save money? I would assume yes, but doing the math in excel I couldn't get a clear answer. There's 4 different loan numbers, all same interest rate, with different balances. Thanks in advance!
Title: Re: student loan interest question
Post by: plog on August 05, 2016, 07:29:19 AM
Quote
There's 4 different loan numbers, all same interest rate, with different balances.

No, you will not saving any money with any loan prioritization scheme.  Since they all have the same rate, you can think of all your loans as 1 big one.
Title: Re: student loan interest question
Post by: Dezrah on August 05, 2016, 07:58:59 AM
plog is right, all that matters is the interest rate.

You might use this as an opportunity to see which psychological method works best for you.  Anything that motivates you to save or invest is a plus.

Some examples:

-Pay the smallest balance first so that you knock it out the fastest and have "fewer loans".
-Pay off the oldest semester first so it feels like "paid off freshman year", etc.
-Pay off in chunks that make the loan balances nice round numbers, if only for a day.*  (My husband liked this one.)
-Pay down the largest balance until they're all equal.
-Roll a die and pay down the "lucky one".  See which loan finishes first.

Make it a game and you'll stay motivated to pay them off to the end.

*Just make sure you always pay an amount that exceeds the accrued interest.  If you have \$1,000 in loan principal that accrued \$25 in interest, don't make a \$20 payment since this won't even cover the interest.  A \$30 payment is okay though because it hits all the interest and some of the principal.