Hello and looking for help with student loans

[brian874]

Looks like a great community, excited to participate.

I am looking to see if someone can look over the attached image. It contains all of my current student loans (around $32,000 total).

I am on IBR, my regular payments are $109/month, and I pay as much possible as a separate payment first to Group D (somewhere in the range of $400 - $600). I generally am attacking this one then will move on to the next one at 6.5%.

My questions are, is this the right way to go about this to pay my loans off as fast as possible? Is there another creative way you would go about paying down by group? Are there any refinancing options where I could stay on IBR? And is there any sense in starting investing at any point in paying these down. I want to start some index funds but have put that off while I pay these loans down.

I have no other debt besides this, no car payment, so the 2 higher interest groups are the highest interest of any debt I have.

Thanks!

[marty998]

Pay the minimum on all of them and throw everything at the highest interest rate one, then the next highest rate one etc down the line.

It's just how the maths works... can't jump around it I'm afraid.

If you're goal is to wipe it as fast as you can, just pay as much as you can as early as you can.

Good luck.

[Rewdoalb]

+1 to the above.

To your question about investing, some of this depends on what you have access to. Do you get a 401k match thru work? I would contribute this before making any extra payments on your loan. For me personally, any student loans I had between 4-5% were paid alongside tIRA contributions, up to the maximun. Anything less than 4% I am trying to max all tax advantaged options before extra debt paydown. YMMV due to personal risk appetite.

[brian874]

Pay the minimum on all of them and throw everything at the highest interest rate one, then the next highest rate one etc down the line.

It's just how the maths works... can't jump around it I'm afraid.

If you're goal is to wipe it as fast as you can, just pay as much as you can as early as you can.

Good luck.

Thanks, that is the plan, paying the IBR minimum on all the groups besides the lower balance, higher interest loan, paying as much as I can to the high interest 1st.

+1 to the above.

To your question about investing, some of this depends on what you have access to. Do you get a 401k match thru work? I would contribute this before making any extra payments on your loan. For me personally, any student loans I had between 4-5% were paid alongside tIRA contributions, up to the maximun. Anything less than 4% I am trying to max all tax advantaged options before extra debt paydown. YMMV due to personal risk appetite.

I have a 401k through work, 4% and it is matched by my employer. I have a sense that I may be "missing out" on investing while I pay my loans down, since it may take me many years to do so. But I am of the opinion that paying off any and all debts before investing is a good idea.

[Sibley]

So, if you're planning on paying them all off rather than letting them be forgiven after however many years are left on IBR, why do you have them on IBR? My understanding of IBR is that the payment may not be enough to cover interest + a bit of principle. If that's the case for you, you're working against yourself because unpaid interest would be accruing to the principle balance.

I'd recommend that you research and consider taking your loans out of IBR, and possibly refinancing all of them into one loan. This may not be the best option for you, but it's worth researching.

[Rewdoalb]

Take the 4% match immediately.

Paying off a 6% loan is like earning 6% guaranteed return on investment - a nice gain. Taking the match is taking a 100% guaranteed return on investment - a gain you won't be able to find elsewhere and can only achieve once per year, with a maximum of 4% of income. Don't miss it now or ever.

[Choices]

Take the 4% match immediately.

Paying off a 6% loan is like earning 6% guaranteed return on investment - a nice gain. Taking the match is taking a 100% guaranteed return on investment - a gain you won't be able to find elsewhere and can only achieve once per year, with a maximum of 4% of income. Don't miss it now or ever.

+1
Kudos to you for attacking your debt! It's contrary to the Ramsey plan, but I also agree with getting your 'free' match, then putting the extra to loans.

As for IBR vs other payment methods, as long as you're paying extra and moving the needle significantly, there's not really any point in changing the plan or refinancing unless your weighted total interest rate is lower.

[brian874]

So, if you're planning on paying them all off rather than letting them be forgiven after however many years are left on IBR, why do you have them on IBR? My understanding of IBR is that the payment may not be enough to cover interest + a bit of principle. If that's the case for you, you're working against yourself because unpaid interest would be accruing to the principle balance.

I'd recommend that you research and consider taking your loans out of IBR, and possibly refinancing all of them into one loan. This may not be the best option for you, but it's worth researching.

I am reluctant to release myself from IBR for a few reasons:

1. I am relatively low income and having the low payments for the other groups helps me significantly

2. I work in a field where my job is not incredibly secure and having a non-IBR payment exist if I should become unemployed could hurt me greatly.

3. With my plan to attack the higher interest loans, I have found the IBR plan to be extremely beneficial, lower payments for other groups = ability to put more money towards the higher interest loans.

This is from previous advice so you can tell me if it is misguided.