Author Topic: Student sub-loans  (Read 3499 times)

velocistar237

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Student sub-loans
« on: April 21, 2012, 05:31:39 AM »
My wife has 8 federal student loans, and they just got transferred between servicers. Under the old servicer, they were grouped into two groups, A and B, with multiple loans with different rates per group. We were paying off the group with the highest average interest rate first.

The new servicer splits out all the loans separately, so now we can tackle the highest rate ones directly, while not paying off the lower rate loans within the group. The thing is, I bet we could have done this all along, instead of limiting ourselves to the group level.

So, if you're in the same situation, learn from our mistake: if you have loan groups, see whether you can break them out to pay the highest rate loans, maybe by a letter and a check in the mail.

fruplicity

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Re: Student sub-loans
« Reply #1 on: April 21, 2012, 07:44:55 AM »
One resource for anyone who's not clear on their federal loan types or servicers (I assume if you're here you at least know the amounts though you can get that info too) is www.nslds.ed.gov.

velocistar237

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Re: Student sub-loans
« Reply #2 on: April 23, 2012, 02:57:34 PM »
We knocked out a $2400 chunk of the 6.5% debt today. We have about $11K more at this level, and then everything else is less than 2.5%. Would it be worthwhile to dig into the stash to knock out this debt?

MEJG

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Re: Student sub-loans
« Reply #3 on: May 07, 2012, 06:16:19 AM »
Late to the party...

But I would totally dig into the stash to get rid of that $11k.  6.8% is pretty high and you have a guaranteed rate of return on paying off that loan.    Anything under 3% isn't work paying off more quickly that required in my opinion, but anything over 3% I'd be itching to get pay off. 

James

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Re: Student sub-loans
« Reply #4 on: May 07, 2012, 07:53:49 AM »
Late to the party...

But I would totally dig into the stash to get rid of that $11k.  6.8% is pretty high and you have a guaranteed rate of return on paying off that loan.    Anything under 3% isn't work paying off more quickly that required in my opinion, but anything over 3% I'd be itching to get pay off.

I agree about the 6.8%, make that a priority and get it paid off with whatever you can throw at it.

I agree that anything around 3% or under can probably be beat by returns from investing in the market, but you have to make sure you are actually investing the same amount you could be using to pay off the loan in order for that to hold true.

Thanks for the tip, I have a coworker who is just out of school and he thought everything is at the same rate.  I'll suggest he investigates to see if there is a way to separate out the highest interest loan to pay that first.

elai

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Re: Student sub-loans
« Reply #5 on: May 08, 2012, 12:08:42 AM »
I took advantage of %0 APR for 1 year credit cards by transferring spending to them and just paying minimum payments on them.  I then took the difference and dumped it into student loans.  I was pretty certain although that I was going to be able to pay off my student loan in a year since I started doing that, and had emergency savings to cover difference if necessary.  Worse come to worse, I would be able to discharge it through bankruptcy, unlike a student loan.