The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Dman214 on January 21, 2014, 06:19:44 AM
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My wife has about $60k of student loans for graduate school (~$8500 subsidized, the rest accruing interest at 5.4% and 6.8%). She will be finished this summer and then will be making approximately $75k, which we've committed to devote entirely to paying off the loans and will live off my income. Question is - between an upcoming bonus and a tax refund, we could avoid taking out any additional loans for her final semester of school this summer - OR we could make that payment to the 6.8% loans early (prob end of Feb timeframe), versus new loans coming out in May (which would be about $6k at 5.4%).
Is the best decision here to take the money and apply it to the 6.8% existing loans and accept new student loans for the may semester? Or hold on to the money and pay the tuition directly for May?
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Dman, sounds like you'd have to run the #'s to find out which route will save you more $. It also might effect your decision if you have a 6 month forbearance after her final semester. That could give you a window of time to save w/ no interest and throw a huge chunk or pay it all off when the forbearance ends. 5%+ on aprox 50k is daunting, so that'd be my vote; to lower that balance as much as possible.
cheers
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If your credit is good you could open an interest free credit card say 12-18 months interest free and then use it to pay for the last semester. Use your refund to pay off the 6.8% loan, and then set aside a certain amount each month to pay off the credit card at least 1 full month before the interest free period is up.
We are doing that. While I could drop 3.75k directly to the school, I can just spread it out over 9 months on my interest free rewards credit card and feel better about my checking account.