Hello Mustachians! I'm a new forum member, so please direct me to a relevant thread if necessary.
I have a small amount of student loans from college--I graduated in 2005 and was able to consolidate my loans with a 1.625% interest rate. I lucked out and continue to be grateful for this (and for the fact that I was able to cover grad school with fellowships). My loans were in deferment until about 2014, when I completed my PhD and began working. At this time, I owe about $12,000. I have no other debt and don't yet own a home.
I'm currently paying the loans off on a 10 year schedule--$125/month. My partner and I have finally reached a point where we're able to start socking away significant chunks of our income, and our "emergency" savings just sailed past the total dollar amount of my loans. I'm wondering, given the low interest rate, if it makes sense to take that money and just end the loans, once and for all. On the other hand, we could put that money in an index fund, or IRA, or other investment vehicle; we'll be buying a home in the next year or so, so this could also go towards the down payment or improvements to make our home more energy efficient. With such a low interest rate, does it make sense to pay off the loans ahead of schedule? My understanding is that the interest rate is lower than inflation's been over the past few years. I should also add that we're both late to starting to save for retirement, early or otherwise, due to our long ride on the higher education train.
Thanks, Mustachians!