Author Topic: Should I Pay Off Unsubsidized Loans While In School?  (Read 599 times)

Painful Fart

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Should I Pay Off Unsubsidized Loans While In School?
« on: December 10, 2019, 04:21:38 PM »
So, some context is needed to fully understand the question:
  • I am currently in a 1-year engineering graduate program (Biomedical Engineering)
  • I am currently working part time at my university (~$200/2 weeks)
    • My salary might change because Spring semester schedules might have more/less availability
  • I am currently renting an apartment with my SO in Buffalo, NY (~$824 including utilities)
    • She has a position to work at the complex which reduces our rent to $0/month
    • There was a falling out between one of the supervisors and her schedule to super packed so she is planning to quit by the end of December.
    • I am debating on taking the position because it will pay for our rent
  • I have ~$27,3K student loans
      • Subsidized loans
        • $3.5K    @4.290%
        • $3.5K    @3.760%
        • $3,360  @4.450%
        • $2,140  @4.450%
        • $4,622  @5.050%
      • Unsubsidized loan
        • $10,442.81 @6.080%
      • I have saved up money from jobs ~$15.5K in an online savings bank with an APY of 1.7%

      My question now is should I fully pay off the unsubsidized loan with my savings right now to avoid any more interest accrued on it? I would still have ~$5K left over which would cover the rest of the yearís ~$2.9k rent.
    « Last Edit: December 11, 2019, 11:12:52 AM by Painful Fart »

    MDM

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    Re: Should I Pay Off Unsubsidized Loans While In School?
    « Reply #1 on: December 10, 2019, 08:17:42 PM »
    I would wait until graduating and getting a good paying job, at which point the extra interest will be negligible in your overall finances. 

    But a case can also be made to pay the loans if the money would otherwise sit in a bank. 

    With a hazy crystal ball, there's no way to tell whether the extra liquidity you would have by not paying off the loans will be useful in the next few years - but it might.

    Ready2Save27

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    Re: Should I Pay Off Unsubsidized Loans While In School?
    « Reply #2 on: December 10, 2019, 08:29:08 PM »
    If you have a good emergency fund or support available if things went bad, Iíd pay off part or all of the loan. You are essentially getting a guaranteed 6% return on your investment. But if you arenít comfortable only having $5k in the bank, then it wonít ruin your financial situation if you wait a little to pay it off.

    Have you considered other part-time work/online work to supplement your income (though be careful this doesnít take away from your studies/relationship)

    Painful Fart

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    Re: Should I Pay Off Unsubsidized Loans While In School?
    « Reply #3 on: December 11, 2019, 11:18:53 AM »
    I would wait until graduating and getting a good paying job, at which point the extra interest will be negligible in your overall finances. 

    But a case can also be made to pay the loans if the money would otherwise sit in a bank. 

    With a hazy crystal ball, there's no way to tell whether the extra liquidity you would have by not paying off the loans will be useful in the next few years - but it might.

    I'm currently in the mentality to just wait until graduating and getting a job to pay it off. However, so far, the job application process is a pain in the ass. Constant no replies and genetic rejection letters.

    When I stop and think about my loans, I get pretty anxious but I guess that's only natural.

    Painful Fart

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    Re: Should I Pay Off Unsubsidized Loans While In School?
    « Reply #4 on: December 11, 2019, 11:20:37 AM »
    If you have a good emergency fund or support available if things went bad, Iíd pay off part or all of the loan. You are essentially getting a guaranteed 6% return on your investment. But if you arenít comfortable only having $5k in the bank, then it wonít ruin your financial situation if you wait a little to pay it off.

    Have you considered other part-time work/online work to supplement your income (though be careful this doesnít take away from your studies/relationship)

    I'm not terrible fond of only have $5K in the bank but I not exactly fond of my loans either haha. Stalemate.

    I have considered other jobs (especially in my field but the application process is poop). The other issue is my lack of reliable transportation.