Been riding my student loan for 10 yrs and 6 months now...at 1.625%

[Slow2FIRE]

I'm in no hurry to pay this off.  $121 payment per month and I've been letting it sit on cruise control for over a decade.  It won't be paid off for several more years.

The beautiful part is that I pay only 1.625% on the student loan while maxing my TSP account, HSA account, Roth IRA and tucking some away in after tax accounts all earning (expected over the long term) far more than I lose to interest.

I rolled all the loans over at the end of 2005 into the low interest rate.  About $5500 left on my loans.

[Friar]

Here are the interest rates for my student loan during the past 5 years I've had to repay:

Year   APR(%)
2015/16   0.9
2014/15   1.5
2013/14   1.5
2012/13   1.5
2011/12   1.5

Although I dislike having ~£22k in loans there is no point repaying them early.

[ardrum]

Nice!  Yeah, I'd be in no hurry to pay that off either atthose rates.  I know some people like the psychological rush of having no debts, but I would probably be delaying off paying that off too given te opportunity cost that would be not investing it at a higher projected return.

[Friar]

Nice!  Yeah, I'd be in no hurry to pay that off either atthose rates.  I know some people like the psychological rush of having no debts, but I would probably be delaying off paying that off too given te opportunity cost that would be not investing it at a higher projected return.

I agree about the rush of being debt free as, even though in my adult life I've not been, when I look at my debts on YNAB it makes me want to pay them off ASAP.

What helps the case is having several cash accounts paying 5-6% interest so even though I have the money to pay it off if I wanted I am actually profiting from not doing os.

[AlwaysLearningToSave]

We just paid off a batch of DW's student loans from grad school that were at 6.8% before refinancing with SoFi at a somewhat lower rate.  It felt great to pay those off and get them out of our lives.  DW has another $5000ish loan lingering from undergrad at a ridiculously low interest rate.  Like you, we will never pay more than the minimum payment on that loan.

[Alexcisxo]

I was glad to find information. Within this forum

[skeeder]

Those are incredible rates.  My loans are at 5.25% my wifes are at 5.85% so yes...we are in a hurry to pay them off.

[Tom Bri]

You young whippersnappers don't know how good you got it. My federal student loans were over 12%, taken out at the height of the Carter presidency. Google 'misery index' if that doesn't mean anything to you. Prime at that time was, I think, 18%.

[CoreyTheMan]

HOW DID YOU GET THAT INTEREST RATE?????????????????????????????

[Friar]

HOW DID YOU GET THAT INTEREST RATE?????????????????????????????

In my case, what significantly helped, is not living in the US ;)

[VladTheImpaler]

I'm just curious...
What interest rate is the cut off?
U.S. inflation averages around 3% a year, so what interest rate on a loan would be the division line between pay it off early or just making the minimum payments.
I guess it's a highly speculative question because none of us can predict the future and no one knows what the market is going to do...

[forummm]

I'm in no hurry to pay this off.  $121 payment per month and I've been letting it sit on cruise control for over a decade.  It won't be paid off for several more years.

The beautiful part is that I pay only 1.625% on the student loan while maxing my TSP account, HSA account, Roth IRA and tucking some away in after tax accounts all earning (expected over the long term) far more than I lose to interest.

I rolled all the loans over at the end of 2005 into the low interest rate.  About $5500 left on my loans.

Nice! I also slow-paid my 2% loans for a long time. I even put money in an IRA while in school instead of paying them off.

[Jesstache]

I did a massive repayment of student loans when I was about 24 and paid off all of the $80k (ouch) I owed in 1.5 years but just couldn't bring myself to pay off the final one at 2.375%.  I'm still auto paying $105/month and will be for the next 10 years.  The balance is $9k and we have a 7 figure net worth but it's just. not. worth. it.

It is the only non-mortgage debt we have and it's SO tempting to just pay it off with one fell swoop but, I can't bring myself to do it, mathematically.  I'd rather pay down on my 3.25% mortgage (which I also don't do... ). 

[mskyle]

I consolidated my undergrad and first year of grad school loans in 2005 at 2% and the remainder of my grad school loans in 2006 at 3.5%. I'm just lucky I realized I had to opportunity to refinance when interest rates were so low.

It is the only non-mortgage debt we have and it's SO tempting to just pay it off with one fell swoop but, I can't bring myself to do it, mathematically.  I'd rather pay down on my 3.25% mortgage (which I also don't do... ). 

This is me too! Except I don't have a mortgage... mostly I tell myself I'll never be able to borrow money that cheap again. I think the fact that I don't use my graduate degree at all makes me want to pay that loan off even more, but I know the money will do me more good invested and/or saved for a down payment on real estate.

For me the cutoff between "just pay it all off" and "keep making the minimum payments" would probably be around 5%. 5% guaranteed "return" is not bad. And I absolutely would not pay off the loans if they're under current mortgage rates, since that's the debt I'm most likely to take on in the near future - no point in paying off one loan to pick up another at the same rate.

[zombiehunter]

HOW DID YOU GET THAT INTEREST RATE?????????????????????????????

In my case, what significantly helped, is not living in the US ;)

Here's some intel on getting a low-low rate within the US:

Recently re-re-financed my student loans.  Originally went from Federal 6.8-7.9% loans to SoFi, for a variable rate that sat at about 3.5% (a solid improvement).  Currently however I'm refinancing again with First Republic Bank.  Their pitch is that they are not looking to make a lot of income from refinancing student loans, but that they hope to start a banking relationship so that presumably when I'm ready to borrow money for houses and cars, they'll earn their profit there (not likely).

Therefore, while SoFi and most other student loan companies refinance your loans based on your individual risk profile (weighing credit score, income, job field, etc.) and offer you an personalized interest rate, First Republic refinances everyone at a set variable/fixed rate so long as you qualify.  For the 5 year payment plan, this was either 1.85% variable or 1.95% fixed.  So far as I know, it's only available in their market areas (NYC and SF areas) and only for higher income grad loans like law school, medical school, and dental school. 

What's more -- if you pay off the loan in less than 4 years (48 months), they will rebate actual interest you paid up to 2% of the initial borrowing.  In my case, this works out to about $1,700 in rebate.  If I take 4 full years to pay off the loan, I would pay around $4k in interest, minus $1700, for a total of about $2300.  Factoring in the rebate, this works out to about a 1% interest rate.

However, if I go turbo mode on this loan and pay it off in 2 years, the actual interest paid and the rebate would be about the same, meaning it's essentially a zero percent loan.


I struggle with whether it's worth going turbo on the loan for 2 years to pay zero interest, or whether paying it over 4 years at effectively a 1% interest rate and investing the remainder would be the better option.  I believe the math works out to go 4 years and invest the difference, as there's very little risk here given that it's a fixed rate and I could easily earn more than 1% for the 2 years difference.  The net gain probably isn't that great, however, and there's a major psychological benefit of NOT having to pay loans that would be very nice to have.