Fixed rate student loans vs variable rate student loans - which to pay off first?

arj14 · January 2014

I currently have two different loan providers - one for my federal student loans, which are a mixed bag of a variety of fixed rates (due to consolidation and subsidized / unsubsidized, I think the rate range is 5.6% - 6.8%), and another which has my MN state student loans, which have a variable rate which has so far been pretty low (3.0% - 3.4% - currently 3.2%). Overall, the fixed rate loans have higher capitals.

Once I've reduced my credit card debt, which group would be better to focus on? Is there anything else I should consider when making this decision?

brij2006 · January 2014

What are the principal amounts still left on the loans? Do the variable rate ones have higher balances than the fixed rate?

Xstatic3333 · January 2014

In general, I like to attack high interest balances first. That said, I don't know what the terms are like on the MN state loans. Federal loans are so flexible on repayment-you can go on IBR if your income takes a hit. If the state loans are less-flexible, and you're in an insecure field (like me!) that might be a reason to pay them off first. Another consideration would be getting rid of any cosigners you may have. Still, I'd go high to low in interest rates personally in most situations.

arj14 · January 2014

brij2006 said:

What are the principal amounts still left on the loans? Do the variable rate ones have higher balances than the fixed rate?

The fixed rates have higher principals - 12500, 6300, 6100, 1500 (roughly)
The variable rate loan principals are 6100, 3100, 3100, and 2600 (again, roughly)

arj14 · January 2014

Xstatic3333 said:

In general, I like to attack high interest balances first. That said, I don't know what the terms are like on the MN state loans. Federal loans are so flexible on repayment-you can go on IBR if your income takes a hit. If the state loans are less-flexible, and you're in an insecure field (like me!) that might be a reason to pay them off first. Another consideration would be getting rid of any cosigners you may have. Still, I'd go high to low in interest rates personally in most situations.

I'm actually currently waiting for my IBR plan to go through for another year... the provider on the MN state loans will supposedly work with you as well, but so far I've found them hard to get a hold of. So I guess I would say they are less flexible.

Income wise, I can make anywhere from $700 a month to a little over $800 take home working my two part time jobs. My DH makes a lot more, but we currently don't have any joint accounts and each pay for our own loans.

brij2006 · January 2014

I would plug away at the smallest variable interest loan, then go to the next highest. Paying off the variable ones first, and the fixed rate last.

Xstatic3333 · January 2014

brij2006 said:
I would plug away at the smallest variable interest loan, then go to the next highest. Paying off the variable ones first, and the fixed rate last.

I think that makes sense in your situation, too.

arj14 · January 2014

Thank you ladies!

Fixed rate student loans vs variable rate student loans - which to pay off first?

Re: Fixed rate student loans vs variable rate student loans - which to pay off first?

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