WWMMD...Student Loans

beetee123 · April 2014

SO's grace period for his student loans ended in November, so we've been paying them back for about five months now. We haven't had any trouble paying them back yet, but his SLs do take a huge chunk of our very small budget every month since I am only able to work part time until next year while I finish up school. I was paying his loans for May when I saw that we can change to pay less right now and then have the rates go up higher in about two years when I am working full time. We would save about $150 per month if we chose this repayment plan, which we would just put towards paying down our CC debt faster and also building up our e-fund. The loans would still be paid back in 10 years, but the interest rate would be slightly higher. I calculated it, and with the higher interest rate it isn't even a $500 difference.

So what would you do? I hesitate to change the plan just because we can (barely) afford to pay what we are paying on it now, but I feel like it would save us some interest on our CCs if we pay those debts off sooner, so I just don't know!

hoffse · April 2014

Well mathematically it might work in your favor to do the graduated repayment (if you can save more than $500 in CC interest). But practically, I wouldn't. If you're still two years away from working full time, any number of things could happen before then that might change your plans.

Since you can afford it now, I would probably just keep doing it. The added advantage is that when your income goes up, it will feel like it goes WAY up, because your payment will remain the same. That will give you some breathing room and will also let you pay down that debt faster.

vlagrl29 · April 2014

I'm on the graduated payment plan and like it a lot. It works for us. I've also had to do the income sensitive payment plan in the past when I had jobs that didn't pay enough for me to make the full payment. I mailed in my paystubs to them and they priced my payment in regards to my salary.

There are a lot of factors to take into consideration - how much debt you have now, what your monthly bills are, and what your salary is. It may make sense for you to do this on a short term basis and put more money back in to the loan when you get it.

KatieCutie05 · April 2014

Well first of all, remembrer that regardless what payment plan your on you can and should always pay extra to get them paid off faster, don't just "settle" for the payment plan terms ever. you can save a lot of money by just paying them off asap. Now obviously if neither of you are working full time you probably don't have a lot of money to be paying on them, but regardless you should be working off a monthly budget to determine how much your really spending and how much you really have to pay toward debt. I'd put the student loans on graduated and use that extra money, plus any extra money and just knock out the credit cards, then apply that money to the student loans and they'll be paid off a lot sooner then 10 years, especially once your working full time.

beetee123 · April 2014

We are hoping to pay them off faster than 10 years, but right now it just isn't possible for us to pay off any extra and have it work with our budget. Hopefully soon! I'm in school until May 2015, so I will *hopefully* have a full time job or at least be working more by June 2015, and then we can put more towards the payments. I'm already paying interest on all of my loans, so that just adds to what we are budgeting towards paying off SLs. I guess I will talk more with my SO about maybe doing the graduated payments. Does anyone know if they will let me switch to graduated payments even though we've been paying the full payments for 6-7 months now? They're just gov't loans. Thanks!

KatieCutie05 · April 2014

you can switch back and forth between payment plans whenever you want.

WWMMD...Student Loans

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