Student loan payoff?

splotch716 · March 2016

I have 9 student loans totaling just under $24,000. I have three monthly payments on them, $50, $130, and $113. I haven't been including my student loans in my snowball yet but am wondering if I should reconsider. The loan payment of $50 per month is for $2800, but is split into three different loans of $750ish, $885ish, and $1150ish. Lately I have been wondering if I should take them one at a time and pay them off but it wouldn't get rid of the $50 payment. My other option is to continue paying down my last credit card that has $2100 on it. Either way I would be paying one of them off within 5 months or so. What do you guys think I should do?

bmo88 · March 2016

I would suggest tackling them in order of highest to lowest interest. That likely means paying off your credit card debt and then student loans.

abrewer5 · March 2016

I agree, because the balances are so similar I would tackle the one with the highest interest rate first and the move onto the next. Good luck!

Erikan73 · March 2016

I'm not sure about this because I haven't had student loans (only went for associates at community college & lucky enough that parents paid for it) but can't you claim the interest you pay for student loans on your taxes as a deduction? Is so, I wouldn't add them to your snowball list because the interest then wouldn't be hitting you then as hard as it would on credit cards which you can't claim on taxes.

If I'm wrong & you can't deduct student loan interest on your taxes, I would add them to the snowball list in order of interest rate.

formerlyGDaisy09 · March 2016

Erikan73 said:

I'm not sure about this because I haven't had student loans (only went for associates at community college & lucky enough that parents paid for it) but can't you claim the interest you pay for student loans on your taxes as a deduction? Is so, I wouldn't add them to your snowball list because the interest then wouldn't be hitting you then as hard as it would on credit cards which you can't claim on taxes.
If I'm wrong & you can't deduct student loan interest on your taxes, I would add them to the snowball list in order of interest rate.

if you itemize instead of taking the standard deduction you can deduct SL interest.

als1982 · March 2016

Like the others, I would pay off any credit card debt first. Then it would depend on whether you have other debt and if you itemize on your taxes. If you don't itemize, I would pay the student loans off highest interest rate first. If you do itemize, I would pay off any other nondeductible debts like car loans first, start contributing to retirement if you haven't already, and then pay off the student loans highest interest rate first.

LillibetteV · March 2016

formerlyGDaisy09 said: Erikan73 said: I'm not sure about this because I haven't had student loans (only went for associates at community college & lucky enough that parents paid for it) but can't you claim the interest you pay for student loans on your taxes as a deduction? Is so, I wouldn't add them to your snowball list because the interest then wouldn't be hitting you then as hard as it would on credit cards which you can't claim on taxes.If I'm wrong & you can't deduct student loan interest on your taxes, I would add them to the snowball list in order of interest rate. if you itemize instead of taking the standard deduction you can deduct SL interest.

**SIB** Actually student loan interest is special and can be deducted even if you don't itemize, however it's a deduction, not a credit, so most people tend to give it more weight than it deserves (and OP's balances are fairly small) and it's still worth it to get them paid off. There are also caps as to how much you can deduct depending on your interest amount and your income.

I would tackle the debt in order of interest rate for sure.

splotch716 · March 2016

I was actually looking at interest rates as well. The lowest balance student loans are only at 2%. Out of my $24,000 worth of student loans, about $11,000 are private student loans at a variable interest rate of about 9%. The rest of the student loans are government and have interest rates between 5.5% and 6.5%. Overall it should take me about 3-5 years to pay off, if nothing else changes with my finances. After my last credit card, interest rate of 12%, I will then start tackling my student loans!

I'm hoping my financial freedom improves in the next few weeks. I have a job interview on Thursday which would be a pay increase of anywhere between $6,000-$11,000.

short+sassy · March 2016

Good luck on that interview! That would be a substantial jump in income.

I think your plan is a good one, to focus on the credit card debt first. But, as an aside, it would drive me bonkers to have nine different loans for essentially the same thing. But I've never had SLs, so maybe that is just typical.

brij2006 · March 2016

If you're snowballing, then I would list your debts from smallest to largest and work on them in that order.

Student loan payoff?

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