Student Loan Repayment
 

How long of a repayment period did you choose for your student loans? I've been looking into it during my lunch today and the default is 9.5 years, though I think I would prefer to double payments and pay in 5 years if I'm allowed. I mean, half the time means half the interest and there doesn't seem to be a penalty for it....

Just curious what everyone else did. If you didn't have the joy of student loans - lucky you! My loans are just over half of what an average student with loans ends up with so I consider myself lucky just to have that little!

Ummm.... something like 15 or 20 years on the graduated payment program?

Same here, I think!! :rolleyes: Hopefully, I will be able to double up on payments and cut that time in 1/2. :)

Re: Student Loan Repayment
 

I was in the same situation as you are in, but I still went with the 10 year program. Things can change VERY quickly (which it did for me several times moving across the country a few times), so it was great I had managable payments - and like you said, you can always pay extra without penalty. Besides, the interest you pay is a nice tax credit!

Also - BIG TIP HERE - if you are making extra payments, (if they were split like mine), put the extra money on the smallest first and so on - all of a sudden, you have 1 paid off and that is a big plus for your credit file!

Of the three I had (2 AB Student Loans, 1 Canada Student Loan), I just have the one AB one left (the biggest), and I should have it paid off by year-end thanks to the extra payment route I went... so about 7.5 years

Just that's just my $0.02 !!!

Re: Student Loan Repayment
 

Haven't offically left school... but my payment plan is already decided - I have decided on a step by step over five years to eliminate the debt and make my credit look good. Hopefully I'll be aided in this by the Military :) If the academic assistance/pay-back plan holds I should have close to 1/3 of the debt paid by the Military over 2 years.

I don't know what your rate is but I recommend you not to think about the word debt as an evil word. Think of it simply as the amount of money you have.

You were loaned say 10,000 at a low rate of 3%. Do you really want to pay it all off so you can take out a house loan that will be a higher percentage right?

If you have more than enough money and can pay it off now and are saying, why have the loan: That money is low interest money. If you can take it and put it into something that pays higher interest, you can make money. Essentially it is free money. I am guessing people here can understand how lovely the concept of free money is. The average rate of returns from the markets is 10% and corporate bonds can often pay in that range and are safe as well.

To sum it up: Consolidate the loan and get the lowest rate and don't worry about paying it off quickly.

-Rudey

Consolidate if you get the opportunity - that's what I did, and it's made a difference in average payments as well as total to be paid over the loan (if I stay on schedule, and I see no reason why I won't).

Wow, for once I agree with Rudey ;)

I just consolidated mine this week. Mine is a 10 year payback period, and the amount makes me shudder. But I need to buy a car and a house within the next few years, so I'm saving up some money on the side for those. Like Rudey said, those interest rates are sky-high, while your loan rate is most likely very low in comparison. I'm working hard to save $ now to pay off some of the principle, and hopefully I'll be able to pay more than the minimum each month. But I'll be more worried about paying off my car/house quicker than my loans because of interest.

Mine are consolidated and I think my interest rate is like 3.14% or something like that....

I believe that once you consolidate your student loans, the interest rate is fixed. If you have variable-rate loans, now might be a good time to consolidate and lock in a low rate.

In the U.S., you can't take the interest from your loans as a tax deduction if you make more than a certain amount.

Rudey has a good point. If you have extra money lying around, there are better things you can do with it than paying down your (relatively low interest) student loans. Pay down your credit card debt if you have any, or invest it.

Don't miss any of your student loan payments... some lenders (Sallie Mae?) will lower your interest rate if you have a perfect payment history for a few years.