Paying off school loans.

[Superfreak04]

I have one more semester upon graduating. While attending, I had to take out 2 subsidized loans. Because of this, I think I get 6 (or 3?) months after I graduate until I have to start paying back the loans. I basically have 3 options because of this.

Option 1

Pay off all the school loans at once. Although, if I do this, my entire savings will be gone and I will have nothing to fall back on.

Option 2

Keep all of my savings, and pay it off month by month for 20 years or so, depending on the payments.

Option 3

Pay half, and pay the rest off month by month which will lower my overall payments per month, for the next X amount of years.

Personally, I would love to just pay it all off at once so I'll never have to worry about the burden. I'm already paying off a car for the next 5 years. As anyone would hope to have a much better job upon graduation, I can't say if I will or won't have one at that time. With that being said, lets go based off what I make now. I make only about $1200 a month, and technically about $500 after all my bills are paid per month. I live with my parents, but I obviously don't want to stay here for too long after graduation. At most, I would stay until I'm 25 (currently 23), otherwise I'd leave regardless. Anyways, my question to you all is what route would you take if you were in my shoes?

[Izzy]

Re: Paying off school loans.

Option 1 will feel amazing. That's probably how I'd try to pay for anything. If I wanted to buy a car I'd save up $20k or so and buy it all at once.

[One Winged Angel]

Re: Paying off school loans.

Giving us interest rates + loan amounts would lead to better feedback, but generally I'd say if you secure a better paying job post-grad, go with option 1 as soon as possible to avoid additional interest accumulating on the principals over the loans' lifetimes. It'll feel great never having to worry about that shit. Otherwise 2 or 3 if you're dead set on moving out by 25 and you end up working the same job.

p.s. u're a shite

[blindreper1179]

Re: Paying off school loans.

Option one as much as possible, save a in just case amount like a grand or something.

[Gundam-Dude]

Re: Paying off school loans.

we've chatted about this over kbo skype once but when I was given the same choices, I paid everything off in one lump-sum so I wouldn't have to worry about the burden and rack up the unnecessary interest over time. albeit, I pretty much spent next to no money for the months afterwards and kinda had no social life for a little while LoL

your circumstances are significantly more difficult though given that you're paying off a car as well, which really chips into your bank account

[Tidus810]

Re: Paying off school loans.

Hmm. Option 1 sounds great, but like blindreper said it would probably be in your best interest (tee hee) to save a small chunk in case of emergencies etc. If you have to then pick and choose which loans to pay off and by how much, definitely get rid of the higher interest rate ones first. The less interest there is building up long-term, the better. That's about all I've got though, best of luck.

[Wafles]

Re: Paying off school loans.

No one can really answer this question for you, and its a pretty big financial decision at that.

You'll end up saving a buttload of money with option 1 though, man I wish that was an option for me lol

[Mahou]

Re: Paying off school loans.

Option 1

[XelNya]

Re: Paying off school loans.

Option one:

Pros: Yay no loans! At all!

Cons: You no longer have an emergency pile of money. At all. Sure sucks your car engine died.

Option two:

Pros: You keep your savings in tact.

Cons: Lots of interest and remembering to pay it / accounting it into month to month income.

Option three:

Pros: You still have some emergency money to use should the situation arise. You pay off a good chunk of your debt. Small monthly payments over less time.

Cons: You have less fall back money. You have some extra interest to pay off as you go, but it's not nearly as much as it would be otherwise. Still need to pay off per month.

Based on this I would say do option three and if things seem to be going fine, pay off a little extra per month so you occur less interest, but you have some savings just in case. Option one is great, if you had more than enough to pay it off outright I'd do it. But you don't want to be left with NOTHING should shit hit the fan.

But I'm not you, and yeah probably should do what you feel is the best option. I'd suggest making a pro / con list that's more in-depth than this shit-tier one.

[Jtehanonymous]

Re: Paying off school loans.

I love option one because I've done way too many interest rate problems and would never want you to waste even more money making up all the interest. </////3

If you're living with your parents right now, I'd vote option 1 and then start putting away for more savings. Since you're with your parents, it may not be as risky right now to do something like pay it off all, leaving you with minimal emergency funds

(Plus it'll feel great as previously mentioned)

[benguino]

Re: Paying off school loans.

There isn't that much information to go off, but I think the general consensus is that you should attempt to pay off as much of your loans as possible from the start whilst still a keeping a decent amount of your savings remaining to at least feel comfortable.

For example, even though the idea of paying off all of one's loans at once sounds like a good idea, not many people would do that if it meant only having $1.27 to their name upon paying off those loans.

Thus, you want to keep some money to yourself so you at least feel financially comfortable. How much money that is exactly is something you need to decide because "financially comfortable" is subjective and that's something only you can decide.