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Archive for the ‘student loan’ Category

What kind of loan is this?

Tuesday, June 20th, 2017

Is it a personal loan? The benefit of having the actual student loan is that this kind of debt has the benefit of (1) cancelling out when one dies, (2) being eligible for deferment or forebearance if needed.

Personally, I think that the better plan would be to just pay the $450 each month on the current loan.

Question about student loan payoffs

Friday, April 7th, 2017

DD22 has an opportunity to swap out her student loan debt. Basically, she can get a $25000 loan at 2.9% 5 years, and pay off her 20,600 7.9% 10 yr student loan. Of course, this doubles her monthly payment from $250 to $450.
The next question is: She has varying amounts of other student loans. She could swap/pay 1 other of the following 3 entirely: 4.5%, 5.6%, 6.0%. If she chose the 5.6 or 6.0, there’s enough to pay 1 of them entirely, and cut the other down by half. The monthly payments for those 3 are 45.52, 38.16, 38.16 respectively. She could probably pay the remaining balance on 5.6 or 6.0 within 6 months if she doubled down.
At best, she would be exchanging 287.71 in monthly payments for 10 years for $450 in monthly payments over 5 years, so it would “cost” her an additional $162 a month compared to if she left it the way it is.
On the other hand, she would “save” about 8,487 in interest, which is enough to pay off another of her student loans.
So the question is: does she swap out as many higher interest loans as she can and exchange them for a much lower interest rate even though it will jump her payments? Or leave it the way it is?