Student loan wwyd

[wavepool]

We have a mortgage and our other loan is student loan. We have x student loan, and ~12x in savings.
I'd prefer to just pay it off just to be done. But it's 0% interest right now (not sure how long). Is it better to wait and pay it off when they announce that's over?
That money is just sitting in a regular credit union savings account.
Thanks!

[ohgillian]

It's a personal preference, but I'd just pay it off and be done with it. Interest rates are so low right now, it's not like you're earning anything on that money by keeping it instead of using it for this. Also, I think Student Loan interest is deductible, but you aren't paying any, so that's not a factor either.

[Susie]

Definitely don't pay it off while it's at 0%. You can do literally anything with the money and get more benefit than 0% interest SL payoff.

Whether you pay it off when the 0% period ends... depends on what the interest rate will be. All of ours are at 2-4% interest, and we're just letting them ride at this point. They're good for our credit score, and we're better off putting money in the market, etc. than paying off the SLs.

Also, now that we have the SLs down to a manageable level and the interest rates are low, I would rather work on my mortgage than SLs. Of course you never want to plan to use your home as a source of emergency cash, but in an absolute emergency, you can do a hell of a lot more with equity in your house than you can with ... a paid off SL. Plus, if the unthinkable happens and one of us dies, that partner's SLs do too. I'd rather pay down a mortgage, whose equity I would keep in that instance, than kill myself to pay off an SL that would be forgiven in the event of the borrower's death.

[sandandsea]

We paid it off to be done with it when we were in that position. My goal was to be entirely debt free and I have no goals that involve leveraging debt.

[wavepool]

Sounds like responses are split like the people in our house! Maybe a good compromise would be the suggestion to up the payment. I think for now I'll crank that up to pay off faster. Thanks for your thoughts!

[just]

It’s unlikely, but since it’s 0%, I’d keep it around and see if Any type of student loan forgiveness makes traction.

Regardless prepaying ANY other loan (including a low rate mortgage) or increasing your 401k by the monthly payments, or even throwing it into a .5% HYSA will get you more.

[edited because I’m wrong]

[wavepool]

Feb 13, 2021 18:45:35 GMT -5 just said:

It’s unlikely, but since it’s 0%, I’d keep it around and see if Any type of student loan forgiveness makes traction.

Regardless prepaying ANY other loan (including a low rate mortgage) or increasing your 401k by the monthly payments, or even throwing it into a .5% HYSA will get you more.

[edited because I’m wrong]

Its federal, and something like 5.8 before the 0. We are about to refinance to a 2.5% loan. I need to learn more about what we should do next!

[Deleted]

I don’t have a student loan but if it was 0% interest and the possibility that student debt might be forgiven in the near future I wouldn’t be touching it.

[wavepool]

Feb 13, 2021 20:16:26 GMT -5 @iceblink said:

I don’t have a student loan but if it was 0% interest and the possibility that student debt might be forgiven in the near future I wouldn’t be touching it.

Good point, and others made, too. I'm a teacher (15 years) and this was for my masters degree. I've read a little about whether it's actually likely to happen and did see some educator-related details. I'm back to undecided. I've never made minimum payments, always more, but now I'm debating between minimum payments and the crank to pay off in a year...

[jlt19]

It's 0% until September at this point. My thinking is that Biden did that in order to take the time to come up with a formal, passable plan for debt cancellation, instead of just coming out of the gate with it.

I would NOT be refinancing now, regardless. I have enough to pay off my loan right now, and even though it's making nearly 0% interest, it's higher than what I'm paying and I'd never forgive myself if I paid it off only to have a large chunk of it able to be forgiven/cancelled.

[wavepool]

Feb 15, 2021 21:05:29 GMT -5 jlt19 said:

It's 0% until September at this point. My thinking is that Biden did that in order to take the time to come up with a formal, passable plan for debt cancellation, instead of just coming out of the gate with it.

I would NOT be refinancing now, regardless. I have enough to pay off my loan right now, and even though it's making nearly 0% interest, it's higher than what I'm paying and I'd never forgive myself if I paid it off only to have a large chunk of it able to be forgiven/cancelled.

Oh sorry, I meant refi on the mortgage. I would feel the same if I paid it off and then it could have been cancelled soon after. I went from cranking it up to deciding to do minimum payment, open a different money market account to at least make something on that money, and save it for if/when interest starts up again!

[carrotsmakemefat]

Feb 13, 2021 19:44:19 GMT -5 wavepool said:

Feb 13, 2021 18:45:35 GMT -5 just said:

It’s unlikely, but since it’s 0%, I’d keep it around and see if Any type of student loan forgiveness makes traction.

Regardless prepaying ANY other loan (including a low rate mortgage) or increasing your 401k by the monthly payments, or even throwing it into a .5% HYSA will get you more.

[edited because I’m wrong]

Its federal, and something like 5.8 before the 0. We are about to refinance to a 2.5% loan. I need to learn more about what we should do next!

Same position. I want to lock in a lower interest rate but don’t want to screw myself out of even a little loan forgiveness.

Honestly - if there is no forgiveness I’d love to see a blanket cut to the interest rates & see no more than 3% on a student loan ever again.