I owe 40k student loans at 5-7% interest. I want to just get rid of them with a lump sum payment. Some people are saying don’t do it that way and some are saying it’s financially smarter. What do you guys think? I have enough money saved to do it. I guess i’m waiting to see if there is any resolve to this overall student loan issue. I wanted to do pslf originally but after the 10yrs/120 payments i would not be eligible anyway.
Posted by SnooPies1653
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What are your loan details? Individual amounts and percentages?
You have $40k saved in cash? What retirement accounts do you have available? Have you made contributions toward a Roth or Traditional IRA? What is your approximate gross income?
All of these questions relate to student loan repayment. Yes it is better to be out of debt. But it is also better to be able to utilize a 401k match and contribute to a Roth while making loan payments.
What is the annual interest your loans are producing? If annual interest is over $2500 then I would suggest paying down high interest and large loan amounts.
If PSLF isn’t an option and you can afford standard repayment then I’d start with that. Make bimonthly payments without extending due dates and you’ll be done sooner without depleted savings.