I want to payoff my student loans!!

**beks37** · 07-31-2010, 06:20 PM

Ok, so my husband has student loans...a lot of them. We consolidated them and started paying on them June of 2008. The current balance is $53,167.84. Silly Sallie Mae has our payment plan set up so that if I just make the payment they say, it will take 30 years to pay off. That is NOT happening.

My goal is to pay it off in 5 years...by July 2015. How Sallie Mae works is that I can't just make straight principal payments. I can make whatever payment I want and interest is applied first and then principal. I have been struggling to figure out the best way to pay them off.

Here are the facts:
Interest Rate: 6.375%
Monthly Payment: $416.11
Extra I pay each month: $320.00
Beginning Balance: $64,558.69
Current Balance: $53,167.84

I'm thinking it's going to be better to put a larger sum of money on it at a time instead of hitting it with $100 here and there. Thoughts, suggestions?

**HeatSeeker** · 07-31-2010, 06:45 PM

I feel your pain with Sallie Mae. Only I haven't consolidated mine, and I won't until my credit score is a 750 to try to get an interest rate at 5% or less.

I have a part time job, that I send any money I make to pay towards my loans, and I also put any unexpected windfall (tax return, bday money, amazon/ebay sales) towards my balance, my goal is to pay it off to 10k then go by their payment plan. That way I can afford other things and have a manageable monthly payment.

**krbshappy71** · 07-31-2010, 06:50 PM

Originally Posted by beks37

Ok, so my husband has student loans...a lot of them. We consolidated them and started paying on them June of 2008. The current balance is $53,167.84. Silly Sallie Mae has our payment plan set up so that if I just make the payment they say, it will take 30 years to pay off. That is NOT happening.

My goal is to pay it off in 5 years...by July 2015. How Sallie Mae works is that I can't just make straight principal payments. I can make whatever payment I want and interest is applied first and then principal. I have been struggling to figure out the best way to pay them off.

Here are the facts:
Interest Rate: 6.375%
Monthly Payment: $416.11
Extra I pay each month: $320.00
Beginning Balance: $64,558.69
Current Balance: $53,167.84

I'm thinking it's going to be better to put a larger sum of money on it at a time instead of hitting it with $100 here and there. Thoughts, suggestions?

Debt Paid off YTD: $3,319.85
Debt Paid off in 2009: $21,160.78
Student Loan: $61,056.44/$53,167.84
Mortgage: $62,159.24/$61,668.98
Toyota: $22,300.20/$21,556.86

Adoption Fund $1,536.31/$10,000

What's the interest rate on the car loan? Are you following a financial plan or just doing your own thing? I'm just wondering as a Dave Ramsey plan would have you working on the smallest debt first, and attack with the the enthusiasm that you are showing right now. According to your signature that would be your car loan. Another school of thought is to compare interest rates, is your car loan a higher interest rate? If so, you'll get a good bang for your buck getting that off your head first and then applying those payments to the student loan.

Just curious what made you both decide it was "get rid of sally mae" time instead of other debts.

**HeatSeeker** · 07-31-2010, 06:56 PM

Sallie mae is the only debt I have, and the high balance could hold me back from financing a house and finishing graduate school, 2 things I want to do in the next 3 years. Most cars and other debts have a much lower principle, and are mentally/physically more manageable and easier to deal with in the instance of income issues than Sallie Mae.

**beks37** · 07-31-2010, 07:02 PM

Originally Posted by krbshappy71

What's the interest rate on the car loan? Are you following a financial plan or just doing your own thing? I'm just wondering as a Dave Ramsey plan would have you working on the smallest debt first, and attack with the the enthusiasm that you are showing right now. According to your signature that would be your car loan. Another school of thought is to compare interest rates, is your car loan a higher interest rate? If so, you'll get a good bang for your buck getting that off your head first and then applying those payments to the student loan.

Just curious what made you both decide it was "get rid of sally mae" time instead of other debts.

We were fortunate enough to get 0% interest rate on our car. We are not following a financial plan, we're just doing our own thing. My husband and I both want to move out to a condo that does not have yard or exterior maintenance. We struggle to keep up with the yard we have. I have already started looking into condos and lofts available in our area. In 5 years, our dogs will be gone to doggie heaven and we may not have a child due to circumstances beyond our control. Our car loan will be paid off in 5 years as well. I do not want to move out of our current house until we have paid off the student loan. That's why we want to get rid of Sally Mae!

**krbshappy71** · 07-31-2010, 08:23 PM

Ah! I was curious when I saw the other amounts. 0% that's sweet!

I'd say do whichever you feel is going to make you feel like you are progressing quickly. I have limited income and low will power, I've noticed I'm not good at saving up to make a large payment. If I don't make small ones they just wont happen so I nickel and dime payments to death just to keep on the roll of paying off debt.

A large chunk can be fun, but stuff tends to "come up" when I'm trying to save up to make a large chunk payment so be wary of that.

Best wishes! Do It!

**ncarr** · 08-01-2010, 08:42 PM

I consolidated my student loans with nelnet and have just "overpaid" each month. My "scheduled" payment is $127.43 a month. My original balance was 18,501.14 and I currently owe 6,451.87. I just pay as much as possible. Some months it's 500 some just 200.

on separate note--- are you SURE you want to buy a condo? I am currently living in condo HELL!!! We can't sell (upside down), our upstairs neighbor clomps around at 3am, we get hit with assessments when things break because so many people aren't paying their fees etc. I would suggest renting an apartment if you want maintenance free living. The condo is not all it's cracked up to be

**Greebo** · 08-02-2010, 08:43 AM

Large chunks are more fun than small chunks, but small chunks save you more sooner.

Example:

$25,000 loan, 5% interest, compounded monthly, 30 year payoff, base payment of $134.21, you pay $23,313.95 in interest

Scenario 1: Big chunk - 1x a year - $1,200 every year starting exactly 1 year after the loan starts. You'll pay $8,585.53 in interest - saving $14,728.42

Scenario 2: Pay $100/month every month from day 1. You'll pay $8,140.62 in interest - saving an additional $440ish - and paying the loan off 2 months sooner.

Not a huge savings, granted - but every penny adds up!

**krbshappy71** · 08-02-2010, 09:14 AM

Thank you for the example, Greebo. I'll have to save that for the days that I'm down and feel like I'm not getting anywhere. I'd take that $440 of savings any day!

**nyguyli** · 10-26-2010, 03:55 PM

Originally Posted by HeatSeeker

I feel your pain with Sallie Mae. Only I haven't consolidated mine, and I won't until my credit score is a 750 to try to get an interest rate at 5% or less.

I have a part time job, that I send any money I make to pay towards my loans, and I also put any unexpected windfall (tax return, bday money, amazon/ebay sales) towards my balance, my goal is to pay it off to 10k then go by their payment plan. That way I can afford other things and have a manageable monthly payment.

Are your loans private variable rate loans at the moment? If you have federal loans, when you consolidate they average the rate and set it 1% higher. So you could end up paying more by consolidating.

If Private with variable rates, than it could pay to consolidate to a lower variable rate and stretch the payment terms. Once you consolidate and have a lower monthly payment because of the longer terms, continue to pay the original amount before consolidation. This will pay off the loan quicker.

I'm in the process of researching consolidation and figured I'd share some info.

Also, seems no banks are consolidating student loans other than Wells Fargo Private loan consolidation.

**mndtrp** · 10-26-2010, 08:35 PM

Originally Posted by krbshappy71

Thank you for the example, Greebo. I'll have to save that for the days that I'm down and feel like I'm not getting anywhere. I'd take that $440 of savings any day!

Also consider that if the money is just sitting in an account waiting for your single large payment, it could become tempting to take some out to put towards a different purchase. Getting it out of the way immediately takes away any temptation.

**shoiji** · 10-27-2010, 07:07 PM

I remember paying back my student loan. They told me the same thing. First the interest gets paid off then the principal. I just paid as much over the monthly amount required each time. I did eventually happen where I got to the point of paying back only the principal. That was an exciting time since I could actually see the bill getting smaller. Keep plugging away at it. When you get the letter saying you paid it off it really is a great feeling!

**weedaisy** · 11-03-2010, 10:43 AM

If you choose not to buy a condo I would recommend a townhome. I live in a townhome and it's the awesome! No yard maintenance, a nice little patio, and don't have to worry about above or below tenants.

**littleplum** · 11-06-2010, 05:35 PM

Originally Posted by beks37

We were fortunate enough to get 0% interest rate on our car. We are not following a financial plan, we're just doing our own thing. My husband and I both want to move out to a condo that does not have yard or exterior maintenance. We struggle to keep up with the yard we have. I have already started looking into condos and lofts available in our area. In 5 years, our dogs will be gone to doggie heaven and we may not have a child due to circumstances beyond our control. Our car loan will be paid off in 5 years as well. I do not want to move out of our current house until we have paid off the student loan. That's why we want to get rid of Sally Mae!

You only expect your dogs to live to the age of 10? Really?

**scottp999** · 11-14-2010, 11:16 AM

Paying them off in 5 years is a great goal. Stick to it!

Student loans are a different animal and if something in life comes up, and you can't pay them back, they become like a master to slave relationship.

Some people who default end up resorting to something as drastic as leaving the country. Once they are referred to a collection agency, the collection costs + penalty + interest = game over.

They can get a judgement and garnish wages without going to a judge.

They are almost impossible to discharge in bankruptcy (unless you are completely disabled - can't even work a desk job).

There is no statute of limitations, and they will keep on coming after you for life.

They will take your tax returns

They will seize any US bank account without needing a judge's permission.

They will seize almost any asset on your balance sheet

Collection agency fees can double your balance very quickly.

If you make it to retirement, they can and will take from your social security checks.

The rules were changed in 1998 to allow these unrelenting tactics, and then modified again in 2005 to include private student loans (thanks Congress).

I have heard that there are 3 ways to get the debt discharged:

1) Die
2) Become totally disabled
3) Leave the country for one that will allow you to discharge the debt in bankruptcy. They will try to track you down outside the country.

As of now the gov't will still allow you to get a passport. They are considered a civil matter so if you leave the country, you can visit without any criminal penalties.

The collection efforts for student loans are bad enough that China listed them as a way that the United States violates Human Rights (crazy).

** My 2 cents, stick with the plan to get rid of them as soon as possible over all other debts.