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should I pay off my student loans in full before intrest kicks in? (lemm.ee)

submitted 1 year ago by giantofthenorth@lemm.ee to c/personalfinance@lemmy.ml

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General financials:

I can afford to pay them off in full and have plenty left over for general life needs

The interest rates on them should be 4.53% according to their chart of when it was awarded.

If I do hold onto the money and pay off monthly I can put everything into a CD but I'll still be losing .03% if I lock in the student loan money maybe I'll beat but .07-.43% so not a ton of upside unless there's sudden political will to actually follow through on student loan forgiveness.

Is there anything else I'm missing when considering this? I am leaning towards just pay off as I've been planning for this, but I want to make sure there isn't something else to do.

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[–] Glaive0 12 points 1 year ago (1 children)

I’m watching this now because we’re about to do the same in October or whenever that turns back on. We’re even having to return the Pell grant credit from being that close to paying everything off.

I just want to be done with it all, there’s no political will for it. The excuses are constant. The Supreme Court majority would call an Apple a banana if it meant they could deliver something miserable to their very politically defined opponents by legislating from the bench.

I think the only thing going through is if you’ve been paying for more than 20 years. It’ll be a LONG time before that happens for us, so we just want to send it all back.

I’m curious if anyone else knows more though.

[–] bytor9@lemmy.ml 1 points 1 year ago (2 children)

Interesting you say SCOTUS legislating from the bench in this case. Deferment and forgiveness were both "legislated" from the White House. Seems the only party not legislating here is the legislature.

[–] hypelightfly@kbin.social 5 points 1 year ago* (last edited 1 year ago) (1 children)

No, they weren't. Congress passed laws giving the executive that authority.

It was in fact legislated by the legislature.

[–] bytor9@lemmy.ml 1 points 1 year ago (1 children)

I think it's disingenuous to make it sound that simple.

If Congress supported forgiveness, we wouldn't be having this discussion. Whether they had implicitly given that power to the executive with previous legislation is controversial, thus the SCOTUS case. But it's not like SCOTUS was the first to question it. Pelosi and even Biden had previously stated it was not an executive power.

Again, it could be easily settled now by the legislature if they supported it, but they do not.

[–] hypelightfly@kbin.social 2 points 1 year ago

I think it's disingenuous to say it's not that simple. Because it is.

[–] Glaive0 4 points 1 year ago (1 children)

Under powers that were explicitly granted to the White House by the legislature. You can doubt their validity all you want, but they’re there—including the right of the secretary to “waive or modify”—WAIVE or modify—“the existing provisions.” It’s quoted in the majority opinion then ignored by the ruling.

That is the apple being legislated into a banana.

[–] bytor9@lemmy.ml 1 points 1 year ago

I guess you must know more about law than Biden did 2 years ago when he publically talked about probably not having the authority: https://www.politico.com/news/2021/02/17/student-loan-forgiveness-biden-469677

It's nowhere near that straightforward. And for a third time, if it was the intent of Congress, now would be the time for them to clarify that with direct legislation. But they are not.

[–] bytor9@lemmy.ml 12 points 1 year ago* (last edited 1 year ago)

I think you're okay either way but personally if I have an emergency fund and no higher interest debt, I'm paying that off for sure. Even if I lost a couple bucks, worth it for peace of mind.

Would be different if the debt was a mortgage at 3%, which many people do have right now.

Edit: One note for folks doing similar math, don't forget interest and yield on bonds are taxed as ordinary income (20~30% in the US).

[–] Ret2libsanity@infosec.pub 6 points 1 year ago

The government is never going to take responsibility for pushing predatory loans onto young kids. The last hope was the Biden forgiveness plan.

Pay it off.

[–] Maybe@lemm.ee 5 points 1 year ago

I don’t think there’s a bad decision.

A CD isn’t the only option. A 2-year treasury note pays 4.82% right now. You could do that and then reevaluate in 2 years. Having more accessible/liquid assets leads to more flexibility if you need money for an emergency or even a move or downpayment or whatever.

There’s also the very remote possibility for loan forgiveness.

I don’t think the interest spread is large enough for that to be the “slam dunk” answer though. If you’re not great with money or just don’t want to deal with another administrative burden I’d lean towards just being done with the loans.