student loan payoff question

[shanendoah]

Run the math. 7.25% APR is pretty high. Which one will cost you more money?

At the same time, I am always in favor of paying back student loans if you can. It helps make sure that they're still around for future generations.

[Deleted]

How much will you have to pay in the course of that 25 years in order for it to be forgiven? Is it less than if you paid the extra $500 per month now?

If the costs were equal, and you already have retirement and savings covered, I'd go for the satisfaction of paying it off early. If you wind up paying more money that way, I'd just ride it out for the full 25 years.

In my case (I owe a similar amount), and my loans are currently in deferrment for another 1-2 years. I would be eligible for a program that forgives the loans in 10 years of payments (none of the previous 6 years I have paid would count, and it wouldn't start until 2 years from now). Signing up for that program would increase my payment so much that I would be paying it off myself within the 10 years, so there was no benefit to the forgiveness thing. Instead, I have opted to continue with my 30 year payment plan (I have 24 years to go on that) - this keeps my monthly obligation at a pretty low rate, so if I ever need to divert money for some reason, I have the flexibility to do it. But I also have the option to pay extra on the loans now - and because I hate them, that's what I am doing. So far, I have shaved about 5 years off of my total repayment time.

[ontrack]

I am doing the 10 year repayment/forgiveness thing craftysarah mentioned. I only had 2 years of payments that didn't count, and I have 8 more years to go. The payment is definitely higher than a 30 year term would be, but I'm so excited to not have it hanging over my head 8 years from now.