Ah, student loans. They are a blessing and a curse, really.
On the one hand, they afford you the educational opportunities that you wouldn’t have otherwise. On the other, they are significant debt that will hang on your shoulders for years (maybe decades) to come.
When my husband and I got married, I knew that he had some significant undergrad debt. He put himself entirely through school, so it was no surprise. I was just happy that I was lucky enough to have had my college education paid for. However, it wouldn’t be long before I started adding to our student loan debt pool.
I went to graduate school for my MBA, and although my employer picked up a portion of the bill, the majority was on me. Then, when I finished my degree, my husband also went back to school for his MBA. Even though we were paying down his undergrad loans this entire time, you can see why they didn’t disappear completely.
So, now, here we are with some significant student loan debt. While we knew how much we needed to pay to our loans to not only meet the minimums but also exceed them (in order to pay them off faster), we were a little confused as to HOW to pay them.
Each one of our loans has a different interest rate and a different balance. So, our question was what makes the most sense? Pay them all equal amounts above the minimum or focus all our money on my loans and take advantage of my husband’s loans being in deferral (since he’s still in school).
For us, it all came down to interest rates. My husband’s undergrad loans were secured at a low 3%, while some of my graduate school loans were above 11% (yikes)! We determined that it made the most sense for us to be really aggressive toward those high-rate loans, pay them off as quickly as we can, and then roll all that money over toward paying down his loans once we’re done.
That strategy doesn’t work for everyone. Some people prefer to not put any loans into deferral (which is where you are allowed to stop paying them, but they still gain interest). However, for us, we decided the psychological boost of paying off all my loans before tackling his was the way to go.
What strategies did you use or are you using to pay down student loan debt?