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re: Student Loan Planning/Strategy

Posted on 12/26/14 at 1:01 pm to
Posted by Buckeye Fan 19
Member since Dec 2007
36169 posts
Posted on 12/26/14 at 1:01 pm to
Thanks for all the advice, everyone. Lots of things to think about and I appreciate them.

I'm a Fed employee (yeah, I know... Working in the public sector is not something I want to do long-term, but the job is a really good one for a first job and in an area that I think the Fed gov't is beneficial) so I definitely have looked into the student loan forgiveness, but it doesn't seem like a reasonable option (unless I stay for awhile which, again, is not something I want to do). The interest tax deduction is interesting, and something I didn't know.

I would be fine with paying the minimum monthly payments if I wasn't thinking about grad school. But since it seems (based on the job I'm in and my general planned timeline) I want to shoot for it in August 2017, I'd like to have at least the 6.8% payments gone by then so the interest isn't accumulating on those while I'm in school. I currently put in 5% to a TSP (sort of like the gov't version of a 401(k)) and it's matched up to 4%. Should I still invest more in a separate Roth IRA?

And lastly, I'm curious about the posters saying I should attack B first. My rationale was to try to reduce C quickly in order to lower interest. For those saying to go after B to get rid of it, is that more just for a peace of mind/psychological benefit, or is there a tangible reason?

Again, thank you, everyone.
Posted by jacquespene8
Nashville, TN
Member since Sep 2007
4157 posts
Posted on 12/26/14 at 2:34 pm to
Paying off B first is both psychological and tangible. When you get B paid off, you feel the win, but also you have one less minimum payment to worry about. Your momentum then rolls into the other loans. It makes sense, but it works better for someone who REALLY wants to be done with debt. If you're looking for ways to have the loans be "manageable" over the long term, then the snowball may not be your best bet. You'd be better off concentrating on deductions and refinancing to save interest.
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