I know I’ve mentioned the masses of student loan debt that BF has, but I don’t think I’ve mentioned that I have some, myself. I have somewhere around $50,000 in federal student loans, consolidated at 7.25%. I also have 2 private Sallie Mae loans, each originally for $10,000, which are currently not consolidated, and are at 7.75% and 5.75%, respectively. My total montly payment right now is around $560. I’ve been paying this amount for about a year now, and it is a good chuck of my income, though not unmanageable, particularly if I didn’t have so much credit card debt.
I can defer the federal loans for up to 60 months, and the private loans for 24 months, and I’ve given some serious thought to doing so, as a way to myself a little extra boost for the next 2 years to get the credit cards paid off. There are a few downsides to deferring the loans, however. They will still be accruing interest if they are in deferment, and when I do resume payment, it will inevitably be higher. Deferring will also push back the eventual loan-free date. And the most important downside, in my mind, is the fact that if I defer the consolidated federal loan, I will lose the incentive that came with consolidation, which was a 1% drop in the interest rate after 60 months of on-time payments. Its hard to know what to do, when I have so much credit card debt, and am making such a push to get it paid off. On the one hand, I don’t want to lose the 1%. But on the other hand – does it make more sense to just push for paying off the credit cards now, and then try and direct more money towards the student loans later, in effect making up for the fact that I lose the 1% rate drop by paying off the total balance earlier? These are questions that are hard for me to project financially, and I’m really at a loss, so I just continue to make my payment each month, and hope for clarity.
