Wiser Use of Money: Pay Off Student Loans / Invest

[ReDeYES88]

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I think my mother has that deal in MA.

As for me, all my loans were federal loans. Initially they were 5.25% I think, but after I consolidated they were 4%, and once I signed up for paying with direct debit out of my checking account, they knocked it down to 3.5% or 3.25 .. I forget. It goes down some more after 2 or 3 years of not missing a payment.

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I was going to make this same point. My Fed student loan interest rate was reduced 0.5% after signing up for direct payment from my bank account. I think one of the reasons lenders offer this is because they will automatically deduct the minimum payment, but it's easy enough to modify the amount you pay each month if you want to be a little more aggressive (i.e. make the equivalent of 13 or 14 payments a year instead of 12).

My 0.02...pay off the high interest loan, set up autopayments for the low interest loan (or even pay off part of it to reduce it's principle) and start growing your nestegg. Jurollo, does your new job offer an employee match on a retirement account? This is another opportunity for free money. IMO I would max any allowed investing in an employer matched account. If you can't quite do it on a monthly basis, then sink any year end bonus into it to reach the max.

[Frinkenstein]

I'd pay off the entire 35K and then invest the remaining 20K. You might be able to make a bit more by paying off the high interest portion of your loans and then investing the rest, but don't underestimate the psychological advantage of being debt free. Plus, you'll still have 20K to invest, which will give you a respectable start.

[Osprey]

The return on investment on your money when you pay off the student loan is the interest rate- note, if your student loan interest payments are tax deductible, the ROI of paying your loan back is less than the interest rate. I have $80,000 loans locked in at 3.8%- I'm investing that money- A 3-5 year difference in compounding the interest in investing $80,000 in the market when held for 20+ years is worth a lot more than the 3.8% interest they are charging me.

[aces_dad]

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18k of it was a personal student loan at 9.25% now
18k is at 4.75%

I am assuming it would be prudent to pay the 9.25% now and then maybe pay the other off piece meal? I am contemplating just paying them both off as I would then literally have no monthly payments outside of a cell phone. I own my car free and clear and have paid rent for the next 6 months. Outside of poker, upon acceptance of a job offer I recently got I will be making $75k+ a year so the $400 I am paying a month now could get moved to investments as I move along.
~J

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I don't recall the actual figure but student loan interest will likely not be tax decuctable at 75k income, the cutoff is lower like 60k or something. Pay off the higher rate for sure.