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Pay off loans ASAP?

StallionRx

Full Member
10+ Year Member
Jan 26, 2007
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  1. Pharmacist
Is it wise to pay back your student loans ASAP? I graduated last year and was able to deduct some interest on my income tax, but only because I made <75k (5 months on Pharmacist pay) This year ill be well over that and wont qualify for the deduction. I have about high 20s of student loans left at an interest rate of around 6% and cant see any reason why I shouldnt be extremely aggressive and bang them out inside of the next few months.

I know some people suggest investing money for the return of beating the interest rate, but I already have a good percentage of money in the stock market and feel like putting any more money in there would be risky.

Any thoughts?
 
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FruitFly

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Apr 20, 2007
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It's hardly ever wise to pay off loans ASAP. There's good debt and then there's bad debt as (Suzie Orman would say). Educational loans are GOOD DEBT, buying a few Mercedes on the day you graduate would be BAD DEBT. Good debt's fine- just pay it off over time. If it's that low, pay it off a few hundred a month. No big deal. Why give them a big chunk of change right away? It's still your loan. Now if this were a credit card, I'd say pay ASAP!
 

PharmDstudent

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Jan 8, 2007
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Sorry about hijacking the thread, but what if I have >$100,000 in private loans which is around 6.5-7% interest and another $50,000 in stafford loan? Would it be better to pay it off fast to prevent the interest accumulation?
If you have that much private loan debt in addition to Stafford debt, you need to see a financial adviser.
 

azPharmD2B

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Always put your money where interest rates or return are highest. Go down the list of any debt you might have and check the interest rate: credit cards, house, car, credit cards, etc. Order them by interest rate. Then look at your investments: cds, high rate savings account, 401k, IRA, bonds, funds, whatever. These are harder to gauge because they can fluctuate quite a bit. Between the two lists you should be tossing the most money into whichever is highest.

Find out if the student loan holder will lower rates if you have direct withdrawal from a bank account each month or if they lower it after X number of on-time payments. Typically student loans will be the lowest interest rate debt you have and so its not worth paying off early.
 

PharmDstudent

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Hmm, not sure what that's supposed to mean -_-
When Stafford loans are subsidized, the government pays the interest while you're in school. If the government wants to pay your interest, let them (as long as you don't mind becoming more educated and marketable :p).
You could get a second degree in another field that interests you and work as a pharmacist a couple of nights a week, on the weekends, during breaks from school, and during the summer. If you're making 50-75K a year as a "full-time" student and a "part-time" pharmacist, you could easily pay off your loan without paying interest, and while earning a second degree such as an MBA, MPH, MHA, BA in Spanish, etc. As long as you aren't hung up on the school's status, ivy league, private, etc., then you could get a second degree (at a low cost) that could benefit your career as a pharmacist while avoiding interest payments. You could also do a residency, but I'm not really familiar with how they categorize you, i.e. you might be considered a resident student who is exempt from subsidized interest or something like that???

If you don't want to "stay in school", because you have other obligations, such as a family, mortgage, private student loans with compounding interest, then you need to see an adviser so that they can help you optimize your payments. Who knows... it might benefit you to drag out your loan over 100 years, because no one on this forum knows what your future plans are.
 

genesis09

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15+ Year Member
Feb 27, 2006
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Right now, investments are not doing well. Even my money market is just a hair over 3%. Most stocks/mutual funds are losing money. Stafford loans are either floating or fixed at 6.8%. I would be trying to pay off the loan. However, if my investment percentage return was higher than my loan percentage than it's better off paying the minimum. A few years ago, the situation was like this and not like the former.
 

RP911T

Full Member
10+ Year Member
Apr 23, 2008
14
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California
  1. Pharmacy Student
Is it wise to pay back your student loans ASAP? I graduated last year and was able to deduct some interest on my income tax, but only because I made <75k (5 months on Pharmacist pay) This year ill be well over that and wont qualify for the deduction. I have about high 20s of student loans left at an interest rate of around 6% and cant see any reason why I shouldnt be extremely aggressive and bang them out inside of the next few months.

I know some people suggest investing money for the return of beating the interest rate, but I already have a good percentage of money in the stock market and feel like putting any more money in there would be risky.

Any thoughts?

Emphatic YES!
 

triptrip21

Full Member
Jul 31, 2016
13
1
1
  1. Non-Student
Is it wise to pay back your student loans ASAP? I graduated last year and was able to deduct some interest on my income tax, but only because I made <75k (5 months on Pharmacist pay) This year ill be well over that and wont qualify for the deduction. I have about high 20s of student loans left at an interest rate of around 6% and cant see any reason why I shouldnt be extremely aggressive and bang them out inside of the next few months.

I know some people suggest investing money for the return of beating the interest rate, but I already have a good percentage of money in the stock market and feel like putting any more money in there would be risky.

Any thoughts?

DAVE RAMSEY PODCAST AND BOOK TOTAL MONEY MAKEOVER WILL SAVE YOUR LIFE!!
 
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