Student Loans

I recently received an email from the Federal Aid office informing me that my student loans, while on forbearance, will start to accrue interest starting August 1st. This got me thinking:

A few of you might be in the same boat as me, but everyone's situations will vary. I'll share as much as possible about my loans and hope you may be able to apply some of what you read to your loan situation.

To start off, I began college in 2018 and graduated in 2022. During this time, my loans for the most part have been in forbearance, as I signed up for the repayment plan when Biden was in office, and have had to make no payments since. I will be honest, I wouldn't have been able to pay off my loans even with the 6-month grace period. I've been dreading the day I would have to pay them off, but time's catching up. Luckily, I am in a better position now, but it's still hard to imagine what others might have to pay or will be paying in the future. Hopefully able to use this as a tool for deciding what you should do based on your own amounts. Here's a breakdown of my loans:

8 loans for a total of $27,444 - with $444 in accrued interest. Interest depends on the loans but ranges from 2.75%-5.05%. I did the math - yearly, I would be accruing about $324 in interest. The Student Aid website does a decent job explaining the different amounts that will be paid (either by month and at end of payment cycle) based on their payment plan, but overall, all of them are disappointing regardless.I am currently on the repayment plan and would be paying $252 monthly starting November 2026.

I did another post on investing, but my investments are actually (almost) accruing interest at the same rate (if not a little more), so I have been debating when to actually start these payments. The thought is whether or not paying some of it off now would save me more money in interest than what I'm gaining through investments. As of right now my returns have been pretty decent and a great example as iv'e invested $5,700 and have earned $520 as of April.

If I were to pay off some of my loans, it would be the two with the highest interest rates - these are also some of the higher loan amounts. Though these amounts only total roughly $5,700 (same as current invested amount), my monthly total would go from $252 to $193. Maybe to some, this is not a crazy difference, but that's about a $743 reduction a year.

If I were to pay off some of my loans, it would be the two with the highest interest rates—these are also some of the higher loan amounts. Though these amounts only total roughly $5,700 (the same as my current invested amount), my monthly total would go from $252 to $193. Maybe to some, this is not a significant difference, but that's about a $743 reduction a year.

If you're someone who feels gratification in being able to pay a loan and saving up for the higher loan amounts feels like an endless task, start off with the lowest loan amount and pay those off first.

I would encourage you to think about whether you have the means to save while paying your loans. If you do, consider saving and maybe paying off the one with the highest interest, the largest loan amount, or the smallest loan amount, and proceed from there. If you don't, then maybe add a few extra dollars per month (even if it's $20).

I wanted to note, as I've done my own research on the PSLF (Public Service Loan Forgiveness), and upon review, have realized it suits me in no way and it may not suit you. You read that right, and they state this on their website that you may not actually qualify by the time the 10 years have passed. This is because you might have already paid off your loan amount. This may not make sense to some, but in the most basic terms: if your loan amount spans 10 years (as most do), then you'll have worked the ten years to qualify, but also have made those monthly payments and therefore paid your loan off. Now I would urge you to review, as for some people it works if you switch to their lower monthly plans, though ultimately (for me), I would still be paying a good chunk (if not more than originally) at the end. Though I have a friend who also qualifies, she is studying to get her master's and has over $100k in loans. For her, she has done her review of the different loan options and the PSLF will ultimately erase (hopefully) $50k of her debt.

For a lot of people, student loans are a weight on their shoulders. While it's not the most enjoyable or best way to spend your money, unfortunately, it must be done. I encourage you to do as I do: try to give as little as possible, whether it's paying the whole amount and forgoing too much extra in interest or finding a way to get some forgiven.

I could go on for a while, and this post has been my longest in both content and time taken to finish. If you have any questions, please ask. Let me know if you prefer these longer posts and wouldn't mind waiting a month (hopefully less once it's not summer) or if you prefer the shorter posts that I (try) to post every week or every other week.

-K.D.S