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What is the best way to paying off my student loans

I just started school and I am already making a plan for paying off my student loans. As of right now I have two loans, each approx. 4000. As of right now I wanted to work on paying them off with $200/ month. At the end of each semester I will be getting back at least $1000 if my loans continue to be around $4000. 4 loans will bring out at 16000 (roughly) at the end of 4 years. I was going to take each of the $1000 and put it in CD's (2-4 year, 1-3 year, 1- 30 month, 1-2 year, 1- 18month, 1- 1 year, and 1- 182 days). At the current interest rates this should put me at $8359.94. I can then either pay half the loan and start my masters or I can keep it in the CD until I finsish my masters and continue the CD plan. Does this sound like a good plan or does someone know a better way to maximize my money in order to have as little as possible left over that comes out of my paycheck?


Asked by Anonymous at 10:30 AM on Oct. 17, 2010 in Money & Work

This question is closed.
Answers (4)
  • Bad plan. I would just take the extra $1000 and put it toward the loan payment now. You are accumulating interest on the loans right now, and the interest that you would gain in a CD is not enough to cover the interest you are accumulating on the loans. So put the $1000 toward the current loan and you'll have less to pay later.

    Answer by SherriPie at 11:27 AM on Oct. 17, 2010

  • If you have the money to pay on the loans now, do it. You will save a TON of interest. The best way to pay off your loans, is to make the monthly payments, even while it's in deferrment because you are still in school.

    Answer by tyfry7496 at 11:00 AM on Oct. 17, 2010

  • I had about 10,000 in loans when I graduated years ago. I left them in deferment until I graduated. Then 100 a month, the min. payment was 70, so I covered the interest as well. While I was in school I didn't accumulate interest. Paying them off over time help to establish my credit, and it was a really low interest rate.
    If you are not accumulating interest then defer them and keep the CD's working for you. If you are accumulating interest then pay them off. Sounds like a very smart plan. Keep in mind you can pay your daily expenses as well, before you put it all into the CD's, the penalties are steep and avoidable.

    Answer by DevilInPigtails at 11:10 AM on Oct. 17, 2010

  • The best plan is to incur as little as possible. Don't take out loans at 6% interest to put it into a CD making 1 or 2%. Stop incurring more debt. Pay at least the accrued interest every month. And start setting aside money for your future college expenses. Remember only 50% of people that start college graduate. So you are literally gambling that you'll be able to complete college and find another job that will pay you enough to live and pay off the student loans.

    Start looking at grants and scholarships, work study programs and extra jobs.

    Good luck!

    Answer by Erica_Smerica at 1:48 AM on Oct. 18, 2010