Why I’m Paying Student Loans Off Last

Why I'm Paying Student Loans Off Last

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Why I'm Paying Student Loans Off Last

Isn’t Canva a beautiful thing? I didn’t make this image. Canva did. I just put in the words. 

You know the stats on student loan debt. The average college student graduates with about $30-$40k in student loan debt.  I am no exception. I graduated college in May 2013 with about $40,000 in federal and private loans. It was my own fault and I take full responsibility. And even though this disturbing number has impacted my life in significant ways, I’m still not prioritizing it over other debts like car loans and credit cards.

The reasoning lies within the fine print. 

1. Low Interest Rates

First and foremost, my student loans have the lowest interest rates out of all my other debts. They’re lower than the car loans and the credit cards. At those rates, it would be foolish to prioritize them over my smaller loans, simply because I don’t like them hanging over my head.

2. Tax Deductible

One of the biggest reasons I’m saving these for last is because the interest is tax-deductible. Now that Mike and I are making more money, as well as filing taxes jointly, we need more deductions so we don’t have to pay Uncle Sam a huge lump sum of cash. Because we have no children and aren’t in school, deducting the interest from my student loans is all we have. So why not let it ride?

3. Flexibility

I’m on the graduated repayment plan right now because that’s what worked best for me when my loans first went into repayment. The great thing about student loans – you can change your repayment plan at anytime. From income-driven to extended repayment terms, you can always find something that works on your salary. Plus, if you lose your job and can’t make payments, you can always apply for a deferment or forbearance. The government is much more flexible than private  loan companies. I doubt your credit card companies and bank will be as forgiving.

4. Death Destroys It

Another reason I’m prioritizing our other debts first is because I am the only one with student loans. If I die, Mike has no legal obligation to pay the federal loans back. This is why we want to pay off our joint-debt first. If something happened to me, it would leave Mike in a tough position, so it’s better to just forget about the student loans right now and focus on more pressing debt.

Please don’t think that because I’m not prioritizing student loans in our debt pay-off plan that I don’t see them as important. I do not want to be paying on them for 25 years. I also don’t advocate slacking off to buy things you don’t need.

We have plans to pay them off in the coming years, but if other more important things come along, we will tackle those items first and put the loans on hold. I’m definitely not going to let the student loans get in our way of buying a home or bolstering up our emergency fund. Their end will come, but for now… I will continue to pay the minimums.

What are your thoughts on the subject? Do you think we should place a higher priority on my student loans?

*Part of Financially Savvy Saturdays on brokeGIRLrich and and A Disease Called Debt.*

14 thoughts on “Why I’m Paying Student Loans Off Last

  1. I think as long as you have a plan for your finances, you pay off your debt however you see fit. What you said really makes sense to me! I think a lot of people make the case for holding on to a mortgage for some of the same reasons.

  2. You have really solid reasons for your choices, which tells me you’re thinking about them a lot and weighing them carefully. Keep making progress!

    1. Thank you! I figure any progress is good progress, and for now, there’s no reason to jump on my student loans when there are so many other things to pay off first.

  3. I think every one approaches debt differently and you have to find what works for you. I took the ignore them approach for a long time and then spent the past few years paying them down aggressively.

    1. Yeah, I have never ignored my debt, but I haven’t always been able to pay more than the minimums, which makes me upset. Life happens and you just have to go with it. Now we have two car payments, my loan debt, and the credit cards. Now we just have to work at really killing it.

  4. Seems like a solid plan to me. I’d point out that credit cards, unless they’re out in both names, are unsecured debt, and wouldn’t pass to the spouse after death either. But the interest rates make them smarter to pay off first.

  5. These all sound like really good reasons! Honestly, a lot of student loans have such low interest rates, it make sense that they wind up last on most people’s financial bucket list. Good luck with the plan!

  6. Thank you for writing this post! It makes me feel less anxious about my student loan debt. My fiance also brought up the point about student loan interest being tax deductible. I couldn’t decide what I thought about that, so it’s good to hear someone else with the same idea.

    1. Of course. We all have to share how we’re tackling debt because there is no set rule. Progress is progress and what works for you is what matters. Student loans are actually a bit valuable to me compared to the other debt I have, so they’re going to sit while I handle the rest of it. Thanks for stopping by!

  7. I think it’s a good idea to prioritize your other, smaller and higher interest rate loans first.
    However, let me to you once we submitted that last payment to my student loans it was an instant game changer. A huge weight was lifted off my shoulders and work all of a sudden became something I wanted to do instead of something I “had” to do because of my student loans. Plus I LOVE that extra $355/month going into my retirement account instead of going to my horrible student loans. Best wishes with your financial journey! :)

    1. Oh yes. Every time I pay something off, it feels so good. I can’t wait to start seeing the credit card debts get paid off. I will feel so relieved when that happens.

Tell me what you think!