should I pay off my student loans in full before intrest kicks in? (lemm.ee)

submitted 1 year ago by giantofthenorth@lemm.ee to c/personalfinance@lemmy.ml

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General financials:

I can afford to pay them off in full and have plenty left over for general life needs

The interest rates on them should be 4.53% according to their chart of when it was awarded.

If I do hold onto the money and pay off monthly I can put everything into a CD but I'll still be losing .03% if I lock in the student loan money maybe I'll beat but .07-.43% so not a ton of upside unless there's sudden political will to actually follow through on student loan forgiveness.

Is there anything else I'm missing when considering this? I am leaning towards just pay off as I've been planning for this, but I want to make sure there isn't something else to do.

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[-] qwamqwamqwam@sh.itjust.works 17 points 1 year ago

The absolutely optimal move is probably to keep 5 or so k of debt around just to hedge the forgiveness play. But just paying it all off is also a great investment. You’re not likely to find another way of using your money with a >4% ROI. If the hassle of keeping another set of bills current is going to significantly add stress to your life I would pay it off. Really, though, there’s no way to lose here.

[-] giantofthenorth@lemm.ee 14 points 1 year ago

I do still lose by having to over pay the bloodsuckers either way 👉😎👉

[-] kakes@sh.itjust.works 2 points 1 year ago* (last edited 1 year ago)

The [S&P 500] index has returned a historic annualized average return of around 11.88% since its 1957 inception through the end of 2021.
https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

[-] specialdealer@lemm.ee 3 points 1 year ago

Adjust for inflation and taxes and the margin thins considerably

[-] kakes@sh.itjust.works 1 points 1 year ago

True true.

this post was submitted on 31 Aug 2023

66 points (100.0% liked)

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