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Would You Rather... Student Loans VS Savings


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Would You Rather... Student Loans VS Savings  

19 members have voted

  1. 1. Pay off student loans in full and go broke or continue to save and pay off loans at a steady rate?

    • yeet them student loans
    • stack ya bread
    • justice for Miss A


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I've reached the magical point where my savings match my remaining student loan balance. With the click of a button, I could be debt-free... but then I'd also be broke. What would you do?

 

I went to Twitter last night to ask the question, but the results were tied: Should I pay off my student loans in full and go broke, or continue to save and pay off loans at a steady rate?

 

 

 

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paying off student loans in full sounds delightful but what's the point if you end up broke, atleast you'll have security if you still have your savings and are paying off the loans slowly but surely. Knowing you have the capability to pay them all off is enough : ) 

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I'm in the same spot. My student loan amount is a bit under my savings right now, but I don't want to be broke after paying them off. So have decided for now to keep paying my regular amounts (I pay a few hundred over what I have to pay each month anyways) until it gets low enough that I feel more comfortable paying the rest of the full amount.

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You shouldn't let yourself go broke. Set aside 3 to 6 months of your monthly expenses as your emergency savings first. After you do that then think about how much you get from your savings in interest and how much you need to pay for your in interest for your student loans. If interest in student loans is greater than interest in savings then better pay off your student loans.

 

Another thing to consider is, can you use your savings to bring your more profit in the future? Like if you have plans to open a small business or something? If so you can actually consider using your money for that first rather than paying off your student loans.

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It's not a good idea to leave yourself with no savings at all. What if you get sick and can't work? 

Just up your payments a bit, so you pay them off sooner. 

 

Also CONGRATULATIONS on saving so much and getting to this point! â¤ï¸ You should be very proud of yourself!

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You shouldn't let yourself go broke. Set aside 3 to 6 months of your monthly expenses as your emergency savings first. After you do that then think about how much you get from your savings in interest and how much you need to pay for your in interest for your student loans. If interest in student loans is greater than interest in savings then better pay off your student loans.

 

Another thing to consider is, can you use your savings to bring your more profit in the future? Like if you have plans to open a small business or something? If so you can actually consider using your money for that first rather than paying off your student loans.

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I guess it's different in each country. Here in the UK I don't think many people think much of student loans (i'm only talking about loans taking out from the government) as it's not really seen as a debt since it doesn't have any impact your financial ratings etc. Also you only repay when you earn a certain amount - which is then deducted automatically from your wages from work. I would say the average person on around £30K annual income only pays about £80 - £110 monthly for student loan repayments. Almost everybody sticks with that scheme plus it eventually ends up being written off after 25-30years anyway.

 

So if you live in the UK or another country which has a similar system I would say keep your savings! 

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I guess it's different in each country. Here in the UK I don't think many people think much of student loans (i'm only talking about loans taking out from the government) as it's not really seen as a debt since it doesn't have any impact your financial ratings etc. Also you only repay when you earn a certain amount - which is then deducted automatically from your wages from work. I would say the average person on around £30K annual income only pays about £80 - £110 monthly for student loan repayments. Almost everybody sticks with that scheme plus it eventually ends up being written off after 25-30years anyway.

 

So if you live in the UK or another country which has a similar system I would say keep your savings! 

Wow you're lucky. Here in America, after 6 months after graduating, they begin to collect interest on your loan so you gotta pay that plus the principal. They do have income driven plans, but the interest never stops growing on your account to the point that you could be paying for life. And any delinquent payments negatively affect your credit score.

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Wow you're lucky. Here in America, after 6 months after graduating, they begin to collect interest on your loan so you gotta pay that plus the principal. They do have income driven plans, but the interest never stops growing on your account to the point that you could be paying for life. And any delinquent payments negatively affect your credit score.

 

warstarplz.png

 

WOW! I mean how do they expect regular people to manage? What about if you are or become unemployed?

 

One of the many reasons I'm grateful for growing up in the UK rather than the US. Student loans are interest free here. Even when they tripled the tuition fees - although it was ridiculous, I wasn't really fussed since I knew it wouldn't really affect me that much on a day to day basis.

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warstarplz.png

 

WOW! I mean how do they expect regular people to manage? What about if you are or become unemployed?

 

One of the many reasons I'm grateful for growing up in the UK rather than the US. Student loans are interest free here. Even when they tripled the tuition fees - although it was ridiculous, I wasn't really fussed since I knew it wouldn't really affect me that much on a day to day basis.

If you become unemployed you can go into forbearance so no money is due, but that interest will continue to accumulate in the meantime... and once forbearance is over, that interest gets capitalized onto your principal balance so you end up owing more.

It's really messed up. If I ever have kids, I will let them know there are other options besides college.

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If you become unemployed you can go into forbearance so no money is due, but that interest will continue to accumulate in the meantime... and once forbearance is over, that interest gets capitalized onto your principal balance so you end up owing more.

It's really messed up. If I ever have kids, I will let them know there are other options besides college.

 

tenor.gift

 

In your situation I would pay it all off whilst I can tbh. But what is broke for you? If by broke you won't have disposable income for luxuries for a few months then I can bare with that just so I would be debt free.

 

But if you mean you can't pay your bills then alternatively you could just pay off as much as of the loan as you can manage. E.g. pay off 60-70% of the remaining student loan with your savings; that way you still have some savings left to live on and continue to save to clear off the remainder (as I assume you are working). Also your monthly loan repayments would become lower as the amount outstanding has reduced significantly.

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tenor.gift

 

In your situation I would pay it all off whilst I can tbh. But what is broke for you? If by broke you won't have disposable income for luxuries for a few months then I can bare with that just so I would be debt free.

 

But if you mean you can't pay your bills then alternatively you could just pay off as much as of the loan as you can manage. E.g. pay off 60-70% of the remaining student loan with your savings; that way you still have some savings left to live on and continue to save to clear off the remainder (as I assume you are working). Also your monthly loan repayments would become lower as the amount outstanding has reduced significantly.

When i originally started saving money, it was for just in case I were to lose my job, I'd know I could still make my monthly payments. I'm fortunate that I still live at home and my only recurring expenses are just my cc, loans, groceries, transportation and day-to-day things. I guess the only thing I would worry about needing the money for is medical expenses if something were to happen to me

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  • 2 weeks later...

I'm gonna be in the same position once I graduate in a few months. On the one hand, if I pay them off earlier there will be less interest but if I make payments regularly it will be good for my credit. I wouldn't recommend using all your savings to pay them off at once but maybe increase the payment amount so you'll at least get them paid off a little earlier. 

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