Save or pay undergrad debt?

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nooblaw12
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Joined: Sat Aug 04, 2012 11:18 pm

Save or pay undergrad debt?

Postby nooblaw12 » Sat Aug 04, 2012 11:56 pm

Hello everyone,

I just graduated from college and I'm planning on attending law school 2 years from now (so class of 2017 - weird...). I have 17k in undergraduate debt. Should I be focusing all of my efforts in paying this debt? Or should I save for law school and pay the minimum payment amount? All of my loans are subsidized (meaning I don't have to pay interest while in school, including law school) and have relatively low interest rates (3.4%-6%).

I have a decently paying job and plan on living pretty frugally for the next 2 years. What would you recommend?

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IAFG
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Joined: Mon Jun 15, 2009 1:26 pm

Re: Save or pay undergrad debt?

Postby IAFG » Sat Aug 04, 2012 11:59 pm

Saving money instead may make more sense since you can avoid paying both the origination fee and gradplus interest rates by not taking out as much gradplus.

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2014
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Joined: Sat Jun 05, 2010 3:53 pm

Re: Save or pay undergrad debt?

Postby 2014 » Sun Aug 05, 2012 12:03 am

Pay off your 6% loans and then focus on saving imo.

nooblaw12
Posts: 6
Joined: Sat Aug 04, 2012 11:18 pm

Re: Save or pay undergrad debt?

Postby nooblaw12 » Sun Aug 05, 2012 12:17 am

I'll be a little more specific on my UG loans:

~1800 6%
~4500 5.6%
~5500 4.5%
~5500 3.4%

Advice change at all?

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2014
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Joined: Sat Jun 05, 2010 3:53 pm

Re: Save or pay undergrad debt?

Postby 2014 » Sun Aug 05, 2012 5:09 pm

I'd pay off the 5.6 too in that case and consolidate the remaining 2 if they do the .5% off for consolidation program again. You might also consider making interest payments on whatever loans you don't decide to chip away at over the next 2 years. It's good to keep them from compounding if you can help it.

christinenyoung
Posts: 15
Joined: Mon Aug 27, 2012 11:07 am

Re: Save or pay undergrad debt?

Postby christinenyoung » Thu Sep 06, 2012 10:07 pm

I put a couple thousand in a brokerage account investing in a couple ETFs. That was in December. I'm at a 7.3% return so far, it hasn't been a year. This beats the 6.8% interest I would have saved putting it towards my loans. Also, the interest from loans is a tax deduction, though I'm not certain as to whether or not you have to pay the interest or just let it rack up.

I mean, I'm not telling you to put it in a brokerage account.. but that's what I did. Not to mention, now I have the money on hand just in case I may need it. If I put it in a loan.. much more difficult to get back.

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bk1
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Joined: Sun Mar 14, 2010 7:06 pm

Re: Save or pay undergrad debt?

Postby bk1 » Thu Sep 06, 2012 10:24 pm

christinenyoung wrote:I put a couple thousand in a brokerage account investing in a couple ETFs. That was in December. I'm at a 7.3% return so far, it hasn't been a year. This beats the 6.8% interest I would have saved putting it towards my loans. Also, the interest from loans is a tax deduction, though I'm not certain as to whether or not you have to pay the interest or just let it rack up.

I mean, I'm not telling you to put it in a brokerage account.. but that's what I did. Not to mention, now I have the money on hand just in case I may need it. If I put it in a loan.. much more difficult to get back.

You're not taking out any GradPLUS?




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