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Student Loans

January 18, 2012

I don’t think about my student loans very often.  They are set up for autopay at $125  a month, about $10 more than the minimum payment.  The balance goes down steadily, though slowly.  The $125 a month is just a line item in my budget.  I spend more on a lot of less important things each month, things that didn’t give me a path to a career I love.  I don’t resent it one bit.  I don’t feel burdened.  They are just a fact.

When I first graduated, my total student loan balance was about $27,000.  This was a mixture of private and federal subsidized loans.  I paid off the higher rate private loans pretty quickly, consolidated my federal loans, then left them on autopilot ever since.   When I went to grad school and reached half-time status, the government stepped back in to pay the interest on my subsidized loans. When I graduated, they went back on autopilot.  As of today, nearly 6 years after graduation, they are just a hair over $15,000.

However, at tax time my student loans always pop back up onto my radar.  I claim the student loan interest deduction, which helps with the taxes but also reminds me that I’m actually still paying interest.  I made $1500 in payments in 2011, but roughly half of that went to interest!

Mathematically a low-interest tax-deductible loan is definitely NOT the #1 place for us to be putting our funds.  I’m not really anti-debt, I’m more anti-being-dumb-with-money.  Yet it bugs me still.  I know the math answer and I know the emotional answer.

So, I’ll probably give into the emotional part of me this year, at least a little.  If we did our initial math right, we are expecting a rather large tax refund, about $5,000.  Interest free loan to the government aside, I’m thrilled.  I talked with T about sending $1,000 of this to my student loan.  It isn’t huge, but it will make a nice dent.  Once T starts a “real job”, we might make too much money for the student loan interest deduction anyway.

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4 Comments leave one →
  1. January 18, 2012 7:11 am

    I’m still waiting on EdFinancial to let me know how much in interest I paid to them this year, but I paid $900 in interest to Nelnet. Boo to unsubsidized loans!

    While I’m grateful that loans were made available to me (otherwise, I do think of them as a burden. Back when I worked at a newspaper making $19,700, doing the math, $400 a month to student loans over a 10 year period was going to be too much. That’s when I began thinking of them as a burden, when it became clear to me that I’d be stretched thin on a journalist’s salary with my student loan payments. The math doesn’t make much sense – over time, I’d get a higher return on retirement accounts – but I like that idea of being free to take jobs that will pay the bills but wouldn’t pay the bills + student loan payments.

    I hope your tax refund is what you’re expecting! I’m on pins and needles waiting to get our tax documents. (I’m hoping to pay off a large chunk of debt, pay for half a mattress, and buy much-needed clothing!)

    • January 18, 2012 8:13 am

      You know, i wrote this about 2 days ago, and I’m already debating if this is the right plan! 🙂 I just don’t forsee a situation where a job would not be able to cover student loans + bills, since they are a pretty small fraction of my budget

      But I totally understand why so many people pay them off as soon as possible. You can never call paying of your debt a bad decision!

  2. January 18, 2012 7:18 am

    I couldn’t be free until they were gone. It was an amazing feeling.

  3. January 19, 2012 2:09 pm

    I feel too much emotional weight on my student loans to neglect them. I just want them gone so I can start saving aggressively. They bug me everyday, just knowing I owe that much is torturous.

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