The Art of Loan Payoff

It's getting to be near the start of a new month and the official start of the Amazing Loan Race between Katie and I so I thought I give a little update on my situation and add a little advice to all of those out there who have their battle with their loan(s) going on at the end (ie just skip to the end of the post if you rather just see my advice, don't worry, I won't be able to tell so my feelings won't be hurt).

Undergrad Loan

My current total (before future interest) to pay off this loan is: $17,780.77. My estimated monthly payments (beginning in May as mentioned here) is $250.00 (roughly).

Now, I discovered something pretty neat while going through my account on their website that I thought I didn't have the option for this far into the game of payoff. I have the chance to reduce my interest rate by 0.25%. That's right, a mere 0.25%. Now hold off on the eye rolling and calling me a loser for even writing about this. The interest gets tacked on monthly for me. So for me, that means that right now for my current total that equates to a savings of:

17,780 x 0.0025 (yes that's 0.25% when you are doing the math) = $44.45

Meaning I will be charged $44.45 less interest this month. If I sign up right now.  Of course this value will get lower as my total owe decreases over time.  For example, in 6 months, applying the minimum payment, my total owed will be around $16,200.  Let's do some more math..... Okay, I'll do it and you can just see the answer.

$16,200 x 0.0025% = $40.50 saved that month.  Still a pretty good savings eh?  I mean, that's almost the cost of  a night at the Cheescake Factory I could be having instead of paying my loan company that amount.

So how do I get this wonderful deal?  Automated kwikpay (seriously, that's how they spell it).  What that means is that if I let them take out the amount owed each month automaticall as opposed to me manually doing it, they will reduce the interest by 0.25% (enough with the thinking I'm a loser for being excited already).  So when I talked with the loan company how exactly this works I was told there are two options:

1.     They only debit out what is due for that month. So if you recall from my earlier post, they actually wouldn't start debiting until May (September now but the reason is further below) since I don't owe anything until then

2.     They debit out the actual monthly payment whether any money is due for that month or not (so they would take out the amount starting this month instead)

For me, I'm chosing option 2 because I plan on making payments anyways.  There is the added benefit here as well that I won't have to remember to pay every month and worry about any late fees if I forget.  Also, I can still make additional payments manually if I am feeling ambitious (or really want to beat Katie that month for our contest).

Grad Loan

So something interesting happened here... and also happened for my undergrad loan but I decided not to do anything about it as of yet since I'll be paying on it anyways.  Apparently, my grad school decided to send them a letter stating I am currently a full-time student (which is kind of funny considering I am taking 0 credit hours there this semester).  I didn't know about this until I called up the loan company because they sent me an email saying my application for deferment was accepted when I didn't even apply for a deferment.  After getting it back on repayment, I now don't owe anything this month because there's a month delay for it to switch.  My monthly payments for that is $817 and some odd cents. I already have a headache so I don't want to look up how much I owe in total right now for the loan but I think I posted it previously or you can do the math ($817/month x 12 months/year x 10 years - the amount I paid which is about $2,400). This month I have off as I already stated which is good because I need to save up for poor Epa's potential surgery scheduled in a month.

I think they have the reduced interest rate deal too if I sign up for autopay but....I think I might hold off on that until I get a real job.  For those who don't know, I have a job in my field but it's a temporary one that pays about half of what normal people would make who have the same degree.

Loan Repayment Advice

Okay so now the part most of you probably skipped to. Advice on paying off your student loans.

• Don't defer them after they go into repayment.
• If you do have to for financial/school reasons, at least pay off the interest so that the amount owed doesn't get any higher.
• Try to pay the interest amount while you are still in school.  
• If you can, pay more than the minimum amount each month.  It benefits you because either your future payments will be less or your next payment is delayed (like mine does).  Either way it really becomes a benefit if you're a little short on cash one month.
• Hint: the interest you pay on your loans you can claim on your taxes.
• Make a friendly competition between one or more friends :)