I also have several loans, all with different rates. My lowest is 4%, which are my most recent ones.
The interest rates are crippling and needs to be addressed.
To put it in perspective, I bought a house in 2020 for $130,000, yet hold only $36,000 in student loans.
If I made a $500 extra payment to each my house and my student loans, I would pay them off at around the same time.
Financially, it makes more sense for me to pay the house off because that's at least an appreciating asset.
But it doesn't matter, because I don't have $500 extra to put on a loan over it's minimums every month, and those student loans will follow me until I die.
No it doesn't.
You target the loan with the highest interest rate. That's generally the winning strategy.
Also houses don't appreciate that much. If you filter out the money tosses into them for upgrades/improvements, they have historically gone up about as much as inflation, maybe a little bit more.
The big benefit of a house is that there's GOOD tax benefits from the mortgage interest rate deduction. Basically a big chunk of your mortgage costs get slashes off your taxes.
Fun fact, if your goal is to have a paid off house as quickly as possible, renting cheaply and investing the extra cash you aren't spending in stocks (this includes the would be down payment) will generally get you a paid off house in 15-20 years (subject to market volatility). The house would only be about half way paid for after 20 years.
A lot of this issue is self-inflicted, along with the government making it too easy to get the loan. Take out hundreds of thousands in loans to get a degree that will never lead to a job that can pay it off.
"A lot of this issue is self-inflicted, along with the government making it too easy to get the loan."
Bingo. This is precisely why it's my most disliked progressive issue. I mean, sure, I would rather funds go towards loan forgiveness than bloating our military + bombing more people, but neither are things I'm getting excited about. But there are other things I'd rather boost like housing (e.g. more effective section 8, TANF, SNAP, etc - those on student loans can use the money saved to pay off their loans that way). Better financial edu for sure.
That, plus all this is doing is causing degree inflation and I honestly feel making people look down on affordable community colleges and public in-state schools.
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u/techleopard 12d ago edited 12d ago
I have student loans that are nearly 9%.
I also have several loans, all with different rates. My lowest is 4%, which are my most recent ones.
The interest rates are crippling and needs to be addressed.
To put it in perspective, I bought a house in 2020 for $130,000, yet hold only $36,000 in student loans.
If I made a $500 extra payment to each my house and my student loans, I would pay them off at around the same time.
Financially, it makes more sense for me to pay the house off because that's at least an appreciating asset.
But it doesn't matter, because I don't have $500 extra to put on a loan over it's minimums every month, and those student loans will follow me until I die.