A rant and reflection on my student loan payoff journey
My student loans are from my first masters degree from 2017. While I was in my PhD program, I used the sale of my business to pay off a private student loan of over $20,000. I then had a remaining $120,000. Between around 2020 and when I graduated from the program last spring (2024), my loan balance went down to about $100,000.
I started a new job in June last summer. Since then, I've contributed bonuses, a benefit that matches up to $2500 in student loan payments each year both last year and this year for a few contribution if $5,000, and thousands of dollars a month toward my last loan. In about once year, I've paid a little over $80,000.
The loan had also been interest free since the legal action against the SAVE plan (about 2 years ago or so) but interest started accruing again yesterday on August 1st.
I turn 40 later this month and am within reach of being free of these student loans. I'm so tempted to throw everything, including savings, at the loans to avoid additional interest and pay them off during my birthday month.
I recognize the financial vulnerability that would put me in, but the mental, emotional, and psychological peace of mind would be incredible.
I appreciate everyone's comments and will continue to consider my options.
EDIT: Thanks to everyone for sharing your perspectives. I think for now I am going to hold onto my savings and spend an additional 3 months to pay it off. I will be grateful to have my savings, even more if I don't need them while I am paying the loans off, and my milestone doesn't have to be my 40th birthday, it can be the new year!
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I recently had a sister who "suddenly" divorced and needed to move into her own place. In my workplace I meet people who suddenly have a medical issue (pulmonary embolisms for example). So: while I totally understand your deep wish to be debt free, I would also like for you to have a safety net in case some issue pops up in your life with really really bad timing. If you paid the debt off and had about zero savings, could you: borrow enough money from friends and family members to tide you over until you're back on your feet? Or borrow from your credit card (although note: paying off student loans may mean a temporary dip in your credit score). Or would you be able to sell something to keep you afloat for a while? If not, I would not pay it of now.
Alternatively I could imagine paying down the student loan debt to something like $9k while keeping your savings also at at least $10k. Congratulate yourself on reaching a very nice comfortably four-figure loan balance now that you're 40, and then pay off the remainder over the next couple of months if things keep running smoothly, never dipping under $10k in savings in the meantime to protect yourself financially.
I do think in ten years time "when you paid off your student loans" - whether it was at age 40 or at age 40.5 - won't matter so much. I imagine that if the worst were to happen and you'd for example became homeless because you decided to risk it all financially to pay off the student loan faster - that would be a thing that you would still remember ten years from now.
Your point is very well taken! Looking back on this season, the more important thing will be paying my loans off and not how old I was exactly.
Hi OP,
Do I understand correctly your balance is $20k? What is the interest rate on the loans? How much do you have saved? How much do you make? I ask this because if you make $40k/year that is 1/2 your income. If you make $300k that isn't too much of your income. There are a lot of variables that can go into a decision like this.
From a phsychological perspective it would be freeing to be rid of the debt but what are the logical consequences if soehng bd happens?
The balance right now is $18,000. I have about $10,000 saved. I definitely appreciate your comparison of the psychological vs the logical.
Tried to do a friend request because it’s not posting. Totally get where you’re coming from:
Yes I had the same mentality but it was to have them paid off before our first baby was born. It ended up being after he was about 1.5yrs old and during that time I had not been stressing it but when the time came and paid that last 20+ k I was like “huh” now what and then we went and got cheeseburgers to celebrate! Not even anything fancy as imagined. So when the time comes and you are near the goal, 40ish, just think “huh righteousness! Now what? Monkey is off my back, time for some more life enrichment and fulfillment.
Congrats on both getting them paid off and for the growth of your family. I appreciate you sharing your story. It's looking like I will be paying them off before the holidays and am on track to head into 2026 without them. I think having an idea of how I want to celebrate will also be a fun way to anticipate that moment. Maybe getting the supplies for a new crafting project like an amigurumi or getting a new plant!
First off, the fact you've managed to pay down the loans that much is pretty dang impressive. Your savings/pay down rate must be really high.
I think the answer to your question is "It depends." I totally get the whole piece of mind argument. The very few times I've been responsible or partially responsible for debt, I viscerally hated it.
Given what you've been able to do financially so far, I have little doubt you could build the savings rapidly. The main question in my mind you need to answer is if the amount of savings you'd have a minimum of a thousand dollars left, preferably more.
Again, if you keep up your savings/pay down rate the way you've been going, it sounds like you could easily build six months of expenses in a matter of months.
The biggest risk during this period is a large unexpected expense in the month or two after going all in on the debt. There are likely options for you to deal with that sort of expense without necessarily needing to pay it all outright or maybe delaying the expense by a month or two if possible, but that of course depends on the emergency.
If you're gonna do it, the main thing to consider is how quickly do you get back to enough savings for you to feel comfortable whether it be three months expenses or a year. If you're ok with not having a full emergency fund for that period of time and don't have any obvious large expenses staring you in the face, I'd say go for it, but ensure you follow through on the plan.
I appreciate your perspective, thank you. I think it would take me about 2-3 months to replenish my emergency savings. I'll definitely keep that in mind.