Tuesday, October 1, 2013

Some Good News!

The other day we got a letter from Aspire, the lender that handles 4/5 of my husband's student loans. The letter was informing us that his loans had gone into deferment because he is enrolled halftime in school. I didn't think much of it, figuring we were going to continue to pay the interest on three of the loans and put all extra funds into the one with the lowest balance.

But when I logged in yesterday, I noticed that all but one of his loans is subsidized. Meaning the government will pay the interest while he's in school.


So, I have a strategy question.

The unsubsidized loan, which is still accumulating interest, is the second lowest balance. So, my first thought was to throw all extra funds at that loan first, to lower the interest rate, and hopefully get rid of it first. Ideally we could be done with it by the time he finishes his schooling (two and a half more semesters).

OR, I am wondering if I stick to the original plan and pay off the lowest balance first, while it collects no interest. I'd still pay the accumulating interest on the unsubsidized loan, but perhaps it makes more sense to put all of our extra funds toward a loan that isn't growing each day so that we can get rid of it and avoid paying future interest on it. Kind of the way you might pay off a zero interest for six month loan in that window so you never owe interest on it.

What do you think? I'd love a second opinion, as I am torn on which path to choose. Either way, I am thrilled that his loans aren't costing us $5 per day in interest (which is what I calculated last month. And then got depressed.)