I am nearing my 2 year work anniversary and last month I was able to completely pay off my student loans. In total, I graduated with just over 60,000 dollars in student loans in 2021. After a brief stint at a local factory while I awaited my physician assistant licensure to be fully authorized, I started a local job in primary care. I tried my best to stay frugal all along knowing that my student loans would eventually begin accruing interest. While I never expected the pause to last this long, I always had the goal of knocking out as much debt as possible before it could snowball into something even more intimidating.
Originally, my plan was to tackle everything over 4.5 %, and leave the rest alone while making minimum payments, while I took advantage of a high yield savings account to grow the rest of nest egg I built up over the last two years. I nerd out over the numbers, and mathematically this plan was rock solid. In preparation, I started allocating 2500 a month to future loan payments, eventually cranking that number up to 5000 after a nice bonus from work. I did get 3 bonuses during this time, and used a portions of each to put directly into the loan, which helped with my need to see progress. My efforts paid off and my savings account eventually grew larger than my debt. So in late august, I paid off over half of my loans and devised a monthly payment plan for the remnants.
This plan seemed reasonable to me because this would allow me to have more money for a down payment as we continue our house search. Everything changed only about a week later when I logged onto my loan servicer and saw that I had accrued 3 dollars in interest over the course of a few days. This seemingly small amount of money was enough for me to realize that the best thing for me was to write another check to pay off the remaining amount.
Frankly, I didn’t feel student loans deserved even an ounce of my attention. I would much rather devote my time to Sharon, my family, my job, and my hobbies. I have a tendency towards racing thoughts, and it’s no fun to think about debt.
Having one less thing to worry about is certainly nice, but since this was a decision made based on the numbers, lets take a different view on the math. Sure, with my first choice I may be making 1000 dollars over the course of a year in my high yield savings account. But after I subtracted what would have accrued on my loan, what I am left with is 200 dollars over the course of the year. That is just under 17 dollars a month. Was keeping my student loan around worth that 17 dollars a month? For me, certainly not.
I used my ongoing house search as an excuse to keep extra cash on hand. But after some self reflection it became clear that this extra cash would just be spent on more house. For Sharon and I, this is not a priority. Just because I could qualify for a bigger loan, does not mean I should.
Lastly, I am in the fortunate position where I had the money to pay back something that I owed. For many right now, that is not the case. And sure, there may be another try for loan forgiveness in the future and I could miss out, but if the money I paid back can help someone who truly needs it, all the better.
