Need Help Prioritizing Payments for Private Student Loan

Discussion
1

I’m seeking advice on how to manage my debt, particularly my private student loans. I don’t have any credit card debt, which means I’ve used all my savings to pay off my previous debt of around $22,000. Recently, I refinanced $26,000 in private student loans, lowering my interest rate from 13% to 6.43%. Now, I’m unsure whether I should allocate most of my monthly income toward paying off the loan quickly or if I should balance it with building up some savings.

I have about $3,700 in free income each month after covering my share of rent and utilities.

Here’s the breakdown:

  • Private Student Loan: Monthly payments of $3,300, $2,700, and $2,200
  • Savings: Goals of $400, $1,000, and $1,500
  • Projected Payoff Dates: March 2025, May 2025, July 2025

What’s the best strategy? Should I focus on aggressively paying off the loan with minimal savings, or should I aim for a mix of debt repayment and saving? Thank you!

2

Debt Snowball Method: This approach involves paying off your smallest debts first, no matter the interest rates. It can give you a sense of achievement and keep you motivated as you see your debts vanish quickly.

Refinancing: If your private student loan has a high interest rate, think about refinancing it to a loan with a lower rate. This could mean working with a new lender or choosing a different repayment plan.