I'm really trying to buckle down and get ride of my student debt. I currently have Stafford and Private loans (I owe more on my private loans).

I'm wondering which are best to pay more towards?


My 3 Stafford loans have a fixed 6.8% interest rates subsidized

My 3 private loans have a Variable 2.5% interest rate unsubsidized

I do have a cosigner.

  • Interest rate would be a major determinant in a repayment strategy, but there could be other factors to consider. For instance, did you require a cosigner for any of the loans? Feb 11, 2014 at 2:14
  • Hi I just added some information. Feb 11, 2014 at 3:25
  • Are you unable to afford the current payments or are you looking at which payment you should put extra towards? Feb 11, 2014 at 16:19
  • @Dopeybob435 thanks for the response. I'm looking at which payment I should put extra towards in order to pay them off quicker. Feb 11, 2014 at 19:45
  • Are you still in school or in the grace period (and therefore interest is paid for you on the subsidized loans)?
    – user102008
    Feb 12, 2014 at 1:02

2 Answers 2


At the current rates, stated in the question, I would push additional funds towards your Stafford loans as their higher interest rates will incur interest charges almost 3 times faster than your private loans. With my loans I have not seen much information regarding private loans jumping the interest rate close to the 6.8% any time in the coming years (if others have insight to this I look forward to the comments).

Due to the private loans being variable there is an element of risk to their rates increasing. Another way to look at it may be to prorate your amount of extra payments according to their interest rate.

$1,000 x 0.068 /(0.068 + 0.025) = $731.18 Toward your Stafford Loans

$1,000 x 0.025 /(0.068 + 0.025) = $268.82 Toward your Private Loans

  • thanks for your help! Would it make any difference in the amount I owe of my stafford vs private? My Stafford Loan balance is 3times lower than my Private loan balance. So I owe 3times more to my private vs my stafford. Feb 19, 2014 at 22:40
  • At those interest rates I don't think it makes a difference unless the Private Loans are 6 times larger than your Stafford Loans. But it is dependent upon the variable interest rate of the private loans, if the rate starts going up it will increase your total fees paid over the life of the loan much more drastically. Feb 20, 2014 at 14:37

Without knowledge of the special provisions of your loan contract, the one with the highest interest rate should be paid first.

Or, if one's fixed payment is much larger than the other, and it is a burden, then it should be paid first, but refinancing may be an option.

Socially speaking and possibly even economically since it could affect your reputation, it is probably best to either refinance the cosigned loan or pay that off as rapidly as possible.

Economically speaking, I would recommend no prepayment since the asset that is leveraged is your mind which will last many decades, probably exceeding the term of the loan, but some caveats must be handled first:

  • Fund all future outflows, risk-adjusted, with credit purchases, like deposits, commercial paper, short term treasuries, the last two in the form of ETFs or equivalent thus no direct exposure.
  • Insure income for as long as the life of all loans that one owes.
  • Buy as much hedged world equity as possible

Many would disagree, but I finance the way I play poker: tight-aggressive.

  • Hi I just added some information. Feb 11, 2014 at 3:23

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