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I have the following student loans still outstanding:

Balance Rate Type Rate

2758.94 FIXED 4.41

3639.59 FIXED 4.41

1978.00 FIXED 3.61

1999.12 FIXED 3.61

3825.37 FIXED 3.61

2422.05 FIXED 3.61

3345.23 VARIABLE 4.00

I currently can afford to pay off roughly 5k of this. Obviously I want to pay off the ones with the highest interest rate first, but the Variable rate has me a little confused.

Should I pay off the 4.41% loans first?

  • 2
    Well, a 0.4% difference on $5k is only $1.67 per month, so there's not much difference no matter which way you go. (a 4% VARIABLE means that it's 4% now, but could change, although probably not drastically) The main thing is that you pay them ALL off as quickly as possible. – D Stanley Jan 3 '18 at 21:27
  • Regarding variable rates, 1. Fed plans to continue to raise interest rates in 2018; 2. In 2017, PRIME rate went up 75 bps, 1M Libor went up ~79 bps. – xiaomy Jan 4 '18 at 20:13
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As you said in general pay off the highest rate loan first.

Since the variable rate one is lower than two other loans; don't make more than the minimum payment for that loan. Of course when it resets then you can change the order of payment.

Now If you know that in 30 days, or 60 days the variable rate is going to jump to be the highest rate, then a lump sum payment before it resets might save you money.

But if it isn't going to change soon, or if you have no idea what the rate may do then go with the data you have now, then paying off the 4.41% loans will save you money.

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