This post is meant to be very straightforward about how I'm planning to pay off my student loans (God-willing lol). If you want to see how I *really* feel about student loans, you can click on this link. I decided to make a separate post for those who strictly care about the facts and the financial aspect of it - rather than the reasoning.
Close to 46K (including my graduate studies), and I graduated in August 2020.
My current debt: $33,034.21
How I am tracking my student loans:
I've been a huge fan of Google Sheets and Excel Spreadsheets lately. I created a tracker full of colors and rules, and after that - I was hooked. I felt like I had so much control - it's pretty wild how empowered that made me feel.
Since then, I've been using Sheets/Excel to track almost everything. I have a master moving inventory sheet, fancy schmancy (for me) budget and money tracker, new home savings tracker, etc. (This hobby is getting a little out of hand if you ask me.)
When it comes to tracking my student loans, this is no different.
I woke up one morning and decided that since I recently paid off one of my credit cards, I'm going to focus on tackling my student loans next.
Quick background on the Biden-Harris plan
Due to the pandemic, the Biden-Harris administration issued a one-time federal student loan forgiveness program. Borrowers could get up to $20,000 off on their student loans if they qualified for a Federal Pell grant while in school. If you don't qualify for the $20,000 off, then it'd be $10,000 in student loans forgiven.
To read the full details about the plan, go here. Currently, it's being challenged by different courts so applications have been paused and no amounts have been dispersed to those who qualify.
Best case scenario
Assuming that the plan goes through and the Supreme Court cares to help regular Americans, that would be a huge lift.
In preparation for the new year, I listed out all of my loans so that I could filter them.
I included the following on my spreadsheet:
The student loan amounts:
Interest Rates on said student loans:
Loan type:
Key distinction between the two types:
- Unsubsidized - interest accrues while you're in school
- Subsidized - interest does not accrue while you're in school
Due Date:
Overall chart:
The takeaway from the Biden-Harris plan:
This translates to the following groups being paid first: AK, AL, & AJ.
Then: AD, AB, AG
Two Ways to Approach This
If we absolutely cannot afford to make payments right now, the government would pay off the loans in the following order.
The first way - unable to make any payments
- Loans with the earliest due dates = (B3+B2+B6) = 5,900+5,771.63+1,082.72
- Loans with the highest interest rates = (B4+B5) = 2,161+4,155.18
- Total of the two above things = $19,071.26
TOTAL for defaulted loans and highest interest rates:
- $20,000.00-$19,071.26 = $928.74
- $19,071.26+$514.84 = $19,586.10
$20,000.00-$19,586.10 = $413.90 leftover in the 20k
Next highest percentage:
$4,444.91-$413.90 = $4,031.01 leftover for pay of group AE
The rest of the unpaid student loans would need to be paid by the borrower.
Interest hits August 29th as June 30th is the last day of zero interest/loan forbearance.
Benefits
This first option allows us to have more money upfront in case we need the funds for something else in the immediate/near future.
The second way - making payments right now
The general math remains the same:
[total owed] - [20,000 forgiveness] = [borrower responsibility]
If we can make payments during this pause, it is more beneficial to pay the groups with the highest interest first. Why?
Even if the forgiveness goes through, the amount forgiven remains the same. If it doesn't go through, then we are left with the loan groups that have lower interest rates.
Benefits
Path Forward
Since I am currently visiting my parents (who do not make me pay rent - I'm lucky, I know)... I can afford to put some of the money from being on my own (rent, utilities, etc.) towards paying off as much of my student loans as I could. My plan forward is to try to pay off the groups with the highest interest first:
- AK
- AL
- AD
- AB (part of)
And hey - who knows? Keeping our selective optimism in mind - maybe the Biden-Harris student forgiveness plan will go through, and we would be debt free from student loans THIS YEAR using this method.
Here's hoping!