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Debt Relief – Insolvency – Bankruptcy Information » Student Loan Help » What loan should I work to pay down first?

What loan should I work to pay down first?

I have 3 major loans that need to be paid off. I have no revolving credit card debt (I pay the balance every month) to be concerned with, but do not have all that much money to increase my payments too much, so I’d like to continue paying the “regular” payments on 2 of the loans and try and pay down the loans one at a time. Here’s the details:

Loan 1: Government subsidized student loan, ~$15,000, fixed interest rate at 5.87%. If I continue with my current repayment schedule, I should have it paid off in 11 years. That’s a lot of interest!

Loan 2: Private student loan, variable rate (currently at 3.5%), ~$29,000. If I continue with my current repayment schedule, I should have this paid off in 8.5 years. Still an awful lot of interest.

Loan 3: Mortgage, fixed rate at 6.125, ~48,000 remaining. I might refinance to a lower interest rate, but planned on selling the house soon, so the closing costs might outweigh the savings. Regardless, I’m only 3 years into a 30 year mortgage, although I have tried paying some additional towards the principal and probably cut at least a year or two of payments off.

OK, that’s the skinny. I am trying to plan for my future, and want to buy a new house soon (obviously selling the old one), but would probably need a little less debt for a bigger mortgage payment.

“stop having loans, it’s bad”–um, thanks captain obvious, but these are loans I had to get to make it through my undergrad/graduate degrees. I’ve had them for 5-10 years, and have already paid them down by 15-20%, and I’m working on becoming debt free. Hence the question
PS–the house was purchased for only $55,000, so the $48,000 is still a high percentage of the home’s value…not too much equity there, unfortunately.
This may seem like a lot of debt, but it’s nothing compared to a lot of people’s credit card debt at 15, 20, 25% interest!

Thank you to most responders who suggested paying down the $15,000 debt first. If I can afford to throw an extra $100 at the principal each month, I should be able to pay that off in <5 years! Gotta work on a budget...


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5 Responses to "What loan should I work to pay down first?"

  1. syidah says:
    Uh loan 1? Stop having loans! it’s bad
  2. Wayne Z says:
    Loan 1 – The rate is relatively high and the balance is the lowest.
  3. The Organizational Development Guy says:
    The quick answer is to pay them off in the order you presented them, throwing everything you can at the first loan while making the minimum payments on the other two. Once the first is paid off, throw everything at the second while maintaining the third. Then throw everything at the third.

    For a more detailed answer, check out and look into the Debt Snowball.

  4. bdancer222 says:
    Since you may be refinancing the mortgage to a lower interest rate or may be selling, let that loan ride for the time being and work on paying off the student loans.

    For now, put the extra money on loan 1. It has the highest interest rate of the two student loans. Should the variable rate loan take a huge increase in interest and become the higher interest rate, switch to that one. Paying down the highest interest rate will always give you more bank for your buck.

  5. Kelsey says:
    wow man your in alot of debt i feel bad for you

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