Student Loan rate question

[Cassius King]

I currently have a student loan with around $20k remaining. This loan is currently at 7.5% and I want to get a better rate. Looking to get some advice/ideas from people here on what options I have to get a lower rate. Whether it be a credit card transfer or different loan type, etc. Thanks ahead of time for your thoughts and ideas.

[clintdavis]

Hi Cassius,

It's a bit hard to give you specific advice with the little amount of information you posted. But I would imagine that you ought to be able to pay this loan off completely in no more than 18 months (and preferably much more quickly).

If you could pay this loan off in 18 months at 7.5% your monthly payment would need to be $1178.

Let's say you could do a balance transfer onto a credit card at 0% interest for that 18 months. There's a standard balance transfer fee of around 3%, which would add $600 to your balance. So you now have a balance of $20,600. To pay that off in 18 months, your payment would need to be $1144.

You would have a grand total interest savings of only $612. Now I'm not making light of saving $612, but you can see here that the interest rate is a very small portion of the problem. Depending on your income, you should really be able to tighten up your budget, sell some stuff, and do whatever it takes to pay this off in 12 months. Then the interest rate matters even less.

The moral of the story is to not invest too much time and energy in reducing your interest rate, because it's not going to make much of a difference. Busting it for 12 months and getting rid of this debt forever and never borrowing money again....that's going to make all the difference.

Thanks for sharing!

[buildmybudget]

Although it's probably going go be very difficult to bust out with the payment Clint is recommending, it's pfobably the best strategy for knocking out the debt. I might also recommend taking a close look at your budget to ensure you've cut out as much fat as possible.

[Cassius King]

Well out of pure hatred for debt, especially this one, I just paid $11.5k on this loan. Took the money from savings. ING was paying me 1%, so it helped in paying down a 7.5% debt. Feels good. Now I have some ebay sales rocking and I'm doubling my monthly payments on it. I will have it paid off by the end of the year! Can't wait to kick this thing to the curb and get on with my life.