Is it a terrible idea to hold onto student loans at about 7% interest when you have the ability to pay it all off? My friend has $25K in student loans with about 5 years left, but also has $30K saved up in investment accounts. I suggested to just pay off the loans and stop paying interest but she does not like the idea of liquidating and only having $5K left in her account if she pays off the loans.
I've never heard of this but she noted paying the interest of her loan upfront so her interest is supposed to be lower going forward for remainder of loan. While it sounds like she is just paying off principal now, I looked at her loan statements and I do see that interest is still being paid monthly so I'm confused as to what she really meant. Her argument is that her student loan interest is also tax deductible so it's really not that bad.
At $400 a month towards student loans each month that could go back into her own pocket if loans were paid off, I suppose it'd still take 5 years to save that $25K back up so maybe I'm wrong to tell her to pay them off. Maybe she is better off having $30K liquid... Any thoughts?
Submitted May 17, 2019 at 06:46AM by optimisticmillennial http://bit.ly/2WSDgEo
