Student Loans - Private vs. Federal

**emanon1501** · 02-09-2012, 10:10 AM

Originally posted by wifeytini View Post

Hi all

I'm wondering if any of you have any advice for me: I'm 24, married, and paying back my student loans. I have a combination of private and federal loans, and I'm wondering which ones I should pay off first. My private loans total about $14,000 at 3% interest. I have multiple federal loans (adding up to about $25K) with interest rates between 2 and 7 percent.

Our strategy right now is to do the Dave Ramsey "snowball" method, if you're familiar with the term. We paid back two of our highest-interest loans (which were privately owned) and we're starting to work on the third (which is federally-owned).

I guess the crux of my question is this -- I have heard some real horror stories about Sallie Mae (my lender), and Suze Orman is always telling people that private student loan debt is dangerous and to pay that off as quick as possible. It would make more sense financially to work on the federal loans and continue "snowballing", but I'm wondering if the smarter thing to do would be to get away from the private loan debt as soon as possible. What do you guys think? Any insight/advice for me?

Thanks, y'all. I usually lurk on this forum but I'd really appreciate the help

I would get rid of the private loans first. Fed loans are easier and more flexible to work with if a problem arise. If you are finish with college, see if you can merge your fed loans into one. I have Fed loan only.

**auron** · 02-10-2012, 11:27 AM

Some information that might help determine what to do are:

Do you have a 3-6 mo emergency fund?

Does your budget have significant room for error (say if private loan servicer drastically changes something)?

How stable is your job/field?

I know if my SLs were split between private/fed I would pay the loan with the highest rate but this is only because I have my own financial reference point to work with.

**wifeytini** · 02-10-2012, 01:55 PM

Thank you for the responses!

We do have a small emergency fund in place. Right now we live rent-free so our fixed expenses are very minimal. We have a few thousand in an emergency fund, which we could live off of for six months if my husband lost his job. We have a steady income and are lucky enough to put MOST of our money every month into our loans - amounts that are well over the minimum. If our loan terms were to change suddenly (like higher interest rates), we would be able to survive.

**ecoadapt** · 02-16-2012, 05:43 PM

I would get rid of the private loans first. Fed loans are easier and more flexible to work with if a problem arise. If you are finish with college, see if you can merge your fed loans into one.

Right, between the two I think it's smarter to get rid of the private loan first!

**debtmediators01** · 02-18-2012, 01:24 AM

I think you should get rid of the private loan first! because of high rate of intrest. You can also take the help form debtmediators(dot)com(dot)au for all debts

**flipyourdebt** · 02-23-2012, 08:47 AM

Consolidate your federal sl into a direct debt consolidation and reduce your interest rate. You can also choose a longer term (10-30 yr).

I would make the decision on what to pay off first based on highest interest. If that's the federal, then hit it.

Student Loans - Private vs. Federal