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Not stupid, but perhaps overly optimistic. Anything Biden proposes will be a long fight, and with an election next year, I don't think much will happen. (The map favors R's in the Senate. I suspect the House will go whichever way the Presidency goes.)
I'm guessing that Public Student Loan Forgiveness and whatever 20/25 years of payments aren't on the table for you? If so, definitely don't pay them all off.
For big life purchases, are you talking about a home, or like a car? If you have that kind of savings, but are still renting, I'd want to save a lot of that, and buy now, or hope interest rates come down, and buy a home. If you already own, or it's not something you want to do for many years for whatever reason, that's fine.
In your shoes, I'd probably pay a big chuck of student loans. Maybe somewhere around half. If they're not consolidated, pay off the higher interest ones first. Then consolidate, and sign up for the SAVE plan. Keep some of your money for big ticket items, but also get lower interest and lower monthly payments.
I paid off my loans just before the interest started accruing again. It sucked seeing so much money drained from my bank account, but to not have that debt hanging over my head is so freeing.
TM1 is also spot on. In an election year nothing will get done, and even if some progress did happen, would be a long fight. If anything, it’s another campaign point for both parties, leaving everyone with substantial loans screwed.
A sadder point, but if any such forgiveness does squeak through, it’s going to be for a very narrow field of people. What happens if forgiveness does take place, but you don’t qualify given the progression of your career. Think about that scenario and how much interest you could have saved by paying most, if not all of it off.
Depends on the interest rates to be honest. All of mine are sub 4 percent and I make a lot of money so I have flexibility. If the interest rates are eating away at your investments or HYSA pay them down faster.
I’d never want to be at a point with only 13k in savings. If you lose your job tomorrow how much time would that buy you?
Yes, very stupid
Pay it! You are clearly doing well enough and that is likely due to the education you earned with that loan. When the government pays you debt it the taxpayers who did not benefit from your education that will be. In addition any of the proposed fixes so far have only been to pay 10k unless you fit very specific requirements for 20k. So if you really want to avoid not missing out on the government help pay everything but close to 10k and keep making payments.
Bro just pay it off
Everything is stupid, so "party on, dude"
Yes you are.
1. Why would you want to rely on the government?
2. What can they do that you can’t do yourself?
3. When has sitting and waiting for the government been an ideal solution aside from events on par with a hostage situation?
I would weigh the interest accruing on both and see what makes most sense from a financial perspective. It may not be worth it to pay it all of if you could be making more in interest with in invested or saved. otherwise, I'd pay all but $10k, as someone else mentioned
S&P 500, USPS. I’m up 25% this year.
My HYSA is 5% right now. And my loans are at 3.5%. Inflation is at 3.1% right now
If you look at the ideas being tossed around, they target those who have been in the system a long time. They are supposed to be making the forgiveness recommendations soon, but the committee just ended without any concrete proposals. It looked like they were targeting compounded interest accumulations and oldee loans, instead of giving everyone $X. Do some Google searches. The info is there.
I'd advise discussing with a financial planner to get the most bang for your buck all the around.
Pay off: one debt off your mind, credit score will temporarily go down but continuing to make good decisions will keep improving your score. No gamble. The debt is gone.
Continue payments: you can invest that 70k instead of paying off the loan. After taxes annual capital gain must be higher than the annual interest paid on the loan for it to be worth it. Or put it in a Roth and let it be a great start to your retirement fund. Or a down payment on real estate in LCOL. Maintenance, taxes, insurance will hurt but it's an asset you can leverage for future loans to grow your investments.
Use it to start your own business. Maybe it's real estate like above or maybe a self car wash lot. Or fund your app idea. Or go travel. Also, credit rating will keep going up due to long credit history. You'll get better rates on future loans. Definitely more of a gamble. But maybe more fulfilling? Also a great chance to try something if youre not tied down to anything
Get an IDR
I agree with everyone who says "Pay It!" Look, my best friend along with the principal amount accrued over $250,000.00. He would have never paid it off save by some miracle. The government paid his off after paying nearly $500 a month for nearly 20 years. His son just began college this year, 4-5 months before the loan was forgiven. If you can pay it, pay it! $13K isn't a terrible launch pad, and you already have the money management skills to save more.
We are all hoping for the best and a break! No you are not stupid!
You're definitely not stupid.
I'd wait maybe 6 months to see what happens with forgiveness and other options... but that's me.
The psychological impact of getting it paid off can't be understated. It'll feel amazing!
I accelerated my payments when interests wasn’t accruing. At some point in the last couple years they changed the laws and time spent in forbearance counted against the 20/25 years. Suddenly I had paid the required time period and now I’m waiting for the servicer to return $16k on top of the $8k they already sent me.
In the last 25 years I’ve already paid the principal twice and the amount forgiven is still more than the original.
If your loan interest is higher than a HYSA, then pay it off. Otherwise, put all the money in a HYSA and you’ll have saved money in the long run. I just opened one for the same reason and I’m accruing more interest than I’m paying on my loan.