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At what point do I start paying off variable APR student loans faster?

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I know the answer is "it depends" but figured I'd put this out there and see if I can get some consensus.  With fed hinting at yet another increase in rates, at some point it will make sense to do.

Loan Balance: $67,000
Current Minimum Monthly Payment: $2060
Original APR: 1.9%
Current APR:  2.8%
Time left to payoff: 3 years from original 5 year table
Cashflow after taxes/loan payment/living expenses/retirement funding: +$10,000/yr

401k and IRA get maxed every year.
Total liquid outside of retirement accounts is 50k sitting around in 2.5% 3 yr CDs not doing much, 1 yr til maturity.
Job is in a relatively unstable position lately, if laid off may take a while to find a similar position.
Would like to buy a house ~2020 or when these loans are gone and downpayment is saved, whichever is first.

Im effectively laying 0.3% to stay liquid in CDs which seems fine.  How high would rates have to go before it's not fine?

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rated:
How fast does the variable rate adjust?

rated:
jerosen said:   How fast does the variable rate adjust?
  Monthly and is essentially fed funds rate + 2%, no cap

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Student loans are one of the better loans out there. Minimal impact on anything, plus if you die it's free money. The counter is they general persist through bankruptcy.  Calculate how much they cost after you write off the interest on your taxes. As soon as that is greater than the post-tax income on your savings (ie CDs), then consider paying it off. However given your concern about an unstable job and wanting to save up cash for a down payment on a house, I wouldn't be in any rush. If you dump your CD into your loans and then loose your job... yuck

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Freakazoid said:   Student loans are one of the better loans out there. Minimal impact on anything, plus if you die it's free money. The counter is they general persist through bankruptcy.  Calculate how much they cost after you write off the interest on your taxes. As soon as that is greater than the post-tax income on your savings (ie CDs), then consider paying it off. However given your concern about an unstable job and wanting to save up cash for a down payment on a house, I wouldn't be in any rush. If you dump your CD into your loans and then loose your job... yuck
  
Thanks.  Dirty little secret is that interest deduction for student loans phases out at around 60k AGI so most people are well beyond it.

I guess it just comes down to how much am I willing to pay to stay liquid and keep a small life insurance policy.

rated:
jd2010 said:   
Freakazoid said:   Student loans are one of the better loans out there. Minimal impact on anything, plus if you die it's free money. The counter is they general persist through bankruptcy.  Calculate how much they cost after you write off the interest on your taxes. As soon as that is greater than the post-tax income on your savings (ie CDs), then consider paying it off. However given your concern about an unstable job and wanting to save up cash for a down payment on a house, I wouldn't be in any rush. If you dump your CD into your loans and then loose your job... yuck
  
Thanks.  Dirty little secret is that interest deduction for student loans phases out at around 60k AGI so most people are well beyond it.

I guess it just comes down to how much am I willing to pay to stay liquid and keep a small life insurance policy.

  
  Student loans and mortgages provide leverage and liquidity (at minimal costs these days). Why not take advantage of it. Heck, you could even convert your payback structure to a 30year term.  Use the extra cash to save up for your down payment. Once your job is stable and you settle in with your mortgage (hopefully at these low rates), then consider plunking down $$$ to pay off the loans.  1-2% cost to essentially have $67K in your pocket and not theirs ain't a big thing. You'd be hard pressed to find a 2% loan if you needed the money the day after you sent it to your student loans.

Edit: I initially stated 80K as the limit, and that is but there is the phase-out between $65K and $80K. Regardless, I would imagine this affects a LOT of people

rated:
jd2010 said:   
 
  
Thanks.  Dirty little secret is that interest deduction for student loans phases out at around 60k AGI so most people are well beyond it.

I guess it just comes down to how much am I willing to pay to stay liquid and keep a small life insurance policy.

  

Sorry to quibble but 60k is right around the median HHI for college educated people under 40.   So I don't think  "most" people with student loans are  "well beyond" that phase out..

And it phases out from 65-80k and double for joint filers.
https://www.irs.gov/publications/p17/ch19.html
"For 2016, the amount of your student loan interest deduction is gradually reduced (phased out) if your MAGI is between $65,000 and $80,000 ($130,000 and $160,000 if you file a joint return)"
 

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Pay it off asap for the peace of mind. Dont go chasing rates, its a lot of hassle and the return is marginal.

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seeing how its only a 3 year loan I would just pay it off when the cd mature. Not too much difference between investing vs 3% variable rate with 2 year time horizon. Use freed up cashflow to invest

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If I were you I would refinance it and make it a 15 year loan.. pay like $500/month or whatever it comes out to be.

Use the 50k you already have and put it towards a house while interest rates are low now.

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