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Student Loans: Lump Sums VS Monthly Payments??

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Amanda B
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Student Loans: Lump Sums VS Monthly Payments??  Reply with quote  

I was recently approved for a student loan repayment program through part of my employer. I currently owe approximately $43,775 and I will receive $20,000 this year, $20,000 next year, and I can request an extension for a third year if I have a remainder (which I will); I know I am still paying off interest that had accrued before I was out of school on half of my loans and I've been paying on them for about 2 years now.

I am wondering what would be my best option, to possibly save from paying more interest than needed, to use the $20,000 each year: 1) pay a lump sum of the full $20,000 each year or 2) use it to pay 12 monthly installments?

Everything online that I have tried finding only talks about one lump sum payment and not multiple ones, so thank you in advance for any direction!
Post Sun Apr 10, 2016 3:33 pm
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oldguy
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The sooner you pay down the principal, the lower your remaining debt is - and you are charged interest based on "outstanding balance". Eg, one year's interest on $20,000 is about $700 - that is what you save by paying the lump sum immediately.

What a great program, is that new? Is it for all degrees? Or STEM degrees? Restrictions?
Post Sun Apr 10, 2016 3:58 pm
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Amanda B
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Thanks for your reply!

That makes sense - I'll have to call my loan company and see what I can actually do. I know they will take money first to pay off my accrued interest, which I think is around $2,000, but I'd like to pay off some of my loans too, if possible. I have paid off one loan on my one and it would be nice to pay off some of the other ones - I have 9 open right now. I'm hoping after paying off the accrued interest and paying the required 12 monthly payments on each loan I have enough left to pay off some of the smaller ones ... I would hope having $20,000 each year could do that!

I don't think the program is new, it is through Indian Health Service and they have different scoring for health profession needs at tribal locations- I have to commit to working for them for so long to qualify. There are certain degrees that qualify: pharmacy, mental health, dietitian, nursing, doctors, etc. along with certain requirements for the program that you must follow. First priority for the program are Native Americans and then it goes from there for whatever funding they have left.
Post Sun Apr 10, 2016 4:23 pm
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oldguy
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My DW is an RN, she worked for the Indian Health Services in Arizona for about 3 years - the summer between junior/senior and 2 yrs after.. She was assigned a Suburban Truck, she regularly drove to several reservations - Pima, Gila, White River, Tohona o'odham, Sacaton, and several more - gave shots to the children, did diabetes surveys, many home visits. Many enjoyable encounters.

She graduated in 1968, we got married in 1969 - college was way cheaper then, more like $1000/y instead of today's $10,000/y. (my college loan was $500). She didn't have loans, but we had to pay off the loan on her old VW, lol.
Post Sun Apr 10, 2016 5:37 pm
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