# Pay of student loans or save for house? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [April 19, 2019, 5:04pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780 "2019-04-19T17:04:10Z")\ **Posts on this page:** 9\ **Page:** 1
**Author:** ![Marcus\_Flavius](https://avatars.discourse-cdn.com/v4/letter/m/a4c791/32.png) [@Marcus\_Flavius](https://boards.straightdope.com/u/Marcus_Flavius)\ **Post date:** [April 19, 2019, 5:04pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/1 "2019-04-19T17:04:10Z")
Selling financial advice here… I currently have $16,673 worth of student loans that I pay $240 a month towards… Average interest rate is 4.02%. I have nearly 31k in savings, with an interest rate of less than 1%. I’d I paid off every single penny of my student loans now, I’d still have nearly 15k left in my savings. I plan to purchase a home in the spring/ summer of 2022. I figure if I keep saving at my current rate, with no debts to pay, I could still have, at the very least, 80k to play with. I’d like to put down around 60k on a house costing no more than 250k. Is it wiser for me to continue to pay my student loan debt bit by bit, or just pay it all off now? ---
**Author:** ![Velocity](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/velocity/32/18006_2.png) [@Velocity](https://boards.straightdope.com/u/Velocity)\ **Post date:** [April 19, 2019, 5:14pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/2 "2019-04-19T17:14:26Z")
Definitely pay off all the loans first. The ongoing debt will eat up your money more severely, and at a costlier rate, than what it would take to prioritize the house first. The exception would be if you see a good house for an unusually low price in an area that is poised for a boom in housing prices and you cannot afford to pass up a great house deal. Does your student loan allow you to pay it all off in one fell swoop? ---
**Author:** ![DCnDC](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dcndc/32/2842_2.png) [@DCnDC](https://boards.straightdope.com/u/DCnDC)\ **Post date:** [April 19, 2019, 5:17pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/3 "2019-04-19T17:17:13Z")
I would pay it off. According to the [Bankrate student loan calculator](https://www.bankrate.com/calculators/college-planning/loan-calculator.aspx), it’s going to take you a little over 6.5 years to pay off that student loan at $240/month and cost you a little over $2300 in interest. If you were looking for a house sooner I’d wait, but on your timeline you have plenty of time to build it back up. Pay it off now. ---
**Author:** ![Grrr](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/grrr/32/146_2.png) [@Grrr](https://boards.straightdope.com/u/Grrr)\ **Post date:** [April 19, 2019, 5:52pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/4 "2019-04-19T17:52:37Z")
Yeah, I’d pay off the student loan. Student loans are like taxes. God forbid you should fall on hard times. There are multiple options you have WRT your home. With a student loan, your only options are deferment, or default. And if you default, the government is going to garnish your wages. (10% I think) ---
**Author:** ![That\_Don\_Guy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/that_don_guy/32/538_2.png) [@That\_Don\_Guy](https://boards.straightdope.com/u/That_Don_Guy)\ **Post date:** [April 19, 2019, 7:06pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/5 "2019-04-19T19:06:39Z")
The only reason I can think of not to pay off the student loan is, the slim possibility that (a) after the 2020 elections, a student debt forgiveness law will be passed, and (b) it would not do anything for people who had already paid their loans off - and I think there are enough people who have paid off their loans who would throw a fit if (b) happened that there would be some relief for them, so you might as well pay them off now, especially with a 4% rate (and if the rate is variable, I expect it to go up before 2022). ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [April 20, 2019, 7:36pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/6 "2019-04-20T19:36:49Z")
I suspect that when you go to apply for a mortgage they will look askance at the outstanding loan. Anyway, I would pay it off on general principles. When I had a student loan (all of $500 in 1957) I paid it off the following summer just as soon as I got a paycheck (also for $500, as it happened). ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 20, 2019, 8:49pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/7 "2019-04-20T20:49:02Z")
If someone offered you the opportunity to move your investment yielding 1% to one yielding 4%, would you? Plus, you would not have to save at the same rate - you can put the $240 a month into savings. So you’d reach your downpayment goal faster. I can’t tell if you included this in calculating you’d have $80 k available. ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [April 20, 2019, 9:05pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/8 "2019-04-20T21:05:05Z")
OP why do you have $31K in savings at less than 1%? You need to get away from the big banks and their miserable interest rates. For example the Charles Schwab Money Market fund SWVXX pays 2.29%, Ally pays 2.2% for their regular savings account, Alliant Credit Union pays 2.1% for their regular savings account, CDs will bring more. Rewards checking accounts might pay 3% for up to $20,000 (you have to make 15 or so debit card purchases each month as well as e-statements and a monthly ACH transfer or direct deposit into the account). Spend some time at: [https://www.depositaccounts.com/](https://www.depositaccounts.com/) ---
**Author:** ![monstro](https://avatars.discourse-cdn.com/v4/letter/m/ba9def/32.png) [@monstro](https://boards.straightdope.com/u/monstro)\ **Post date:** [April 20, 2019, 9:52pm UTC](https://boards.straightdope.com/t/pay-of-student-loans-or-save-for-house/832780/9 "2019-04-20T21:52:54Z")
Many economists are predicting a recession within the next two years or so. You’re more likely to get a better deal on a house when the economy is crappy than when it’s popping, like it is now (or so they say).