Which loan to pay off first?

[direred]

So, I have consolidated my student loans and I now have three.

 

1) Sallie Mae, unsubsidized, balance around $20k.

2) small lender, subsidized, balance around $20K.

3) same small lender, unsubsidized, balance around $100k.

 

They are all at virtually identical interest rates.

 

So, here's my motivations:

 

1) I like my small lender better, but keeping an account at Sallie Mae offers me the possibility of refinancing later (dunno why I'd want to with the low fixed rate I've got, but there it is). So that means pay down 2 or 3.

 

2) I'd like to Pay Something Off, preferably this year, which leaves 1 and 2.

 

3) Since I'm using up in-school deferments, #2's the only one that doesn't accrue interest, which means I should pay down 1 or 3 instead.

 

So each loan gets two votes, which means I'm throwing up my hands. From a financial perspective, does it really matter, except that #2 would be the better one to have for longer?

[direred]

Actually, the Sallie Mae loan is at 4.7% where the other two are at 4%, so I think that answers my question. Pay off Sallie first.

[LynnInMN]

You have not formally consolidated your loans. They may be grouped together at a lender but they are by no means consolidated. You still have multiple tradelines.

[direred]

They are actually formally consolidated and appear as two tradelines only because they're fundamentally different kinds of loans and can't be grouped together (or my lender doesn't report them that way, not sure which). Believe me, there were 12 before (8 unsubsidized, 4 subsidized). I deliberately left one loan unconsolidated, that's the Sallie Mae.

 

When I log into my lender, they appear under a single tradeline, though I can show the subsidized and unsubsidized portions separately.

[TxQuiltGirl]

Red, I'd focus on the smaller unsubsidized loan first, the the sub, and then the big one.

[LynnInMN]

Nope, not a consoldiation. A true consolidated student loan "consolidates" all the loans into 1 one with one interest rate, based on the weighted average of the current loans. Once you consolidate, sub and unsub loans technically cease to exist, replaced by a new status of consolidated.

 

When I log into my lender, they appear under a single tradeline, though I can show the subsidized and unsubsidized portions separately.

 

This is true of all loans that are not consolidated. They are "grouped" by type and by SSI#. This is not a true consolidation. Your lender may have used the term consolidation, but in order for it to be a true consolidation, you have to complete a new prom note, listing all existing loans.

[direred]

Nope, not a consoldiation. A true consolidated student loan "consolidates" all the loans into 1 one with one interest rate, based on the weighted average of the current loans. Once you consolidate, sub and unsub loans technically cease to exist, replaced by a new status of consolidated.

 

When I log into my lender, they appear under a single tradeline, though I can show the subsidized and unsubsidized portions separately.

 

This is true of all loans that are not consolidated. They are "grouped" by type and by SSI#. This is not a true consolidation. Your lender may have used the term consolidation, but in order for it to be a true consolidation, you have to complete a new prom note, listing all existing loans.

 

I did complete a new prom note listing all existing loans, went through the 6-8 week process, and all that stuff.

 

But, just so we're clear (and, gah, those are frightening numbers, aren't they?):

 

[direred]

Red, I'd focus on the smaller unsubsidized loan first, the the sub, and then the big one.

 

That's how I'm thinking, too.

[LynnInMN]

Based on that information you do have a consolidation. However your sub and unsub loans technically no longer exist. When you make a payment, it simply pays the consolidated loan..there are no longer seperate loans to pay down. It is like taking a consolidation loan at a credit union.....you cannot earmark your loan payment to pay off Macy's since Macy's has already been paid off. Technically your sub and unsub loans are paid in full.

[direred]

Based on that information you do have a consolidation. However your sub and unsub loans technically no longer exist. When you make a payment, it simply pays the consolidated loan..there are no longer seperate loans to pay down. It is like taking a consolidation loan at a credit union.....you cannot earmark your loan payment to pay off Macy's since Macy's has already been paid off. Technically your sub and unsub loans are paid in full.

 

Gotcha. So I guess I'll pay the small one (with the other lender) first.