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A reader by the name of Bill (Thanks Bill) provided me with some good insight on my student loan payments. Bill was also an Access Group borrower and informed me that I may be able to pay interest only on my larger loans and apply as much principal as possible to my smaller loans, thereby snowballing the amount. Excellent! I am going to call Access Group today to get better clarification. But this is great news because I may be able to make more progress towards eliminating my debts.
Below is a chart that I threw together that details what my student loan repayment will look like next year. Repayment begins in stages: 1/2008, 4/2008 and 6/2008. The chart below shows what the payment on the capitalized amount will be based on interest that accumulates over the next few months, the interest rate and various terms. The chart does not take into account the payment incentives that I intend to take advantage of which will reduce the various interest rates over time. I will detail those incentives later. The amounts have been rounded for simplicity (not overly so) and I took a conservative approach and increased the interest rate to 9.2% on my private loans which currently rage from 8.9 – 9.1%. The remaining loans have a fixed rate.
This chart makes my eyes pop out! Since starting school, I have accumulated $18k in interest on my loans. If I don’t pay anything over the next few months, I will accumulate another $11k in interest making that a grand total of $29k in capitalized interest. I am seriously considering how I can make interest payments over the next few months to keep the loan amounts as low as possible. I wonder if I can pay the accumulated interest off before it capitalizes on the loans when they enter repayment. Hmm…I have a lot more questions to which I need answers.
*** Edited Chart. Accidentally switched principal and interest columns. Wishful thinking. =)
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