Should You Pay Faster or Pay Less?

As you're preparing to buy a home and figuring out your financial plans, you might wonder, "Should I pay off my student loans faster, or should I pay less each month?" Good question! Let's dig into this.
Conventional wisdom often tells us to pay off loans quickly, but that's only sometimes the best choice for everyone. Are there times when it's better to pay less? Absolutely!
Here are a couple of essential factors to think about when deciding if you should pay less or pay more quickly:
⚡️Your employer: If you work for a public services organization like a school, university, nonprofit hospital, city, state, or county government, or any other kind of charitable nonprofit, then you could be eligible for Public Service Loan Forgiveness (PSLF). This means you can pay less based on your employment rather than your income.
⚡️Your income: If you earn less than 1.5 times your total student loan debt each year, you might also be an excellent candidate to pay less. For example, this could be if you earn $30,000 a year and owe $45,000 in student loans or if you earn $200,000 and owe $350,000.
Even if you work in the private sector, you can still qualify for an income-driven repayment plan based on your debt-to-income ratio. But remember, private-sector loan forgiveness programs are less generous than public-sector ones. You might be making payments for a more extended period and face a "tax bomb" or taxation on the amount forgiven.
If you work in the public sector, your student loan debt can be forgiven after 120 on-time qualifying payments, and it's not taxed. Plus, you don't have to make those payments consecutively. So if you leave the public sector and then return, you can pick up where you left off.
⚡️Some critical things for you to think about:
Could you keep track of your qualifying payments? You can do this by looking at your student loan data file, or LoanSense can tell you this on your "My Loans" dashboard.
Know when you need to file your annual paperwork. This is called your "IDR Anniversary date." Could you make sure to file ahead of this date each year to avoid an increase in your payment?
Understand which paperwork you need to file each year. If you're trying to qualify for PSLF, you must file two annual forms - your employer verification form and your IDR renewal paperwork.
Know which plan will save you the most money - REPAYE, PAYE, IBR, or ICR.
If you're married, determine how filing your taxes will impact student loan payments. Can you file separately and save more money?
Paying faster is the right choice if you're in the private sector, have a stable income, and owe less in student loans than you earn in a year. For instance, paying off your loans quickly is a good strategy0,000 a year, and you owe $80,000 in student loans, primarily if you work in the private sector, you earn $10.
⚡️Some questions for you to consider:
Can you make larger monthly payments to pay off your loans faster?
If you want to pay your loan off quicker, have a stable job, and are close to cutting your payoff timeline to 5 years, have you considered refinancing your loan?
Remember, understanding your options is the key to making the best financial decisions. If you have any other questions, feel free to let me know.


"I have worked with a good number of lenders personally and professionally over the years, and our experience with Walt and his team was by far the best experience I have had. For the refinance of our home mortgage, I had obtained quotes from other lender relationships, but no one could commit to closing any faster than 45 days. And, no one beat Waterstone Mortgage's fees and rates. Walt committed to closing within 30 days, and his team delivered: Walt spent the time needed to understand our needs and recommend loan options to meet those needs (and the options exceeded our expectations); Mayra pleasantly and efficiently walked us through the application process; and Ann worked closely with us to expeditiously move through underwriting to closing. All in roughly 3.5 weeks. They communicated with my wife and me effectively throughout the process so that there were no surprises. In addition to our genuine appreciation for the speed and results of their services through closing, we are also grateful that we can continue to turn to them as our primary contact over the life of the loan. We could not have asked for a better experience and would recommend Walt and his team at Waterstone without hesitation."

brian moore

"We used Walt and his team when we purchased our new home in Salem. We had a short close, but it was no problem for them. They were very responsive and were available when we called. We were very impressed with their professionalism and we appreciated Walt meeting with us for the Discovery Consultation. This was a great opportunity to ask questions and learn more about the process. We highly recommend Walt and his team!"


"Walt and his team are an actual delight to work with! At the beginning of my process I was disappointed with a lender, switched to Walt and holy smokes he exceeded my expectations right off the bat! He brought me to the office and laid out everything that was going to happen and multiple options to go about it. Everything was step by step, as a first time homebuyer your have many questions and he is well aware of that. He closed my house in 30 days and got me great rates! He responded in a timely manner to every question I had and I couldnt of been luckier to have such a informative, supportive and professional team to help me through this crazy process. I have to give a huge thank you to Walt and Lenda from the very bottom of my heart!"

katie braff