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My wife is about to begin paying off her loans from graduate school . Currently she has about $70,000 in loans, half of which are from Wells Fargo Med Cap Loans (with interest rates between 8.5% and 10%). We also have about $10,000 in cash. If we pay the minimum, the medcap loans will be paid in 10 years with about $15,000 in interest. Is it better for us to dump the $10,000 in cash into paying off the loan right away, or keep the $10,000 and invest it as a retirement fund for the next 20 to 30 years? Any help would be greatly appreciated. Thanks!


Well, I'd keep 3-6 months worth of expenses in a liquid Emergency Savings. I would also be putting money into a tax-benefitted retirement account such as 401k or Roth IRA. And I might put a small bit of the cash towards the highest interest rate loan.

Also, I would suggest that your wife consider consolidating her student loans. The William D. Ford Direct Loans Program through the U.S. Dept. of Education has a consolidated loan with a variable interest rate that changes once per year and is never more than 8.25%. DH consolidated his loans through them and we have been very happy.

Despite the size of the loans, if you send some extra $ when you can afford it, you'll be surprised at how fast the loans get paid off.


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