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Posted in Student Loans
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erinupnorth

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Which loan to pay off first?
I have a 0% interest car loan and a 5% student loan that has a 10-year public service forgiveness clause. I have enough in savings to fully pay off one of these loans. Which should I choose? I am stuck. Thank you!

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I would pay off the student loan, then you are not obligated to spend 10 yrs doing something. Secondly, if something would happen that took your income, you couldn't sell your education to pay off the loan, but you could sell the car to pay off the car loan. And the simplest way to look at this is that you would pay off an interest loan before a no interest loan.

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Also, the loan forgiveness deals like you mention only have limited funds and not everyone will be able to get this and who knows what can happen a couple years down the road, they may cut the program all together.

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