Student Loan Repayment Question

Quote from RammsteinNicCag : I think you guys missed the main key in what I posted... "tipping point in time." Now, I could be wrong because I haven't been able to find a calculator to do what I'm talking about and I'm not about to make my own for this, but I'm sure one of you guys can figure out. Can you try an overly simplistic calculation? Loan 1: $20,000 @ 14% Loan 2: $3,000 @ 15% Now, for the first four payments, apply $5,000 to Loan 1 and $100 to Loan 2. For the fifth payment, apply whatever is necessary to pay off Loan 1 (basically whatever interest is charged in those four months, right?) and the remainder of the $5,100 to Loan 2. What is the total interest paid in this scenario vs paying Loan 2 off in the first payment and $2,100 going to Loan 1 in the first payment, then $5,100 to Loan 1 until it's paid off? Like I said, I may be wrong since I haven't calculated it myself, but I do think it might matter how long these balances are held; although, generally speaking, it is better to pay off the highest interest rate first. I just want to make sure that we're giving the OP accurate advice and not just accurate most of the time advice.

I'm positive that I knew what you meant and was commenting on that. There is no "tipping point."
To do this and make it simple, I'm adding some terms to your example. Both loans are 3yr loans. This will have an effect on the payments numbers you mentioned, but only by a few dollars.
Here are your examples:

Your First Example:
Loan 1:
$20,000 @ 14% for 36 mo = $683.55/mo
Payment 1: $5,000.00 Principal: $4,766.67 Interest:$233.33 Balance: $15,233.33
Payment 2: $5,000.00 Principal: $4,822.28 Interest:$177.72 Balance: $10,411.05
Payment 3: $5,000.00 Principal: $4,878.54 Interest:$121.46 Balance: $5,532.51
Payment 4: $5,000.00 Principal: $4,935.46 Interest:$64.55 Balance: $597.05
Payment 5: $604.02 Principal: $597.05 Interest:$6.97 Balance: $0.00

Total Interest Paid = $604.03

Loan 2:
$3,000 @ 15% for 36 mo = $104.00/mo
Payment 1: $104.00 Principal: $66.50 Interest: $37.50 Balance: $2,933.50
Payment 2: $104.00 Principal: $67.33 Interest: $36.67 Balance: $2,866.18
Payment 3: $104.00 Principal: $68.17 Interest: $35.83 Balance: $2,798.01
Payment 4: $104.00 Principal: $69.02 Interest: $34.98 Balance: $2,728.99
Payment 5: $2,763.10 Principal: $2,728.98 Interest: $34.11 Balance: $0.00

Total interest Paid = $179.08

Total for both: $783.11


And the second:

Loan 1:
$20,000 @ 14% for 36 mo = $683.55/mo
Payment 1: $2062.50 Principal: $1,829.17 Interest:$233.33 Balance: $18,170.83
Payment 2: $5,100.00 Principal: $4,888.00 Interest:$211.99 Balance: $13,282.83
Payment 3: $5,100.00 Principal: $4,945.03 Interest:$154.97 Balance: $8,337.07
Payment 4: $5,100.00 Principal: $5,002.72 Interest:$97.27 Balance: $3,373.98
Payment 5: $3,373.98 Principal: $3,335.07 Interest:$38.91 Balance: $0.00

Total Interest Paid = $736.47

Loan 2:
$3,000 @ 15% for 36 mo = $104.00/mo
Payment 1: $3,037.50 Principal: $3,000.00 Interest: $37.50 Balance: $0.00

Total interest Paid = $37.50

Total for both: $773.97


So, in your example, you save about $10 for paying off the smaller / higher interest rate first. Obviously, the savings would be much more substantial if we were making smaller payments over a longer period of time. I just wanted to fill your wishes to show financial logic.

Always hit the highest interest rate first.

Quote from Formless : I'm positive that I knew what you meant and was commenting on that. There is no "tipping point." To do this and make it simple, I'm adding some terms to your example. Both loans are 3yr loans. This will have an effect on the payments numbers you mentioned, but only by a few dollars. Here are your examples: Your First Example: Loan 1: $20,000 @ 14% for 36 mo = $683.55/mo Payment 1: $5,000.00 Principal: $4,766.67 Interest:$233.33 Balance: $15,233.33 Payment 2: $5,000.00 Principal: $4,822.28 Interest:$177.72 Balance: $10,411.05 Payment 3: $5,000.00 Principal: $4,878.54 Interest:$121.46 Balance: $5,532.51 Payment 4: $5,000.00 Principal: $4,935.46 Interest:$64.55 Balance: $597.05 Payment 5: $604.02 Principal: $597.05 Interest:$6.97 Balance: $0.00 Total Interest Paid = $604.03 Loan 2: $3,000 @ 15% for 36 mo = $104.00/mo Payment 1: $104.00 Principal: $66.50 Interest: $37.50 Balance: $2,933.50 Payment 2: $104.00 Principal: $67.33 Interest: $36.67 Balance: $2,866.18 Payment 3: $104.00 Principal: $68.17 Interest: $35.83 Balance: $2,798.01 Payment 4: $104.00 Principal: $69.02 Interest: $34.98 Balance: $2,728.99 Payment 5: $2,763.10 Principal: $2,728.98 Interest: $34.11 Balance: $0.00 Total interest Paid = $179.08 Total for both: $783.11 And the second: Loan 1: $20,000 @ 14% for 36 mo = $683.55/mo Payment 1: $2062.50 Principal: $1,829.17 Interest:$233.33 Balance: $18,170.83 Payment 2: $5,100.00 Principal: $4,888.00 Interest:$211.99 Balance: $13,282.83 Payment 3: $5,100.00 Principal: $4,945.03 Interest:$154.97 Balance: $8,337.07 Payment 4: $5,100.00 Principal: $5,002.72 Interest:$97.27 Balance: $3,373.98 Payment 5: $3,373.98 Principal: $3,335.07 Interest:$38.91 Balance: $0.00 Total Interest Paid = $736.47 Loan 2: $3,000 @ 15% for 36 mo = $104.00/mo Payment 1: $3,037.50 Principal: $3,000.00 Interest: $37.50 Balance: $0.00 Total interest Paid = $37.50 Total for both: $773.97 So, in your example, you save about $10 for paying off the smaller / higher interest rate first. Obviously, the savings would be much more substantial if we were making smaller payments over a longer period of time. I just wanted to fill your wishes to show financial logic. Always hit the highest interest rate first.

Repped for putting the time into explaining this one out completely.

Quote from Formless : I'm positive that I knew what you meant and was commenting on that. There is no "tipping point." To do this and make it simple, I'm adding some terms to your example. Both loans are 3yr loans. This will have an effect on the payments numbers you mentioned, but only by a few dollars. Here are your examples: Your First Example: Loan 1: $20,000 @ 14% for 36 mo = $683.55/mo Payment 1: $5,000.00 Principal: $4,766.67 Interest:$233.33 Balance: $15,233.33 Payment 2: $5,000.00 Principal: $4,822.28 Interest:$177.72 Balance: $10,411.05 Payment 3: $5,000.00 Principal: $4,878.54 Interest:$121.46 Balance: $5,532.51 Payment 4: $5,000.00 Principal: $4,935.46 Interest:$64.55 Balance: $597.05 Payment 5: $604.02 Principal: $597.05 Interest:$6.97 Balance: $0.00 Total Interest Paid = $604.03 Loan 2: $3,000 @ 15% for 36 mo = $104.00/mo Payment 1: $104.00 Principal: $66.50 Interest: $37.50 Balance: $2,933.50 Payment 2: $104.00 Principal: $67.33 Interest: $36.67 Balance: $2,866.18 Payment 3: $104.00 Principal: $68.17 Interest: $35.83 Balance: $2,798.01 Payment 4: $104.00 Principal: $69.02 Interest: $34.98 Balance: $2,728.99 Payment 5: $2,763.10 Principal: $2,728.98 Interest: $34.11 Balance: $0.00 Total interest Paid = $179.08 Total for both: $783.11 And the second: Loan 1: $20,000 @ 14% for 36 mo = $683.55/mo Payment 1: $2062.50 Principal: $1,829.17 Interest:$233.33 Balance: $18,170.83 Payment 2: $5,100.00 Principal: $4,888.00 Interest:$211.99 Balance: $13,282.83 Payment 3: $5,100.00 Principal: $4,945.03 Interest:$154.97 Balance: $8,337.07 Payment 4: $5,100.00 Principal: $5,002.72 Interest:$97.27 Balance: $3,373.98 Payment 5: $3,373.98 Principal: $3,335.07 Interest:$38.91 Balance: $0.00 Total Interest Paid = $736.47 Loan 2: $3,000 @ 15% for 36 mo = $104.00/mo Payment 1: $3,037.50 Principal: $3,000.00 Interest: $37.50 Balance: $0.00 Total interest Paid = $37.50 Total for both: $773.97 So, in your example, you save about $10 for paying off the smaller / higher interest rate first. Obviously, the savings would be much more substantial if we were making smaller payments over a longer period of time. I just wanted to fill your wishes to show financial logic. Always hit the highest interest rate first.

This example is great and i appreciate all the time everyone has put in to help me with my current situation. I wanna start off by saying that I am not trying to bash or say anyone is wrong because i am clearly asking for help and not in the position to do so.

Rammstein pretty much nail it right on the head with my concerns...The above example is very informative but also a bit bias in my opinion. If i was paying $5000 a month at a $20000 loan, its blatantly clear that I will accrue less interest. However, paying $1000 a month I think the numbers would look a bit different.

I am going to use an excel sheet that ryanfj has posted and test out all different combinations when i get out of work.

Again thank you for all the help, I appreciate it very much and value everyone's opinion.

This isn't difficult math here.