6

My brother and I both have a large sum of student loan debt. I have more than he does and my interest rates are slightly larger as well. We are both attempting to snowball our debt separately. It occurred to me that we may be able to accelerate paying off our student loan debt if we snowballed together. We could both tackle one loan together and then focus on the next and as a result, both end up with less interest to pay in the long run.

However, I'm stuck on how to implement this idea in a fair way. We both pay different amounts each month. Is there any way we can take into account our total balances, interest rates, and the amount paid to keep track of what percentage of payments are going towards each other's loans?

As an example let's say I have 4 loans at \$10,000 at 10% APR (A, B, C, D) and he has 4 loans at \$5,000 at 5% APR (E, F, G, H). So we have a total of 60,000 due, $40,000 of which is mine.

  1. Does anyone have an equation for this or can anyone better explain why this will or will not work?
  2. Do we have to pay proportionally to our debt at all times in order to make this work? If we pay equal amounts, at a certain point he should stop paying because he's done with his portion and I should continue; how will we know when that point is?
  3. This should help cut the amount of interest we pay. Will it actually do that or will it only benefit the person with the higher interest rates?
stu
  • 161
  • If you don't get a satisfactory answer here, be advised that there's a finance stack exchange as well. – Kaj Hansen Jun 20 '17 at 18:45
  • +1 for the interesting and well-written question, but I strongly suggest you just keep your loans separate. –  Jun 20 '17 at 18:47
  • 2
    Snowballing your debts means paying off the smallest debt as quickly as possible, even if they are at lower interest rates, while paying the minimum on the larger debts, which may have larger interest rates. While this may be psychologically beneficial, this strategy does not minimise the total amount of interest you have to pay in the long run. To minimise interest you need to pay off the most expensive loans first. – David Quinn Jun 20 '17 at 20:33

0 Answers0