Need advice! Pay off Student Loans or Make Art?

[DianaMH]

I have two student loans:

1. Private loan of about 19K at 7.5% interest, at $345/months for about 5 more years.

2. Direct loan US Dept of Ed consolidated of about 53K at 4.25% interest, at a current monthly payment of $213.  It's a graduated plan and the final three years of payments will be about $560/mo.  Loan term is about 19 more years.

I have no other debt at all - no car payment, mortgage or consumer debt. 

My question is this - should I try to pay off that 19k as soon as possible?  I'm currently living at home and can pay about $1000 a month towards the loan, since I'm not paying rent.  I take home about $2800/month and have 13k in savings. 

On the other hand, I'm working in a job I hate, and would love to quit and live off my savings while I work on my art (yes, i'm an artist).  And defer my student loan payments. I applied to grad school for art and didn't get in - which is probably good, since it would have put me into more debt.  But I have been taking classes after work all year and would love a sabbatical to just practice and see how much I can produce and if I can support myself as an artist. 

I'm 33 years old, single, and no kids.  I feel like I'm at a cross roads - art or "sensible living, steady job." I also really value being in good financial standing, and would love to just pay off my loans and be debt free. I was in default on both loans for a long time and just pulled myself out recently. 

Help!

EQ  4/9/09 - 635;  9/10/10 - 729
TU  11/26/09 - 585;  3/30/10 - 760

EXP 3/6/10 - 734

[BrokeStudent2010]

Pay off your loans. When you are on your sabbatical you will go into FORBEARANCE not DEFERMENT. 

Deferment is for people who are still in school, and the up side is that depending on your loan, no additional interest accrues on the debt.

Forbearance means you are going through a financial hardship and cannot pay, but the interest on the loan is steadily adding to the principal balance. Forbearance is a favor the loan servicer is doing for you, so that you do not end up defaulting.

Going into forbearance means that when you are done with your sabbatical you will have a larger loan to pay off. Is that something you want? You have already defaulted on loans in the past, so maybe you should focus on eliminating them so you can truly move forwards towards your dreams when you are debt free. It will be such a great feeling to know that you don't have the student loan monkey on your back. 

Maybe you should start small towards your artistic goal, but get your affairs in order before making the decision to leave your job and live off of your savings. 

[DianaMH]

Thank you so much, Broke Student.  I think you are right and I think I have to work a while longer before I can take a sabbatical like that.  I would much rather do it when I don't have such massive debt.  As much as I value the freedom to be an artist, I also value freedom from debt.  I still make time on a daily basis for art, so I know can work towards both at the same time.  Onward and upward.  

"My debts were my enemies, but the men I owed were my friends for they had trusted me and believed in me...Within me surged the soul of a free man going back to conquer his enemies and reward his friends.  I thrilled with the great resolve."   - The Richest Man in Babylon  

[Tazman81]

For the job that you hate, are you working there full time?  Can you possibly change to part time?  That will give you extra time to take your art classes, while also allowing you to bring in money so that you don't have to fully live off of your savings.