Hello everyone,
I’ve lurked here for about a year and the resources and advice have helped me quite a bit with getting a handle on my finances.
Here’s my problem: Three years ago I completed a Master’s program at a private university with a minimal scholarship and took out massive student loans. I stupidly was so thrilled to be accepted into the prestigious university that I didn’t do any research or educate myself about the financial pitfalls of Federal Plus loans before I took them out. Though I worked part time in school, with the 7.3% FedLoan interest myloans have increased to $90,000 in student debt over the last five years.
I have a full-time job (ironically at the expensive university where I got my Master’s) with good benefits but not great pay (I make $38,000 a year before taxes). Because of r/personalfinance I’ve finally got my budget sorted and built up an emergency fund to cover 3 months. I have no credit card debt.
I am currently enrolled in the PSLF program through my job, and will be three years into repayment come this spring. I am on an income-based repayment plan currently paying $130 a month, which is about $20 over my minimum payment.
Looking at my FedLoan account yesterday it hit me that with the income-based repayment plan I am just paying down interest, not making a dent in the principal payment at all. I feel like I’ve been treading water for the past three years.
I’m trying to decide whether I should continue paying the minimum for the next seven years with the goal of PSLF loan forgiveness, or try to pay off a bigger chunk of debt month to month.
Part of me is nervous about funneling money currently going into my savings into paying off more of my debt, as the debt is so vast it feels like pissing in the ocean. Even if I was stretching my budget to the max to pay off more of my loans each month, with my current salary and expenses I think I could only manage about $5,000 a year (the university I work at is in a large city with high cost of living).
I would like to start saving for other things - a downpayment on an apartment, an increased emergency fund, or a small chunk of money for investing, but I don’t know if that’s the most practical choice considering my debt.
Any advice you all have would be appreciated. Thanks for reading.
Submitted January 11, 2017 at 11:00AM by almostaknight http://ift.tt/2iGxguf
