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Hey frugal redditors! I have the good fortune of being selected for National Health Service Corps Loan Repayment, and I have some questions about the best way to use the funds. The award is 50k and is tax-free. The money, of course, needs to be put toward my student loans, and I can choose to either make a one-time payment (which I would use to pay off outstanding interest and then pay off as many complete loans as possible) or apply the balance toward future payments. Without getting into the specifics, I have about 170k in student loan debt and am making payments around $450 per month. If I make the one-time payment, I can reduce my student loan debt by 50k in one shot, make the payments I am making work towards principal, and reduce my overall indebtedness. If I use it for "future payments"I can put that $450 per month toward getting rid of non-student loan debt (i.e. credit cards, car loan) thus freeing up the money made towards those payments. I can then begin to make additional principal payments on my home in order for me to be more liquid overall. The downside, of course, is that my student loans will continue to accrue interest for the roughly 111 months that my 50k is "making my payments". I also plan to talk to a financial advisor, but I am very interested in your perspectives.

For what it's worth: I am well aware that 170k is a lot of money to borrow, but I am not in a field where my advanced degree is optional (required for licensure) and came from a family without means to save for my college.



July 05, 2017 at 05:57PM

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