So reddit, I need some advice. I have no idea how we should approach this mountain of debt, and any words of wisdom are much appreciated. Long story short, my fiance recently graduated from medical school, and is choosing to complete a research route instead of clinical medicine.
For the most part, his loans are all federal. The exact numbers are $388,894 with a 6.018% interest rate. His gross income is approximately $48,432 for this first year, and depending on if he can qualify for a grant this upcoming year (spring 2019 I believe) his salary will increase to between $80,000 to $100,000. I wish I had more exact numbers.
As of right now, we have budgeted and the max amount we can afford to repay is $600 per month. If it helps I can post a picture of our budget... I am currently in graduate school myself, and am having to take out additional loans to go to school and live on. By the time it is all said and done, I'll owe about $100,000 in student debt but that's a whole different story that we won't worry about until I'm working. I'm not too worried about paying mine off, as my job prospects look good and I should start making $80,000.
Anyway here's where the advice comes in:
- The main thing I want to know is if it's the best idea to get aggressive with student loans and not put money into a retirement or save for a house down payment? This is what I am thinking would be best, but it has risks as well. His job is stable, but we have budgeted to put only $100 into a savings every month. Is this appropriate given our situation? My reasoning is if his salary increases to $80,000, then with our same budget, we can increase the monthly payments to $3,200 a month and have them paid back in 15 years. If it increases more, and when I am able to graduate and start bringing home a paycheck, we can dedicate over 50% to 75% of our income towards loans and have them paid off in under ten years. I guess tldr: is paying them back aggressively the way to go? Then once we have a dual income we can beef up our savings a tad bit / still aggressively pay back loans? Then start saving for a home and putting a good portion of our income towards retirement savings?
- I feel at a loss for this first year when our max payment we can afford is just $600 per month, because this doesn't touch our interest rate. We need to pay like $2,000 per month to cover interest and knock off a tiny bit of principle along with it. So because of that, is this first "year" of repayment essentially a waste since the debt will grow regardless?
- As far as paying them back aggressively, what kind of repayment plan is ideal? I know I need to do research in this department... I don't fully understand the differences in REPAYE, PAYE, IBR, and IBC aside from the minimum payments and amount of loan forgiveness after 20 years is varying. What is most ideal for this situation? And this may be a dumb question, but are there penalties for paying back more than the agreed upon amount?
- Is public service loan forgiveness even worth risking? Currently his position is in association with NIH which should make him qualify. However, if he can make a six figure income by doing competing for grants and doing research in a private sector, would it be more lucrative for him to continue with a 20 year repayment plan and ideally get this payed off before the 20 years are up?
Anyway, sorry for bombarding you guys with all these questions. But please, any advice will be helpful!
Submitted July 19, 2018 at 11:03AM by 911finance https://ift.tt/2NwaOmP
