Student loans

[houseelf]

Who still has them and what is your plan?

We still owe them in a big way. We have been chipping away since residency but there is still a hefty load remaining. At this point we'll have them while our oldest is in college. We overpay on the set that has the highest interest by several thousand dollars a year. Obviously, I want them gone yesterday.

Anyone refi-ed, received forgiveness for working in rural medicine, pay them off with a bonus, or take out a second mortgage to wipe these bad boys out? Did you live like residents until they were paid off. That train has already left the station for us, but I'm looking for solutions. Most financial gurus state that one should never cash out a house for any reason whatsoever. Still, it's not like we're at an income bracket where we get to take student loan interest deductions AND a second mortgage would save us approximately 2% in interest over the life of the loan.

The good news is that we are both hell bent on making sure our kids don't start life out like this. We're fortunate that DH makes enough to cover these payments. I know that there are a ton of people who are not in the same boat.

How have you conquered your beast? What is your grand master plan?

[spotty_dog]

It would scare the poop out of me to trade an unsecured loan, even one that can't be discharged in bankruptcy, for one that's secured by your HOME as collateral.

Mind giving some details? What's the interest on your loans? Interest and duration on your mortgage? Current year projected contributions to retirement? Emergency fund status (in number of months of expenses)?

[Michele]

My grand master plan:

Pay monthly until they are gone.

Though mine probably aren't as bad as most. I still owe about 90K. I consolidated them when I graduated at a low interest rate which has since been lowered because of good repayment. I think my rate is 1.85% now. My monthly payment is $340 or so. It's auto drafted.

If I get a large windfall of money, I would gladly consider paying it down. But $350 a month isn't breaking my bank and I don't really mind knowing they exist.

[JaneDoe]

We just paid off our last student loan (Dh's big loan from med school). It was a whopper of a payment -$55,000, but it was a financial priority to us to be debt free. We also felt we were in a good position to pay it off because we have a great savings cushion, no consumer debt and we will be getting Dh's retirement plan up and running at full speed this year. We will just have to forgo some luxeries this year like a vacation and upgrades for the house.

Like you, we didn't want to pay for our kids college while still paying back our education debts. Some people didn't agree with our strategy- saying that the interest rate was low (3.5%) and that we would have been better off investing the money. Whatever. It is conservative, but we sleep better at night knowing that we don't owe anything.

It feels so liberating!

[Vanquisher]

We owe a shit ton on them, but aren't in a hurry to pay them off. In fact, I don't think we will pay them off early at all. Our interest rate on them is 2.88%, so no hurry. We're way more interested in other things.

[alotofyarn]

We owe somewhere in the low six figures - all his, because I was fortunate not to need any loans throughout all of my education. We wanted to get aggressive as soon as possible, but I think we're going to forebear at least some of his loans during residency so we're not totally broke, pay what we can, then put a serious plan in place for paying them off quickly once he finishes residency.

[ides]

We were planning on paying on time for ten years then getting them forgiven, however we have been notified that we don't qualify for the loan forgiveness program because our loans are already consolidated with Sallie Mae and not with the fed direct pay program. We are going to see if we can reconsolidate into the program but I'm guessing we won't be allowed. Anyhow, in debt attacking, our priorities are after our buffer is set to pay down the smallest med school loan then work on being mortgage free. Once we reach that point we will reassess our strategies.

[ladymoreta]

We suck... Just paying minimum. We have other debt with higher interest rates, negligible retirement, no college funds, and only a very small emergency fund, so school loans are not a priority right now. Right now, we're just prioritizing by interest rate.

[Auspicious]

Mine I paid off on my own in my late twenties, just before my husband and I moved in together.

His were consolidated in 2006 or so at some freakishly low rate (he knows the rate off the top of his head but I forget it), except for a smallish Perkins loan that couldn't/shouldn't go into the consolidation for some good reason. That one we paid on throughout training, double payments until the children came along, and at the end of training it had like 10K left on it and we paid that off post-haste. And paid off the cars, so now the big consolidated student loan is our only debt left (until we buy a house).

Which is all to say, I do consider us debt averse, and certainly willing to pay off loans early, but we'll be making minimum payments on the big loan for a good long while, possibly forever. Because of the low interest rate, it's our lowest financial priority. I don't worry about that one very much--I feel much more of a sense of urgency about retirement and house and just about everything else we're behind on.

One thing I think no one's mentioned yet is if, heaven forbid, the doctor dies, the student loan debt dies with them, doesn't it? In which case spouse and kids are more protected by investing that extra money in something they get to keep rather than paying down the student loan debt early. No?

[diggitydot]

I don't think all student debt dies with the doc when they die. Depends on whether it's subsidized or private, I think.

We have a metric shit ton of student debt at ridiculously low rates. We have higher financial priorities to pay off.

[Vanquisher]

As far as I know, the student debt dies with the doc.

[Sheherezade]

I think it's an option to have forgiveness at death. For a fee. My DH was clear that he "paid more upfront so it doesn't come to you if I die". Not sure on details.

[GreyhoundsRUs]

As far as I know, the student debt dies with the doc.

Same here - as long as they're not consolidated with your loans!

[GreyhoundsRUs]

I think it's an option to have forgiveness at death. For a fee. My DH was clear that he "paid more upfront so it doesn't come to you if I die". Not sure on details.

Interesting. I'll have to ask DH about it. Maybe there are different rules for private vs govt loans?

[Sheherezade]

I believe this was the consolidation. All his loans are in it now. This was also 8 years ago so very different lending environment and student loan rules.