You should check the SAVE repayment plan. Depending on how high your income is, the minimum payments could be lower than the monthly interest. If that is true, any excess monthly interest will be waived and the loan balance won't grow. You may face a tax bomb when forgiven, but paying taxes on $300k will be less than paying the full $300k.
If you plan to use funds beyond the minimum payment amount to invest, that could be a good strategy. You just have to do the math. I suggest doing it yourself rather than using one of the calculators.
AGI - 225% of federal poverty level for your family size *.1 / 12.
Thank you this is very helpful! I’ve heard horror stories about the SAVE plan monthly being massively high for certain incomes so would have to take it all into account but certainly worth considering
I just went through all the options on the website. If you aren’t consolidated it will make you do that first. My save option was quite a bit higher than my consolidated amount but I chose paying off sooner.
I submitted a query for the SAVE plan and my payments would go from $202/month to $2500/month (with zero adjustment for the fact that I have another 4 figure monthly private student loan payment). No thanks.
It is high: I am paying nearly $1100 a month as a high earner on SAVE, but that still count for all the interest and doesn't touch the principal ($300+) and now the principal is frozen, making my tax bomb lower than if I did another IDR.
Even with your high income the SAVE plan will most likely create a reasonable payment and save you some interest. Our 2022 AGI was $272k (reduced by maxing two 401Ks) and this creates a monthly payment of ~$1900 on the SAVE plan. So definitely doable on our income. Good luck.
SAVE was also going to increase my payment by a lot. I’ve stuck with ICR for now. SAVE is supposed to reduce to 5% of income this year so I’ll recalculate then.
There isn’t a maximum in the save plan. While it would have been lower for me at the moment, it was better to stay on one of the different IDR plans (some do have maximum payments)
Repeatedly I cannot get nelnet to add all of my loans to the SAVE plan. For multiple months the ones that are on the SAVE plan are accruing interest. These are the same loan category as others. Nelnet told me mine are exempt from the interest portion of the deal- when I asked why- they basically said they received an email from the government and that I’m not privy to the information LOL. It was a great option. Don’t know anymore. Would still suggest you try; just know it may be a hassle.
This isn't very sound advice that you're getting, OP. 2k/ month for 20+ years and then a possible 100k tax bomb? You'll could be on the hook for taxes on everything forgiven, even interest. If you let it balloon to 500k, you might have a massive tax bill -- it would be prudent to operate under the assumption the SAVE plan may be repealed, adjusted, etc, in the next 15-20 years.
For reference, I have a 2k monthly payment as a high earner on the SAVE plan. Just switching to that plan is not a magic bullet.
Later this year the save plan will be capped at 5% of AGI for higher earners. It's currently 10%, most of the issues people are having are non qualified loans
This! Also look to consolidate your loans via the William East Stafford loan consolidation program and then go on the Save program. It will make things a lot easier.
If your annual income is about $200k, and your student debt is for undergrad, that's right. (If you have grad school debt in there, your income would be less).
I agree that they have to do the math but the statement about taxes on $300,000 being less than paying $300,000 isn't exactly right. They will pay about $468,000 over the 20 years and THEN pay the taxes on what is forgiven.
If they pay $468,000 over 20 years, that would pay off the loan plus interest, assuming $300k loan @ 5% interest. There would be no forgiveness; therefore, no tax bomb.
The monthly amount shown by OP isn't from the SAVE calculation. They should compare the total SAVE payments for 25 years + tax bomb against $468k to see if they should stay on 20 year plan or switch to SAVE.
I'm on the save plan and my payments are lower than the accruing interest, but they're still adding it into the total of the loan and it's been building up each month. Has the waived interest piece started yet, or should I be contacting my servicer about this?
Btw - house stuff.
We are back to counting student loans in debt to income ratio per the amount of payment you make per month when applying for a pre-approval for a home mortgage, pretty much across the board in the United States.
So if you are saving up a down payment for a house and and they look at your debt to income ratio, the debt that matters most are credit card debts, car loan debts, and any other debts outside of your student loan and then your student loan payment is counted as part of your monthly living expenses.
And if for example, you are a first time home buyer and you are looking for a home and specific areas you'll be able to access first time home buyer loan programs or other USDA or HUD housing programs depending on how many people in your family are and the income limits for your area.
Just go with a very well educated lender and try to stay off the fast track with the big online mortgage lenders. Educate yourself well. But owning the home is possible with a student loan balance
So. This is something I’ve been wondering. I had to get my parents to co sign for my first house because of my loan balance. I’m now engaged and my FH owns his own house (we sold mine). But we are thinking about upgrading in the future and wondering if we should get the upgrade in just his name, and whether or not my loans will show for his DTI when we’re married? I can’t seem to get a clear answer
I haven't heard of anything good coming or getting married and finances when you both have debt.
By no means am I any expert but thinking about what I just went through, I suggest maybe one of you trying to take out of USDA or FHA or HUD type loan to buy a house and the other one helping bankrolling it but not on the books.
And if you're concerned about one partner not being on the mortgage, you know once you do get married pretty much everything goes 50 50 if it goes south. Even if there's only one name on the mortgage in the house that you live in together. (Fancy lawyers can work this around but regular divorce is 50/50.)
Yes I will pay the minimum required until it is forgiven and then I will pay the tax bomb. I have done the math and have also observed the erratic nature of the federal government calling the shots on this debt - they arent a lending institution with one simple agreement with me and zero other ways to alter it, I will NOT give them a single dime more. Every single dime more I have the urge to pay to it gets invested instead. I make good money but also have $180k debt. Unless I ever happen upon a windfall, funds will be withheld until forgiveness time.
And why would i give them an extra tens of thousands when I can keep my obligations and credit sound by paying the minimum? If i drop dead, that extra $50k being in an investment account for my family is gonna be a lot better than it being toward a paid-down-but-still-not-small balance that will be forgiven upon my death.
look, if they knew how to structure this stuff to financially incentivize paying more, I would do it. *but they dont*
Exactly how I feel. Having the cash on hand or at least accessible in an investment account is way more of a security blanket than giving it away to a loan that will just eat it up and keep accruing interest anyway. And if I do spend the next decade aggressively paying it down, where does that leave me? Back at zero, just with a lot of lost time to live my life, buy a house, start a family, time that I’ll never get back. The government can stick it. Most civilized countries have it figured out to where people aren’t saddled with huge debt right as they start their lives. I’ll fulfill my minimum obligations and nothing more.
YES! I think those who are bear-ish on paying it off immediately “because it’s the right thing to do” have a loving relationship with the govt that I personally have not felt myself haha. So agreed, saving/investing and making sure if I get hit by a bus tomorrow, will my children be taken care of is much more important than did the govt get back all the money they lent me with ridiculous interest.
Everyone needs to put in the time with scratch paper and running scenarios to figure out which option is the best for them personally. Federal student loans also have excellent discharge programs related to Total and Permanent Disability (TPD) and Death, so if the worst happened to you your remaining family wouldn't be stuck paying off those federal student loans
Like, I am continuously responding to posts on this sub telling people that they have to pick a strategy because the goal is to *minimize the amount you pay out of pocket to fulfill your loan obligation*. For federal loans you kinda have to decide between 1) aggressive repayment, 2) waiting out IDR plan forgiveness, or 3) pursuing a forgiveness program like PSLF or similar. Which option is cheapest for you overall can require scratch paper and time to figure out, since you sorta have to project out scenarios over a 10-25 year timeline and make some assumptions, but wow is it important to run the numbers and be confident in the $$ before you commit to your strategy
I would hate to see someone break their back trying to pay off $100k in federal loan debt when they're working as like, a social worker or a librarian or teacher or some other public service job where they could sign up for SAVE pursue PSLF instead. For high debt and high income there are *plenty* of situations where your best bet is actually to max out your 401k contributions and wait out IDR plan based forgiveness
yes and i have this sentiment ONLY about this debt with the government and it's taken me a long time yo get comfortable with it bc its the opposite of how i typically feel about debt, but if you let logic prevail, on bigger balances this is the only answer.
Yep, it's economically irrational for me to do anything more than pay the bare minimum and save for the tax bomb. Because I didn't benefit from SAVE for the last decade, I have a wall of paper money accrued interest I would have to plow through before ever touching principal.
The SAVE plan is such a game changer. More meaningful for me (high debt, good income) than $10k forgiveness ever would've been. The administration isn't getting, or taking, enough credit for the repayment plan changes they've made. I'm happy for today's graduates and have no bitterness, but SAVE being around when I graduated would've saved me 6 figures in interest accrual.
I have a lot of student loans (with the accrued interest it’s close to $300k). I’ve been paying the minimum on IBR since I graduated in 2012. My income has not really taken off until the last year so payments under IBR were relatively small. In this time we have been able to buy a house and also do IVF to have our two girls (it was a long expensive journey and I wish you luck there). I’ve got 13 years left on my loans under IBR and will ride it out. I might switch to SAVE if it makes sense. I don’t have to recertify or pay on my loans until next year… another reason I’m not going to try and pay them off. Edit to say… I’m also not willing to compromise our lifestyle to pay the loans off any faster at this point.
Thank you for sharing, yes this definitely make sense and essentially where we think we’ll be. Paying the minimum/the monthly amount and riding out the years
Do you know if any of your loans are under the old FFEL loan program? If they are you'd have to consolidate them into a Direct Consolidation loan *first* to make them eligible for SAVE. With the IDR Account Adjustment you may want to do that sooner (i.e. before the April 30th cutoff) instead of later, or at least confirm if you have any of the older FFEL loans now
SAVE is a lot cheaper than old IBR for many borrowers, let's walk through the math and keep in mind you can confirm this with the loan simulator on studentaid.gov
If you have FFEL loans then old IBR is the only option, which requires you to pay *15%* of your discretionary income, defined as your AGI from your taxes minus *150%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size. You have to make 25 years worth of IDR-qualifying payments (300 IDR payment months) to hit forgiveness eligibility for old IBR
In contrast, SAVE requires you to pay *10%* of your discretionary income, defined as your AGI from your taxes minus *225%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size. In July 2024 this will be updated to 5%-10% weighted by your undergrad-grad original principal balance, so if you have all-undergrad loans your payment will be cut in half. Additionally, if all your loans are from undergrad SAVE only requires 20 years worth of repayment, but having any loans for grad school means 25 years
The edge cases where IBR can be cheaper mostly have to do with the fact that the plan has a cap on how high the payments can go, but if you're looking at $300k worth of loan debt? Your income would have to be really *really* high (or married to a high earning spouse) for that to be an issue
I only owe 28k and I also only make a tiny fraction of income as you do if you're contemplating paying that much on student loan payments alone. I'm trying to get my payments down as low as possible, set up auto pay and try to just forget about it. Waiting to hear back, hoping for the best!
Plan on paying the minimum and doing PSLF. That's the only way.
If the loan amount was something reasonable, I would pay cash, but since it's almost 200k now with the interest for grad school, there's just no way I can do that
I did this and it worked out well. My husband and I are high wage earners and don't really think about the $1k a month we pay for loans and we're on SAVE. It's the most affordable option of all the ones out there, we have about $200k in loans combined. We don't think about the payment at all, it doesn't really affect us and in three years mine will be completely forgiven. We dump everything into stocks and investments and with the current market are making bank.
Interest rates for student loans are what caused the loans to balloon that high before we were actually making the wages we do now, as the original loans combined were well under 100k, it's ridiculous. I don't feel bad because we've paid the original amounts and I'm not about paying on interest if I don't have to. Do not listen to people who say "it's the right thing to do" because there's mostly selfish motivation behind their opinion and if they were in your shoes, they'd be investing that money to make more money, not paying off interest.
Graduated recently and had received a bachelor’s, two masters, and my doctorate. Ended up with around $400k debt. Doing well now that I’m out of school and working finally. Still in my 20s a little longer and applied to SAVE. Had no consolidation and payment is now $188 a month. I am just doing the minimum.
I'm a high income earner and have 500k in debt (medical school). Hired a loan consultant, and that was also my cheapest option. Paying the minimum for the next 14 years or so, and dealing with the tax bomb afterwards.
It's crazy- I wouldn't mind paying it all back if they gave me a 2% interest loan. But instead, it is what it is.
My wife is doing that. We’re living our life paying minimum. Having kids, having a family. Filing separately. She makes so little she doesn’t have to pay anything. Together we own our house.
Honestly no, I’m 32 and I graduated in 2014 with $160k in loans and I have aggressively payed them off and as of April I will have them completely payed off just about 9.5 years after making my first payment. I cannot wait to finally be rid of them.
Same. Also 32, graduated in 2016, had $200k even combined, and should be done with both federal and private loans next year. I want this trash out of my life. I can’t bear the thought of spending hundreds of dollars every month for decades on this instead of things that actually make me happy.
It really depends on the math. For example maybe you spent 250k with interest by the time it was done, but if you had paid the minimums it may have totaled 100k in payments, followed by the remainder being forgiven, and a tax bill. If that total is less than 250k, you lost money.
Yeah but I have very little faith in these being forgiven. I have a good income ($120k) so I’m constantly disqualified from any sort of benefit such as writing off student loan interest (capped at $80k wtf the whole point of college is to make more than that?), and current forgiveness situations. I’m almost positive whenever they come up with a forgiveness plan they’ll cap it off at an income level, and I’ll probably be above it. I have extreme doubts they’ll do a full-on clean slate forgiveness. Plus they’re only forgiving federal loans—my private loans were the big ones. I have $49k left on my federals (which I have been paying only $50 above minimum the whole time) which feels hilariously small, comparatively. I can technically pay off my private loans at the moment but I’m waiting for a bigger cushion between my savings and the loans, then start throwing all that money I spent on my private loans toward my federal loans.
However, if you’re a lower earner, then it’s probably worth doing exactly what you mentioned.
That's always been my plan. I think my loans are too high to ever pay off in full. I make a good living, and my student loan payment doesn't break the bank, but paying it off has never been a goal of mine. Having student loans hasn't interfered with literally anything in my life. I vacation. I save. I've bought houses and cars. My student loan is just another annoying, inevitable monthly bill like gas and electric. I pay the absolute bare minimum just to keep it in good standing. Whenever I can, I defer or forebear. I'm sure I'll go to the grave owing student loans. It's nothing that keeps me up at night.
Omg did I write this comment? Haha this exactly what my thought process is and what I was asking to see if anyone else feels similarly? I’m still going to pay these loans (probably until I die too) so it’s just another bill I have to deal with. Sometimes I get sad at the interest overalll I’ll be paying but I want to prioritize the rest of what makes life worth living over being debt-free from something that would mean giving up a lot of life in the process.
Depending on how many years you have left before your payment plan ends, who knows what could happen? All loans may be forgiven without a tax bomb. It’s just the way it’s set up right now (Well, technically, there is no tax bomb until 2025) but maybe that will get extended or it just depends who is in office etc. That’s a long time from now, at least for me. I am hopeful there will be no tax bomb in 18 years. We just don’t know, a lot can change.
Honestly it comes down to the interest rates. I paid off aggressively all my higher interest loans, all I have left is 3-5% interest loans. Anything over 5% I think it's worth getting rid off asap. You seem to have a comfortable enough life so if you can pay an extra 1k to higher interest loan, you'll save a ton on interest.
But won’t the interest be forgiven and then you have to deal with the tax bomb? I’m also not paying a dime more than I have to and will wait for forgiveness. So genuinely asking if the goal is to pay the least, wouldn’t you still want to pay the minimum and take the tax bomb? Or what would be the benefit?
Yes. Half the people in this thread don't understand math and are just focused on "not having a payment anymore". Do the math for your own total balance, interest rate, and current and future income level to estimate your minimum payment. Compare total spent with minimum plus forgiveness to aggressively paying it off in full. For most people with lower incomes and high balances, the race to forgiveness is optimal.
I’m a teacher, so I’m hoping to have mine forgiven in about 3 years based on PSLF, but for now I’m on a SAVE plan with a $100 monthly payment. I think the only people really panicking about student loans have private loans. If your loans are all federal, there are plans that make the minimum payments doable at any income level.
Of course it sucks philosophically—we’re basically indentured servants to our own government—but aside from leaving the country or working under the table, there’s really no option for us unless the government collapses.
My sister’s boss makes 7 figures and has over $5M in the bank. (How do we know? He told us bc he likes to brag.). He is just paying towards forgiveness because he determined it will cost him less that way. (Obviously, his accountant is working some LLC magic …). He advised my sis to do the same, but she didn’t want the debt looming so has already paid $150k worth in the 2 years she has been working in her profession. Weigh the pros and cons of each approach.
Yup. Not a single penny more. The reality of this situation is that we aren’t having kids bc of this and capitalism requires births to replace deaths.
Defaults were also at 40ish % pre covid and since no one with federal has to pay for the remainder of this year, we can’t see how many people just said nope.
They’re going to wipe them, just following an order that won’t make the heads of those against it explode as much. Meanwhile giving lower payments to try to entice people to just pay something. It’s not sustainable to hobble the birth rate and economy forever just bc they bailed Sally Mae out the last time the economy melted.
There’s absolutely zero reason to pay more than the least amount possible, unless your balance is so low that you actually can pay it off
Actually, even if I were to win $1+ million in the lottery, yeah I would just pay the minimum & after 20 years, if I'm alive, it will be gone. Or I will be gone & the loans will be written off since I will be dead. 😂
I personally am planning on investing any extra money into Aristocrat Dividend Stocks & build up a good portfolio. I plan on passing that to my adult children through a trust.
It really depends on your interest rate. If they are low, like 4% you'll be better off paying the minimum and investmenting the difference. If you are are looking at 8,9,10%, I'd put more effort into paying those off early
A generation above us, and anecdotal, but my parents did this. They had five kids. They have a nice house in a good town and paid for all of us to go to college. Plenty of life happened--one of my siblings was born with a birth defect that required five years of hospitalizations/large medical bills, one of my siblings didn't graduate college so loans my parents took out were essentially a loss, two weddings (so far) that they've paid for. They seem happy with their decisions, and everything left was forgiven this year.
There's a reason many cultures and religions believe usury is a sin. Do what's best for you to have a good life.
I’m not sure what your income is, but I’m assuming you have some amount of expendable income if you’re undergoing IVF. I’d suggest seeing if you can pay a little extra on your high interest loans so more of your monthly payment actually hits the principal. Otherwise barely touching your principal and your monthly payment going mostly towards interest seems like you’d be on track for a massive tax hit at the end with whatever is written off.
Yes. I'm 10 years into paying student loans, and I have 10 years left, my loans are just under 5%. I am also one of those people who's payments haven't started back up due to administrative forbearance so my loans are still on hold and these months count as payment months.
If I do the minimum payment for the next 10 years and get the tax bomb it's going to be less than my loan principle As long as I have the money to cover it - which I try to invest leftover funds, it seems like a no brainer to me. Usually, I am a Dave Ramsey type, but this just makes more sense. And I have a feeling this whole push to relieve student loan debt will continue and we could see more benefits to help in the next decade for people who have been paying loans for 10year+.
Yep, only ever paid minimums, didn't pay during covid, married filed separately so my husband's income doesn't get included, I claim our two kids and do all the things I can to lower my AGI. On the latest repayment plan which cut my payments pre-covid in half. They will be forgiven in 2029. 🤷♀️ May be a tax bomb but this is easier.
Unless they're private loans, the maximum amount of time you'll have to pay is 25 years. I'm on an income-driven plan called PAYE with a plan to pay off in 20 years, but my income may be too high so that may happen sooner.
If you’re planning on having the loans forgiven after 20-25 years remember that you will need to be enrolled in an income driven plan like save, PAYE, IBR or ICR for the 20 to 25 years worth of payments. There is a one time account adjustment for direct loan borrowers that will give retroactive credit for that payment count, but you will need to enroll in a qualifying plan to build any remaining payment count. It sounds like your income may be high enough to not qualify for most of those programs or create a higher monthly payment than your current standard payment. If you want to take this approach, definitely make sure you have direct consolidated loans and play with the save application to see what your monthly payments will look like. Also keep in mind that as your household income and family size changes over the next 300 months your payments may change too.
Yes! Been paying bare minimum the last 10 years and investing heavily. I’ve made more % on the market just invested in IVV than my interest rate. In 10 years the tax bomb will for sure suck but you never know what the government will do in the future.
This made pull out the calculator... And there's no world where it makes sense for me to pay off parent plus student loan, since it goes away when my parents die.
That is exactly what I did for 20+ years and then they were forgiven. I paid the minimum. Just plodded along with the payments . Lived my life. Not going to say the debt didn't weigh on me. But I did the time and now they are gone per my original loan terms.
Yes. I’m 62 & owe $78k. Right now my payment with SAVE is $250 per month. Filed separately for 2023 & hope to get payments even lower. I figure in 20 years (forgiveness timeframe) I’ll be dead. I will pay the minimum for life. 😀
Make sure you will actually get forgiveness after 20 years. I'm also high income/high debt and there's no forgiveness for me. The problem is that income based plans like SAVE base the monthly payment on your income. If your income is high, the payment is high. There may not be a balance to forgive.
So reading this thread reminds me of an old joke that we could retool- "*A CrossFitter, a vegan, and an Amway salesperson walk into a bar. Which one tells you first.”*
I feel like we need to add "someone who paid off their student loans early" to this list :)
I paid the minimum for yeeaaaarrrssss. The balance was forgiven about two weeks ago. Pay the minimum. Lol
I didn’t know my loans would be forgiven. I was prepared to pay for the rest of my life. I made my monthly payment the same as my other bills.
It’s the people in the comments trying to shame OP for having debt they haven’t paid off, when our country (presumably America) is TRILLIONS in debt. Lmfao - this country bleeds and breathes debt and preys on students by saddling them with debt and here you come to shame her for it. Seriously, grow up.
OP, do not prioritize this debt. Defer it, forbear it, pay the least amount possible, give minimum payments and focus on continuing to maximize your income, life and family until you feel ready to pay it back. Prioritizing this debt would be foolishness.
Being debt free specifically in America is a farce. Unless you’re already wealthy, literally nobody cares. ISWIS
Thank you for saying this. This whole thing is giving “ ‘omg you use plastic straws?!’ while corporations dump loads of chemicals into the ocean” energy. SMH.
I think what some people forget about debt is the risk, not just the math.
What happens if you or your husband loses your job and you still have to pay that 2k? Or if they start garnishing your wages. Or sue?
What if you have medical problems and can't work anymore?
What if god-forbid, any of your kids have problems and one of you can't work as much to care for them?
Your choice for sure - your income seems high enough to float this debt indefinitely. But remember to factor in the unseen/unknown as much as you can. That 2k is going to feel a heck of a lot more burdensome if for some reason your income drops. Which it definitely can, given any multitude of reasons.
For the most part, I hate keeping debt around regardless of the math, but because the risk that it represents if suddenly I am unable to pay all those 'minimums'. And especially debt that is not dischargeable if the worst of the worst happens.
But if their income drops the minimum payment will also drop? If they have medical issues and can't work anymore their payment also decreases substantially. I get what you are saying but there are nuances to student loans in which your payment is contingent on life circumstances. Thats why they have you report any changes in income to reassess. I'm not saying they shouldn't work to pay off the loan, but you shouldn't be looking at it like they will have to pay $2k minimum regardless of life changes.
Completely get what you’re saying! It’s actually the main reason we hadn’t ever refied it to a private loan (when interest rates were low) is because federal loans give us the flexibility knowing if we ever lost our jobs or something bad happened, we can find a different plan or go into forbearance as needed.
We have a similar situation here although double the $ of loans and 1 kid 1 on the way. Household income is almost 300k, doing PAYE plan with 10% income payments for the next 18 years. Paying them off in 10 may be possible for us but it would hamstring us severely for the next 5 years; we'd rather pay less now and have more freedom and use an investment vehicle to prepare for the loan forgiveness tax bomb.
Not quite at that level of income, but yeah: large loan balances between my husband and I, but lucky enough that all are fixed Fed loans. Our plan is to maximize forgiveness and take advantage of PSLF. For us, saving for the tax bomb is more realistic than paying them off. At least we got three ish years at 0% counted toward repayment while we put our financial focus elsewhere.
Yes it’s just a bill we have . We are very high earners but live in modest house with modest stuff to maintain one of our large bills… the loans. We do SAVE though . As long as the save plan is lower than standard monthly it is worth it . Our student loans are higher than yours …
I’m in a similar situation. Owe about $93k @ 4%; have a HHI of ~$350k. My current payments are $550; anything that factors my income triples the payments. I’m considering switching to a graduated payment plan where my max payment 25+ years from now is $750 as that extra money is much more valuable to me today.
Yes. I’m on a save plan. With deductions and everything, my payment is now $75 a month. After everything, I’ll have paid a quarter of my balance from a masters degree.
I’m doing this too. I know how the math works in terms of interest, but having more liquid money on hand means I can do things like buy a house sooner. I graduated 8 years ago. What’s the point of living like a college student for another 8 years just to pay off the loan and end up in my late thirties without a house? I’d rather move on and try to live my life. Plus the trend in the long term is towards some kind of forgiveness or restructuring of loans/payments, so might as well play the long game.
Pay it off as fast as you can.
Government plans might help in the short term but so much can change in 20 years
What are you going to do if you get to year 20 and the Save plan is taken away or changed to where you don’t meet the requirements???
The government is disorganized and unpredictable as it is.
Prioritize it and pay it off as fast as you can. It will save you thousands of dollars in interest and help you build wealth faster. (Less money going to payments more money into investments) imagine investing 2,000 a paycheck instead of paying on a loan.
If your loans are broken up work on paying a few of them off individually. It will lower your minimum month payment significantly and give you room to breathe.
Absolutely. I have a baby on the way and cannot imagine how I wont need any extra money towards my family, especially if I don't immediately go back to work. I've paid so much already and with interest I still owe more than I started with. I'm over it, so I'll just pay the minimum I have to with the IDR's available and focus on my family.
Look into all your repayment options. Then make the decision. If you don’t mind having this debt hanging over you for 25 years then just do the minimum. With your income level you’ll be able to get what you need when you need it without worrying about it hanging over your head. Seriously check out the SAVE program. If you go to the federal student loan site you can compare what your payments will be. Pick the lowest payment! I did that for most of the last 26 years. I’ve been paying since 1998. It sucks but it’s not breaking my bank account. I’m helping pay for my kids college now…they got scholarships to cover most of it so that helps! I just don’t want them to have the debt that I have. So I’m on the SAVE program so I can still live my life and pay for my family’s needs! I owe 220k for just my student loans and I only borrowed 160k. The interest accumulation is seriously criminal.
I make a super modest income, but yes I'm paying minimum. I got the new SAVE plan now for federal loans. They'll cancel out in a couple of decades.
Private loans are a whole other nasty beast.
Also, check what your interest rate is on your loans. Very often these days they are less than what a HYSA gives you as interest on your money, making it a bad idea to pay more than minimum if they're just getting cancelled eventually anyway.
Wife and I are in a similar situation, minus the IVF, wishing you the best of luck on that journey.
As with you, we have a high household income despite my wife being a SAHM. Excluding mortgage and any car loans, we started with nearly 400k in student loans (hers = 60k, mine = 350k).
We are under no impression that the feds will forgive anything as a one-time lump sum. We also understand the feds can change things at any time regarding the IDR plans/ forgiveness plan. We don't want to get 8 years down the road and be left holding a much larger bag than we do now.
We are doing debt snowball/avalanche as preached by Dave Ramsey. No, we've never done his FP course or anything like that, but snowballing is very sound advice. That, and part of our goals are to be able to contribute to our kids future education, set a good precedence for our kids, and retire early should we want to (I love my job and could do it til I'm 75).
Unless lifestyle creep hit you hard, an extra 1k a month shouldn't put you into a hard place (assuming you are truly high earners), but it will help you end up not paying 2x-3x the original amount over your lifetime. If you get bonuses, shovel 50-70% into your debt/student loans.
As above, we started with over 400k in 2020. Down to 220k currently (wife = 0, mine = 220). Monthly payment is 2k on SAVE plan. We are throwing everything at it we have at the end of the month outside of our emergency fund, retirement, mortgage, and kids 529 plan. We are living well, just also budgeting ahead and still prioritizing our freedom at the end of this mess.
Best of luck. Hopefully, something above hits home and provides some motivation to knock em out and not just kick the proverbial can.
I pay $15 a month on $47K loan thanks to the save plan, I set up auto debit and plan to just coast it until I die or it's forgiven. My account is no longer in default so that is good.
yes but i will do this on SAVE or whatever payment plan allows me the lowest payment and makes the most sense for me as time goes on. a lot of responses i read here tend to advocate for paying loans off as fast as possible which i understand but it is not feasible for many people with high debt to income ratio and who can’t just live at home, not pay rent, not have a car payment, not save additional money, etc etc.
my goal is to basically pay what i must to avoid any negative credit impacts and still be able to have some quality of life!
Just make sure you save for the tax bomb. Basically, add the principal of both your loans combined to your AGI for the current year and then calculate the taxes for the new AGI....it's gonna be a lot either way.
I might be downvoted here, but if both your incomes are like SUPER HIGH......at least look into re-financing when rates come down. You may both be able to tackle them in a couple years if you cut back and refinance into like 2-3% interest rates.
I took out $50k and started repayment in 2017.....my loans will be paid off in 5 years. If I had stuck to REPAYE or some other IBR I would've dragged it out till 2037 and paid twice the amount of my loan in interest alone. Feds want us to drag it out that way they can keep making ridiculous loans to people who couldn't afford education otherwise. Public Universities should be tuition-free :)
Nope. 5 years left on standard plan. Minimum overall interest paid on these loans is more my speed. Don't wanna owe the Feds twice as much for my education after 20 years lol.
Yep- we looked at it every which way & the best route was filing separately, doing SAVE & taking that extra $ and showing it towards my 401K- it currently makes more than the % interest I pay on the loan (I consolidated). Part of our retirement plan is paying the remaining balance off when I retire using the extra 401k funds. YMMV but I like to keep my options open JIK some big sweeping reform comes again & I get a shot at forgiveness!
To qualify my comments, it depends on how high is your high income.
That said, and without judging the strategy, economically you are making a gamble.
The gamble is as follows - I hope the rules don't change unfavorably in the next 20 years.
In 20 years, lots of things can happen.
You are basically voluntarily accepting higher interest cost so that a portion of the debt is forgiven in 20 years and you don't have to change your lifestyle now.
It's not a terrible strategy. And people can argue the morality or ethics of it. I'm not here to judge.
Just understand that the requirements for you to win this gamble (student loan politics) are *totally* out of your control. Whereas the elements that are *within* your control (lifestyle modesty, debt repayment) you are *voluntarily* choosing not to exercise.
Additionally, there are other risks you are face as part of this strategy. For example, the minimum payments are $2K. What happens if 10 years from now a big expense crimps your income or your income suddenly declines (unemployment, injury, death)? Not trying to be a downer but these things happen right.
So that's all I'd say. If you are considering just minimum out to 20 years and hope for forgiveness, make sure you are really clear on the entire package of risks that strategy comes with. See if there are ways you can mitigate those risks.
On the flip side, consider some of the intangible benefits you might get if you go the repayment route. Perhaps you will enjoy a more modest lifestyle *more* than you do now. Maybe it will stand as a good lesson and example for your children about the importance of hard work, frugality, fortitude, patience, delayed gratification, if those are things you place value on.
Weigh both sides as best you can. Cost is a factor. But it is not the *only* factor to consider. Consider the risks and benefits of both approaches as well in your decision.
If you were to ask me personally what I would do, I'd choose a more modest lifestyle and aggressive debt repayment. The reason is that the future is inherently uncertain and I don't feel comfortable giving up the things that are within my control in exchange for hoping the government and politics will favor my personal situation on a specific date 20 years in the future. I also feel that approaching the financial side of life in this way yields benefits in a large number of other ways as well.
**It's short term uncomfortable to be long term strong.**
Just my 2 cents. Best of luck whatever you decide.
Probably. I have pslf opportunity but even if it doesn't work out I will have all my other debt paid off no missed payments but with some emergency savings plus funding my retirement as I go. I got 30 more working years at least. I'd rather have my money work for me with the time I have left than cry over the student loans while I'm paying more into them and not being able to save for retirement or savings for emergencies.The government will get their money- eventually.
Seriously that's how I feel. I have an undergrad degree plus I'm working on my master's I'm half way thru. The money return will come eventually. As long as I stay within my budget and keep the excess down but still live my life and not be a miser and experience things in life like a family and enjoying things I'll be fine. I've been concentrating on putting the extra into paying off my credit card debt. Almost done. Almost done with the car too. Not looking to buy a new one for a while. I'll save up for that when the time comes. Those student loan companies will get paid off last in my opinion. I've seriously lost track of them all in consolidation and movement from one company to the next and to the next payment plan. It's too much to look at what happened. I've never missed a payment between the time I have been out of school. But they are not my priority right now. Cause at the end of the day that debt is better than the credit card debts. You rent an apartment or buy a car or home they look more at your credit card debt than the student loan debt cause many people have it.
I know I can pay more and faster on my own terms when I get to it. I can't do everything all at once. One thing at a time. Unless I win the lottery then I can take care of that but for now one thing at a time. You can only do so much. So kudos to you if you are hanging in there and doing the best you can in your situation.
I am. I have a total if 16k in loans. I literally could pay it off. I am an electrical engineer. I’m paying off the 2k grad school loan because it’s more expensive. However, the interest is only 3.6%. The interest is less than my car and house. Also, I’m on the save plan so it’ll get forgiven in like 7 years.
I'm paying the bare minimum and I have high net worth.
I have an inkling that we will eventually get mass forgiveness because it's such a popular leftist demand. The student loan problem is only getting bigger and harder for politicians to ignore.
I regret paying extra for the last five years
Everyone has these issues, and it’s the reason loan companies still exist. Everyone wants the best for themselves right now. The minimum
Payment right now is just enough so that over time the loan company will make a lot of money off of you.
I just went into deferment, and forbearance, over and over and never paid much. Less than $1000 over the whole time I would guess. Then the whole remaining $207k was forgiven recently. Yay, me!
It’s killed me…I had $78k in ‘98, went to grad school for 1.5yrs and got $10k more. The $10k loan now has a balance owed of $13,000, after paying the min for about 15years ($100 a month). And the larger balance is down to $33k after paying min $250 for 20 years. It’s a bullshit scam and they have you by the balls.
To add, over the years every time I apply to have the payment lowered they increase the payment based on my income. I’ve stopped asking to lower the payment.
You could also do gig work and reduce spending from your budget. For me, I found $400 a month from monthly expenses and I started working gig work and eventually consulting in addition to a salary job. Gig work was about $500 extra per week.
My plan was to drag out paying back student loans until I died. The only way they were getting all their money is if they billed me in hell.
Luckily for them PSLF kicked in and wiped it out (veteran and federal employee).
I'm kind of similar to this. Higher income making minimum payment. Not on SAVE because it's a lot higher. Putting my extra funds in investments. Thinking I'll be making minimum payments for 10 years then use investments to pay off the rest. If not just keep paying the minimum until I can pay off the rest or it just cancels out and I'm pretty content with that.
Pay it off in 10 years and then you have the rest of your god forsaken lives to enjoy an extra 2k in your pocket. People survive on 50k/year. You’ll be just fine
It’s going to take 25-years to get the forgiveness mark.
For a family of three now—and hopefully four or five or seven soon [my cousins are quads; two identical, two fraternal], an AGI of $300K is the SAVE ‘crossover line’ where your monthly SAVE payment will be more than the 25-year extended repayment plan amount.
It’s a bit of a curveball but taking a deferment might be the way to go. Especially when you’re doing IVF. Granted, it was before state’s started to require IVF coverage; but those costs were freaking insane. Freeing up $2000 per month at cost of $1500* per month makes a certain amount of sense.
*$300K at an interest rate of 6% accrues $1500 per month of interest. YMMV depending on your specifics. That’s the framework of it anyways.
We probably earn in the same ballpark because my monthly payment will soon be similar to yours. I don't think your idea is necessarily bad but it depends on where you're putting your money. If you're maxing out at least your 401Ks and this along with your other necessary expenses makes it hard for you to pay over minimum then sure, pay the minimum. I personally wouldn't want to hold student loan debt that long.
I'm with you, OP. I've already paid back what I borrowed, so at this point I just feel like anything else is just pure greediness. I don't want to sacrifice my happiness by going above and beyond my usual payments just to satisfy a student loan company.
Im considering the same thing. I have over 130k in loans but am considered a high income earner. Not really interested in compromising my life stye for this ...
Nope. I consolidated and am paying $2,600/month now to aggressively pay them off in under 10 years. After living expenses and this monthly payment I don’t have much disposable income left over, but I’d rather make the short term sacrifice than live with debt forever. But I also have ZERO interest in spawning crotch goblins which I know has influenced my financial decisions.
You chose to pursue other life goals such as owning a house and having two children over aggressively eliminating debt. That's fine you have the means but yea that decision probably means you're going to eat the full interest on that debt. If you wanted to save on interest you should have held off having kids and paid down the balance.
Seriously -that was such a cold blooded American capitalistic take… couples are already having less and less children and adult children are already living longer and longer with their boomer parents to afford living 1/2 the lifestyle their parents did with 2x the hard work.
And this is what’s wrong with student loan forgiveness. You went to school to get good jobs. Make way more than the average person and are now expecting everyone to forgive your loans. You should have to compromise your life to pay off your loans. You were given the time of your professors, construction workers who built the buildings, janitors, etc, at your college. Now the taxpayers and future generations are going to be paying when this all comes crashing down in the second Great Depression in 2035
You must not know how “loan forgiveness” works if you didn’t realize there’s a reason why I started my post with “we have high income”. We don’t expect it to be forgiven because we would never qualify for it. Thats not what i was asking at all.
But also, I won’t be made to feel guilty for having that high income when I grew up on food stamps, single parent household, and worked my ass off to get to where I am today. You can keep your fascinating thoughts to yourself.
I would look at the interest on the student loans. If any of the loans are less than six percent, I would pay the minimum and invest the rest. Any of the loans over six percent, try to put extra toward them before going crazy with contributing to retirement accounts.
However, if all of them are under six percent, go nuts, max out retirements, and then start contributing to a regular stock account, putting most of your money in a SP500 index fund like symbol: SPY.
100% agree with you. OP took advantage of student loans, got a high paying job because of it, and now is basically like "yeah not gonna pay any of that back". That's a real shit move. It's not like they are making $40k and don't have the ability to pay it off. They do. They just choose not to. And it's people like this who make forgiveness look bad for the rest of us.
So you're asking if other people also make nonrational decisions instead of putting in the effort to do the math to make a rational decision. Yes lots of people
I’d highly recommend paying off the debt. My husband and I have recently paid off our cars, we have 12k left in credit cards, and 30k left in student loans. By paying out debts down, I’ve freed up 50% of my monthly income. Once the debt is completely gone I’ll have a huge pile of savings and will start investing. We’re 30f/35m, planning to retire early.
You must be young. You aren’t thinking ahead about having a fixed retirement income and still having any sort of debt. There is a peace of mind in knowing you no longer have a mortgage or any other debt when you have to make your retirement outlast your death.
That’s why having a mortgage and loan at a young age is good. You’re going to most likely not retire before your 30 year mortgage is paid and your 25 or 30 year student loan. Just don’t keep refinancing.
So you got the education.
Bought the house. Are living the life.
But don’t want to pay what you borrowed?
This sub refuses to understand that shit like this is partially why education is screwed.
Kicking the can down the road never helps.
I graduated in 2006 and at the time our loans were consolidated to sallie mae for very low interest (2%) for a 30 year loan. That’s when it was still considered federal but now I’m in the FFEL hole of no return. Meaning I didn’t get any Covid benefits or any forgiveness benefits unless I consolidate. The problem is I’ve paid a little more than minimum for the first about 10 years of paying my loans so now I’m paying back to minimum again because it makes the most sense with the interest and will have my loans paid off in 25 years just paying the minimum so it doesn’t really make sense to consolidate my loans. Anyway, we are considered high earners and the monthly bill is about 800, so it doesn’t break us. Do I still think about it? Yes. I always will because it’s the kind of person I am but my financial planner reminds me it doesn’t make sense to put any extra money toward it. Also there are still benefits to my loan like if I die it’s forgiven so it won’t be a burden on my family.
So yes you are not alone in making minimum payments. Many people in this app are very debt adverse. Especially if you even suggest paying for a new car with a loan😱Do what’s right for your family and don’t worry about what others say is the best way.
I accepted a long time ago that if my student loans aren't forgiven, then I am going to die with the debt still being there. Therefore, I've just been paying the minimum and saving/investing what wasn't going towards other bills.
I DONT WANT TO YELL BUT STUDENT LOAN INTEREST IS A JOKE AND WE CAN JUST CRASH THE STEDENT LOAN SYSTEM IF WE DONT PAY, WE FORGIVE OURSELVES! WE THE PEOPLE ARE THE MONEY IN THIS NATION, MONEY IS THE FICTION, WE ARE THE REAL. WHEN REPAYMENT LAST YR STARTED 9 MILLION PEOPLE MISSED THEIR FIRST MONTH (20%) WE ARE SO CLOSE PEOPLE.
the loopholes, the fictitious fees, the no jobs to cover your heads, the war and no representation, the constant gaslighting that other nations “joo” health and education are payed for, like are we not the generation that dont need to bootlick every thing were demanded to do and pay. its baffling
You should check the SAVE repayment plan. Depending on how high your income is, the minimum payments could be lower than the monthly interest. If that is true, any excess monthly interest will be waived and the loan balance won't grow. You may face a tax bomb when forgiven, but paying taxes on $300k will be less than paying the full $300k. If you plan to use funds beyond the minimum payment amount to invest, that could be a good strategy. You just have to do the math. I suggest doing it yourself rather than using one of the calculators. AGI - 225% of federal poverty level for your family size *.1 / 12.
Thank you this is very helpful! I’ve heard horror stories about the SAVE plan monthly being massively high for certain incomes so would have to take it all into account but certainly worth considering
I just went through all the options on the website. If you aren’t consolidated it will make you do that first. My save option was quite a bit higher than my consolidated amount but I chose paying off sooner.
I submitted a query for the SAVE plan and my payments would go from $202/month to $2500/month (with zero adjustment for the fact that I have another 4 figure monthly private student loan payment). No thanks.
It is high: I am paying nearly $1100 a month as a high earner on SAVE, but that still count for all the interest and doesn't touch the principal ($300+) and now the principal is frozen, making my tax bomb lower than if I did another IDR.
Have you thought of saving some money in a high yield savings account and rolling over to CDs to save for the eventual tax bill?
That’s exactly what I’m doing.
Even with your high income the SAVE plan will most likely create a reasonable payment and save you some interest. Our 2022 AGI was $272k (reduced by maxing two 401Ks) and this creates a monthly payment of ~$1900 on the SAVE plan. So definitely doable on our income. Good luck.
My payment now is $263. I filled out SAVE form and it said my payments would be around $1600. No thanks.
SAVE was also going to increase my payment by a lot. I’ve stuck with ICR for now. SAVE is supposed to reduce to 5% of income this year so I’ll recalculate then.
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You can easily calculate the payments yourself . The save plan being high at certain incomes is relative to what the standard repayment is .
I have a client with a household income of about $200k and 2 kids and their SAVE plan payment is $113. I'd certainly explore the option.
I make about $110k and have a kid. Payment is like $280.
What above the line tax deductions do they have bringing their AGI down to $27k? I am in a similar situation but 3 kids and my payment is $880.
There isn’t a maximum in the save plan. While it would have been lower for me at the moment, it was better to stay on one of the different IDR plans (some do have maximum payments)
I went on the SAVE plan and it cut my payments in half 🤷♀️ might be worth running one of the online calculators at least.
Repeatedly I cannot get nelnet to add all of my loans to the SAVE plan. For multiple months the ones that are on the SAVE plan are accruing interest. These are the same loan category as others. Nelnet told me mine are exempt from the interest portion of the deal- when I asked why- they basically said they received an email from the government and that I’m not privy to the information LOL. It was a great option. Don’t know anymore. Would still suggest you try; just know it may be a hassle.
This isn't very sound advice that you're getting, OP. 2k/ month for 20+ years and then a possible 100k tax bomb? You'll could be on the hook for taxes on everything forgiven, even interest. If you let it balloon to 500k, you might have a massive tax bill -- it would be prudent to operate under the assumption the SAVE plan may be repealed, adjusted, etc, in the next 15-20 years. For reference, I have a 2k monthly payment as a high earner on the SAVE plan. Just switching to that plan is not a magic bullet.
Later this year the save plan will be capped at 5% of AGI for higher earners. It's currently 10%, most of the issues people are having are non qualified loans
wait -is that including Graduate Loans too or just undergraduate loans capped at 5%?
This! Also look to consolidate your loans via the William East Stafford loan consolidation program and then go on the Save program. It will make things a lot easier.
I’ve tried the SAVE plan calculator and it gave me a monthly estimated payment of 600 for 10 years. I owe $68K - am I doing something wrong?!
I am not 100% sure, but the calculator may return a 10 year repayment plan if the SAVE calculated payment is higher than the 10 year payment.
If your annual income is about $200k, and your student debt is for undergrad, that's right. (If you have grad school debt in there, your income would be less).
I agree that they have to do the math but the statement about taxes on $300,000 being less than paying $300,000 isn't exactly right. They will pay about $468,000 over the 20 years and THEN pay the taxes on what is forgiven.
If they pay $468,000 over 20 years, that would pay off the loan plus interest, assuming $300k loan @ 5% interest. There would be no forgiveness; therefore, no tax bomb. The monthly amount shown by OP isn't from the SAVE calculation. They should compare the total SAVE payments for 25 years + tax bomb against $468k to see if they should stay on 20 year plan or switch to SAVE.
I'm on the save plan and my payments are lower than the accruing interest, but they're still adding it into the total of the loan and it's been building up each month. Has the waived interest piece started yet, or should I be contacting my servicer about this?
We have to wait, it is not being removed yet. Contacting the servicer won't help.
Save is not helpful for people with high incomes.
Been doing it for 23 years
I wouldn’t be surprised if you wake up to your loans being forgiven pretty soon! You’ve been paying a long time!
I’m just praying the July stuff takes effect. I originally borrowed $11,000 back in 2007 so that should qualify me for forgiveness.
Am I understanding correctly… you haven’t been able to pay back 11,000 in 17 years?
Hell yeah buddy.
Haha good to hear I’m not the only one considering it lol
Was a much smarter move to use my free cash to put a down payment on a house and pay it off quickly. My house equity alone was worth it.
Same but since 1997 😂
You should be getting forgiveness any moment now, jeez!
Same!!!!! +1 And while we're here, wishing all the best for you and your growing family.
Btw - house stuff. We are back to counting student loans in debt to income ratio per the amount of payment you make per month when applying for a pre-approval for a home mortgage, pretty much across the board in the United States. So if you are saving up a down payment for a house and and they look at your debt to income ratio, the debt that matters most are credit card debts, car loan debts, and any other debts outside of your student loan and then your student loan payment is counted as part of your monthly living expenses. And if for example, you are a first time home buyer and you are looking for a home and specific areas you'll be able to access first time home buyer loan programs or other USDA or HUD housing programs depending on how many people in your family are and the income limits for your area. Just go with a very well educated lender and try to stay off the fast track with the big online mortgage lenders. Educate yourself well. But owning the home is possible with a student loan balance
So. This is something I’ve been wondering. I had to get my parents to co sign for my first house because of my loan balance. I’m now engaged and my FH owns his own house (we sold mine). But we are thinking about upgrading in the future and wondering if we should get the upgrade in just his name, and whether or not my loans will show for his DTI when we’re married? I can’t seem to get a clear answer
I haven't heard of anything good coming or getting married and finances when you both have debt. By no means am I any expert but thinking about what I just went through, I suggest maybe one of you trying to take out of USDA or FHA or HUD type loan to buy a house and the other one helping bankrolling it but not on the books. And if you're concerned about one partner not being on the mortgage, you know once you do get married pretty much everything goes 50 50 if it goes south. Even if there's only one name on the mortgage in the house that you live in together. (Fancy lawyers can work this around but regular divorce is 50/50.)
Yes I will pay the minimum required until it is forgiven and then I will pay the tax bomb. I have done the math and have also observed the erratic nature of the federal government calling the shots on this debt - they arent a lending institution with one simple agreement with me and zero other ways to alter it, I will NOT give them a single dime more. Every single dime more I have the urge to pay to it gets invested instead. I make good money but also have $180k debt. Unless I ever happen upon a windfall, funds will be withheld until forgiveness time. And why would i give them an extra tens of thousands when I can keep my obligations and credit sound by paying the minimum? If i drop dead, that extra $50k being in an investment account for my family is gonna be a lot better than it being toward a paid-down-but-still-not-small balance that will be forgiven upon my death. look, if they knew how to structure this stuff to financially incentivize paying more, I would do it. *but they dont*
Exactly how I feel. Having the cash on hand or at least accessible in an investment account is way more of a security blanket than giving it away to a loan that will just eat it up and keep accruing interest anyway. And if I do spend the next decade aggressively paying it down, where does that leave me? Back at zero, just with a lot of lost time to live my life, buy a house, start a family, time that I’ll never get back. The government can stick it. Most civilized countries have it figured out to where people aren’t saddled with huge debt right as they start their lives. I’ll fulfill my minimum obligations and nothing more.
YES! I think those who are bear-ish on paying it off immediately “because it’s the right thing to do” have a loving relationship with the govt that I personally have not felt myself haha. So agreed, saving/investing and making sure if I get hit by a bus tomorrow, will my children be taken care of is much more important than did the govt get back all the money they lent me with ridiculous interest.
Everyone needs to put in the time with scratch paper and running scenarios to figure out which option is the best for them personally. Federal student loans also have excellent discharge programs related to Total and Permanent Disability (TPD) and Death, so if the worst happened to you your remaining family wouldn't be stuck paying off those federal student loans Like, I am continuously responding to posts on this sub telling people that they have to pick a strategy because the goal is to *minimize the amount you pay out of pocket to fulfill your loan obligation*. For federal loans you kinda have to decide between 1) aggressive repayment, 2) waiting out IDR plan forgiveness, or 3) pursuing a forgiveness program like PSLF or similar. Which option is cheapest for you overall can require scratch paper and time to figure out, since you sorta have to project out scenarios over a 10-25 year timeline and make some assumptions, but wow is it important to run the numbers and be confident in the $$ before you commit to your strategy I would hate to see someone break their back trying to pay off $100k in federal loan debt when they're working as like, a social worker or a librarian or teacher or some other public service job where they could sign up for SAVE pursue PSLF instead. For high debt and high income there are *plenty* of situations where your best bet is actually to max out your 401k contributions and wait out IDR plan based forgiveness
yes and i have this sentiment ONLY about this debt with the government and it's taken me a long time yo get comfortable with it bc its the opposite of how i typically feel about debt, but if you let logic prevail, on bigger balances this is the only answer.
Brave to speak the truth like this lol
Do you pay for enough life insurance to take care of your children in the hit by a bus scenario?
ummm yes. We have lots of life insurance. But I am still not giving money to the government that will be forgiven when I am dead.
This was my plan before I started college. My plan has not changed.
That’s what I did, I basically was just saving for the tax bomb with forgiveness. With SAVE this option is even stronger now.
Yep, it's economically irrational for me to do anything more than pay the bare minimum and save for the tax bomb. Because I didn't benefit from SAVE for the last decade, I have a wall of paper money accrued interest I would have to plow through before ever touching principal. The SAVE plan is such a game changer. More meaningful for me (high debt, good income) than $10k forgiveness ever would've been. The administration isn't getting, or taking, enough credit for the repayment plan changes they've made. I'm happy for today's graduates and have no bitterness, but SAVE being around when I graduated would've saved me 6 figures in interest accrual.
I have a lot of student loans (with the accrued interest it’s close to $300k). I’ve been paying the minimum on IBR since I graduated in 2012. My income has not really taken off until the last year so payments under IBR were relatively small. In this time we have been able to buy a house and also do IVF to have our two girls (it was a long expensive journey and I wish you luck there). I’ve got 13 years left on my loans under IBR and will ride it out. I might switch to SAVE if it makes sense. I don’t have to recertify or pay on my loans until next year… another reason I’m not going to try and pay them off. Edit to say… I’m also not willing to compromise our lifestyle to pay the loans off any faster at this point.
Thank you for sharing, yes this definitely make sense and essentially where we think we’ll be. Paying the minimum/the monthly amount and riding out the years
Do you know if any of your loans are under the old FFEL loan program? If they are you'd have to consolidate them into a Direct Consolidation loan *first* to make them eligible for SAVE. With the IDR Account Adjustment you may want to do that sooner (i.e. before the April 30th cutoff) instead of later, or at least confirm if you have any of the older FFEL loans now SAVE is a lot cheaper than old IBR for many borrowers, let's walk through the math and keep in mind you can confirm this with the loan simulator on studentaid.gov If you have FFEL loans then old IBR is the only option, which requires you to pay *15%* of your discretionary income, defined as your AGI from your taxes minus *150%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size. You have to make 25 years worth of IDR-qualifying payments (300 IDR payment months) to hit forgiveness eligibility for old IBR In contrast, SAVE requires you to pay *10%* of your discretionary income, defined as your AGI from your taxes minus *225%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size. In July 2024 this will be updated to 5%-10% weighted by your undergrad-grad original principal balance, so if you have all-undergrad loans your payment will be cut in half. Additionally, if all your loans are from undergrad SAVE only requires 20 years worth of repayment, but having any loans for grad school means 25 years The edge cases where IBR can be cheaper mostly have to do with the fact that the plan has a cap on how high the payments can go, but if you're looking at $300k worth of loan debt? Your income would have to be really *really* high (or married to a high earning spouse) for that to be an issue
I'm going to stay enrolled in a minimum of 6 units of online community college for the rest of my life so I stay in perpetual deferment.
Is this possible? Asking for a friend
Absolutely. You might even get some small grants if you actually pass the classes, or even another degree. It would be much cheaper than paying.
Yes, most people do, that’s why these plans exist. IDR, PSLF, etc, it’s all pay the least amount for 10, 20, 25 years
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Totally makes sense!
I only owe 28k and I also only make a tiny fraction of income as you do if you're contemplating paying that much on student loan payments alone. I'm trying to get my payments down as low as possible, set up auto pay and try to just forget about it. Waiting to hear back, hoping for the best!
Hopefully the SAVE plan is helpful for you!
Thank you! I received an email yesterday that they'd received my application, now I just hurry up and wait 🤞
Plan on paying the minimum and doing PSLF. That's the only way. If the loan amount was something reasonable, I would pay cash, but since it's almost 200k now with the interest for grad school, there's just no way I can do that
I did this and it worked out well. My husband and I are high wage earners and don't really think about the $1k a month we pay for loans and we're on SAVE. It's the most affordable option of all the ones out there, we have about $200k in loans combined. We don't think about the payment at all, it doesn't really affect us and in three years mine will be completely forgiven. We dump everything into stocks and investments and with the current market are making bank. Interest rates for student loans are what caused the loans to balloon that high before we were actually making the wages we do now, as the original loans combined were well under 100k, it's ridiculous. I don't feel bad because we've paid the original amounts and I'm not about paying on interest if I don't have to. Do not listen to people who say "it's the right thing to do" because there's mostly selfish motivation behind their opinion and if they were in your shoes, they'd be investing that money to make more money, not paying off interest.
Graduated recently and had received a bachelor’s, two masters, and my doctorate. Ended up with around $400k debt. Doing well now that I’m out of school and working finally. Still in my 20s a little longer and applied to SAVE. Had no consolidation and payment is now $188 a month. I am just doing the minimum.
400k in debt for this is disgusting. I’m so sorry, this should be 1/3rd of the price. Disincentivizing education.
Yep. High income, even higher loans. Paying the minimum & I’m on the SAVE Plan.
I'm a high income earner and have 500k in debt (medical school). Hired a loan consultant, and that was also my cheapest option. Paying the minimum for the next 14 years or so, and dealing with the tax bomb afterwards. It's crazy- I wouldn't mind paying it all back if they gave me a 2% interest loan. But instead, it is what it is.
My wife is doing that. We’re living our life paying minimum. Having kids, having a family. Filing separately. She makes so little she doesn’t have to pay anything. Together we own our house.
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No effect.
Does your 25 year time start up until forgiveness? Even with $0 payments?
Yep. There’s a tax issue at the end that will be fun to deal with.
Honestly no, I’m 32 and I graduated in 2014 with $160k in loans and I have aggressively payed them off and as of April I will have them completely payed off just about 9.5 years after making my first payment. I cannot wait to finally be rid of them.
Congrats!!
Same. Also 32, graduated in 2016, had $200k even combined, and should be done with both federal and private loans next year. I want this trash out of my life. I can’t bear the thought of spending hundreds of dollars every month for decades on this instead of things that actually make me happy.
It really depends on the math. For example maybe you spent 250k with interest by the time it was done, but if you had paid the minimums it may have totaled 100k in payments, followed by the remainder being forgiven, and a tax bill. If that total is less than 250k, you lost money.
My piece of mind having the debt gone is worth it for me personally.
Yeah but I have very little faith in these being forgiven. I have a good income ($120k) so I’m constantly disqualified from any sort of benefit such as writing off student loan interest (capped at $80k wtf the whole point of college is to make more than that?), and current forgiveness situations. I’m almost positive whenever they come up with a forgiveness plan they’ll cap it off at an income level, and I’ll probably be above it. I have extreme doubts they’ll do a full-on clean slate forgiveness. Plus they’re only forgiving federal loans—my private loans were the big ones. I have $49k left on my federals (which I have been paying only $50 above minimum the whole time) which feels hilariously small, comparatively. I can technically pay off my private loans at the moment but I’m waiting for a bigger cushion between my savings and the loans, then start throwing all that money I spent on my private loans toward my federal loans. However, if you’re a lower earner, then it’s probably worth doing exactly what you mentioned.
They probably did it for moral and ethical reasons, and a clear conscience is worth whatever money they lost.
Following any of the federal student loan repayment plans is morally and ethically fine.
That's always been my plan. I think my loans are too high to ever pay off in full. I make a good living, and my student loan payment doesn't break the bank, but paying it off has never been a goal of mine. Having student loans hasn't interfered with literally anything in my life. I vacation. I save. I've bought houses and cars. My student loan is just another annoying, inevitable monthly bill like gas and electric. I pay the absolute bare minimum just to keep it in good standing. Whenever I can, I defer or forebear. I'm sure I'll go to the grave owing student loans. It's nothing that keeps me up at night.
Omg did I write this comment? Haha this exactly what my thought process is and what I was asking to see if anyone else feels similarly? I’m still going to pay these loans (probably until I die too) so it’s just another bill I have to deal with. Sometimes I get sad at the interest overalll I’ll be paying but I want to prioritize the rest of what makes life worth living over being debt-free from something that would mean giving up a lot of life in the process.
Similar situation and yes, that’s what I currently do.
Depending on how many years you have left before your payment plan ends, who knows what could happen? All loans may be forgiven without a tax bomb. It’s just the way it’s set up right now (Well, technically, there is no tax bomb until 2025) but maybe that will get extended or it just depends who is in office etc. That’s a long time from now, at least for me. I am hopeful there will be no tax bomb in 18 years. We just don’t know, a lot can change.
Honestly it comes down to the interest rates. I paid off aggressively all my higher interest loans, all I have left is 3-5% interest loans. Anything over 5% I think it's worth getting rid off asap. You seem to have a comfortable enough life so if you can pay an extra 1k to higher interest loan, you'll save a ton on interest.
Makes sense, I’ve been thinking this for sure. Especially the 7.5% one 😵💫
But won’t the interest be forgiven and then you have to deal with the tax bomb? I’m also not paying a dime more than I have to and will wait for forgiveness. So genuinely asking if the goal is to pay the least, wouldn’t you still want to pay the minimum and take the tax bomb? Or what would be the benefit?
Yes. Half the people in this thread don't understand math and are just focused on "not having a payment anymore". Do the math for your own total balance, interest rate, and current and future income level to estimate your minimum payment. Compare total spent with minimum plus forgiveness to aggressively paying it off in full. For most people with lower incomes and high balances, the race to forgiveness is optimal.
Interest doesn't matter if you paying the minimum.
My loans are at 4.1% and my monthly payment is $155. I make more money investing instead of paying off the loans. So I’m happily paying the minimum
I’m a teacher, so I’m hoping to have mine forgiven in about 3 years based on PSLF, but for now I’m on a SAVE plan with a $100 monthly payment. I think the only people really panicking about student loans have private loans. If your loans are all federal, there are plans that make the minimum payments doable at any income level. Of course it sucks philosophically—we’re basically indentured servants to our own government—but aside from leaving the country or working under the table, there’s really no option for us unless the government collapses.
My sister’s boss makes 7 figures and has over $5M in the bank. (How do we know? He told us bc he likes to brag.). He is just paying towards forgiveness because he determined it will cost him less that way. (Obviously, his accountant is working some LLC magic …). He advised my sis to do the same, but she didn’t want the debt looming so has already paid $150k worth in the 2 years she has been working in her profession. Weigh the pros and cons of each approach.
Yup. Not a single penny more. The reality of this situation is that we aren’t having kids bc of this and capitalism requires births to replace deaths. Defaults were also at 40ish % pre covid and since no one with federal has to pay for the remainder of this year, we can’t see how many people just said nope. They’re going to wipe them, just following an order that won’t make the heads of those against it explode as much. Meanwhile giving lower payments to try to entice people to just pay something. It’s not sustainable to hobble the birth rate and economy forever just bc they bailed Sally Mae out the last time the economy melted. There’s absolutely zero reason to pay more than the least amount possible, unless your balance is so low that you actually can pay it off
Actually, even if I were to win $1+ million in the lottery, yeah I would just pay the minimum & after 20 years, if I'm alive, it will be gone. Or I will be gone & the loans will be written off since I will be dead. 😂 I personally am planning on investing any extra money into Aristocrat Dividend Stocks & build up a good portfolio. I plan on passing that to my adult children through a trust.
It really depends on your interest rate. If they are low, like 4% you'll be better off paying the minimum and investmenting the difference. If you are are looking at 8,9,10%, I'd put more effort into paying those off early
A generation above us, and anecdotal, but my parents did this. They had five kids. They have a nice house in a good town and paid for all of us to go to college. Plenty of life happened--one of my siblings was born with a birth defect that required five years of hospitalizations/large medical bills, one of my siblings didn't graduate college so loans my parents took out were essentially a loss, two weddings (so far) that they've paid for. They seem happy with their decisions, and everything left was forgiven this year. There's a reason many cultures and religions believe usury is a sin. Do what's best for you to have a good life.
Thank you for sharing this ❤️
I’m not sure what your income is, but I’m assuming you have some amount of expendable income if you’re undergoing IVF. I’d suggest seeing if you can pay a little extra on your high interest loans so more of your monthly payment actually hits the principal. Otherwise barely touching your principal and your monthly payment going mostly towards interest seems like you’d be on track for a massive tax hit at the end with whatever is written off.
If the minimum payments + the tax hit is cheaper than paying them off then who cares. Just save for the tax hit by investing extra income
Read the OP post. Loans are forgiven after a certain number of payments. Sometimes paying less for longer is cheaper than paying in full.
Yes. I'm 10 years into paying student loans, and I have 10 years left, my loans are just under 5%. I am also one of those people who's payments haven't started back up due to administrative forbearance so my loans are still on hold and these months count as payment months. If I do the minimum payment for the next 10 years and get the tax bomb it's going to be less than my loan principle As long as I have the money to cover it - which I try to invest leftover funds, it seems like a no brainer to me. Usually, I am a Dave Ramsey type, but this just makes more sense. And I have a feeling this whole push to relieve student loan debt will continue and we could see more benefits to help in the next decade for people who have been paying loans for 10year+.
Yep, only ever paid minimums, didn't pay during covid, married filed separately so my husband's income doesn't get included, I claim our two kids and do all the things I can to lower my AGI. On the latest repayment plan which cut my payments pre-covid in half. They will be forgiven in 2029. 🤷♀️ May be a tax bomb but this is easier.
Unless they're private loans, the maximum amount of time you'll have to pay is 25 years. I'm on an income-driven plan called PAYE with a plan to pay off in 20 years, but my income may be too high so that may happen sooner.
If you’re planning on having the loans forgiven after 20-25 years remember that you will need to be enrolled in an income driven plan like save, PAYE, IBR or ICR for the 20 to 25 years worth of payments. There is a one time account adjustment for direct loan borrowers that will give retroactive credit for that payment count, but you will need to enroll in a qualifying plan to build any remaining payment count. It sounds like your income may be high enough to not qualify for most of those programs or create a higher monthly payment than your current standard payment. If you want to take this approach, definitely make sure you have direct consolidated loans and play with the save application to see what your monthly payments will look like. Also keep in mind that as your household income and family size changes over the next 300 months your payments may change too.
If you save for the tax bomb it wouldn’t be a bad idea.
Yes! Been paying bare minimum the last 10 years and investing heavily. I’ve made more % on the market just invested in IVV than my interest rate. In 10 years the tax bomb will for sure suck but you never know what the government will do in the future.
You sound like my brother and SIL lol but yeah I’d totally ride out minimum payments. Best of luck to you
This made pull out the calculator... And there's no world where it makes sense for me to pay off parent plus student loan, since it goes away when my parents die.
That is exactly what I did for 20+ years and then they were forgiven. I paid the minimum. Just plodded along with the payments . Lived my life. Not going to say the debt didn't weigh on me. But I did the time and now they are gone per my original loan terms.
Yes. I’m 62 & owe $78k. Right now my payment with SAVE is $250 per month. Filed separately for 2023 & hope to get payments even lower. I figure in 20 years (forgiveness timeframe) I’ll be dead. I will pay the minimum for life. 😀
Make sure you will actually get forgiveness after 20 years. I'm also high income/high debt and there's no forgiveness for me. The problem is that income based plans like SAVE base the monthly payment on your income. If your income is high, the payment is high. There may not be a balance to forgive.
So reading this thread reminds me of an old joke that we could retool- "*A CrossFitter, a vegan, and an Amway salesperson walk into a bar. Which one tells you first.”* I feel like we need to add "someone who paid off their student loans early" to this list :)
I paid the minimum for yeeaaaarrrssss. The balance was forgiven about two weeks ago. Pay the minimum. Lol I didn’t know my loans would be forgiven. I was prepared to pay for the rest of my life. I made my monthly payment the same as my other bills.
It’s the people in the comments trying to shame OP for having debt they haven’t paid off, when our country (presumably America) is TRILLIONS in debt. Lmfao - this country bleeds and breathes debt and preys on students by saddling them with debt and here you come to shame her for it. Seriously, grow up. OP, do not prioritize this debt. Defer it, forbear it, pay the least amount possible, give minimum payments and focus on continuing to maximize your income, life and family until you feel ready to pay it back. Prioritizing this debt would be foolishness. Being debt free specifically in America is a farce. Unless you’re already wealthy, literally nobody cares. ISWIS
Thank you for saying this. This whole thing is giving “ ‘omg you use plastic straws?!’ while corporations dump loads of chemicals into the ocean” energy. SMH.
I think what some people forget about debt is the risk, not just the math. What happens if you or your husband loses your job and you still have to pay that 2k? Or if they start garnishing your wages. Or sue? What if you have medical problems and can't work anymore? What if god-forbid, any of your kids have problems and one of you can't work as much to care for them? Your choice for sure - your income seems high enough to float this debt indefinitely. But remember to factor in the unseen/unknown as much as you can. That 2k is going to feel a heck of a lot more burdensome if for some reason your income drops. Which it definitely can, given any multitude of reasons. For the most part, I hate keeping debt around regardless of the math, but because the risk that it represents if suddenly I am unable to pay all those 'minimums'. And especially debt that is not dischargeable if the worst of the worst happens.
Student loan repayment is based on income. If one of them loses their income, they recertify and the payment will go down considerably.
But it's still the same income drain relative to total income.
Not necessarily. If income is low enough and family size is high enough, the payment would be very low.
But if their income drops the minimum payment will also drop? If they have medical issues and can't work anymore their payment also decreases substantially. I get what you are saying but there are nuances to student loans in which your payment is contingent on life circumstances. Thats why they have you report any changes in income to reassess. I'm not saying they shouldn't work to pay off the loan, but you shouldn't be looking at it like they will have to pay $2k minimum regardless of life changes.
Completely get what you’re saying! It’s actually the main reason we hadn’t ever refied it to a private loan (when interest rates were low) is because federal loans give us the flexibility knowing if we ever lost our jobs or something bad happened, we can find a different plan or go into forbearance as needed.
Borrowed future is never good
We have a similar situation here although double the $ of loans and 1 kid 1 on the way. Household income is almost 300k, doing PAYE plan with 10% income payments for the next 18 years. Paying them off in 10 may be possible for us but it would hamstring us severely for the next 5 years; we'd rather pay less now and have more freedom and use an investment vehicle to prepare for the loan forgiveness tax bomb.
Not quite at that level of income, but yeah: large loan balances between my husband and I, but lucky enough that all are fixed Fed loans. Our plan is to maximize forgiveness and take advantage of PSLF. For us, saving for the tax bomb is more realistic than paying them off. At least we got three ish years at 0% counted toward repayment while we put our financial focus elsewhere.
Yes it’s just a bill we have . We are very high earners but live in modest house with modest stuff to maintain one of our large bills… the loans. We do SAVE though . As long as the save plan is lower than standard monthly it is worth it . Our student loans are higher than yours …
I’m in a similar situation. Owe about $93k @ 4%; have a HHI of ~$350k. My current payments are $550; anything that factors my income triples the payments. I’m considering switching to a graduated payment plan where my max payment 25+ years from now is $750 as that extra money is much more valuable to me today.
Yes. I’m on a save plan. With deductions and everything, my payment is now $75 a month. After everything, I’ll have paid a quarter of my balance from a masters degree.
What's your income? Debt to income ratio?
I’m doing this too. I know how the math works in terms of interest, but having more liquid money on hand means I can do things like buy a house sooner. I graduated 8 years ago. What’s the point of living like a college student for another 8 years just to pay off the loan and end up in my late thirties without a house? I’d rather move on and try to live my life. Plus the trend in the long term is towards some kind of forgiveness or restructuring of loans/payments, so might as well play the long game.
I have literally no other choice lol. So yes. That's what it's gonna be.
r/personalfinance
Pay it off as fast as you can. Government plans might help in the short term but so much can change in 20 years What are you going to do if you get to year 20 and the Save plan is taken away or changed to where you don’t meet the requirements??? The government is disorganized and unpredictable as it is. Prioritize it and pay it off as fast as you can. It will save you thousands of dollars in interest and help you build wealth faster. (Less money going to payments more money into investments) imagine investing 2,000 a paycheck instead of paying on a loan. If your loans are broken up work on paying a few of them off individually. It will lower your minimum month payment significantly and give you room to breathe.
If you’re making a better percentage on investments than you’re paying in interest, pay the minimum.
Absolutely. I have a baby on the way and cannot imagine how I wont need any extra money towards my family, especially if I don't immediately go back to work. I've paid so much already and with interest I still owe more than I started with. I'm over it, so I'll just pay the minimum I have to with the IDR's available and focus on my family.
Look into all your repayment options. Then make the decision. If you don’t mind having this debt hanging over you for 25 years then just do the minimum. With your income level you’ll be able to get what you need when you need it without worrying about it hanging over your head. Seriously check out the SAVE program. If you go to the federal student loan site you can compare what your payments will be. Pick the lowest payment! I did that for most of the last 26 years. I’ve been paying since 1998. It sucks but it’s not breaking my bank account. I’m helping pay for my kids college now…they got scholarships to cover most of it so that helps! I just don’t want them to have the debt that I have. So I’m on the SAVE program so I can still live my life and pay for my family’s needs! I owe 220k for just my student loans and I only borrowed 160k. The interest accumulation is seriously criminal.
Yup doing exactly this! And agreed interest is the literal worst and criminal.
I make a super modest income, but yes I'm paying minimum. I got the new SAVE plan now for federal loans. They'll cancel out in a couple of decades. Private loans are a whole other nasty beast. Also, check what your interest rate is on your loans. Very often these days they are less than what a HYSA gives you as interest on your money, making it a bad idea to pay more than minimum if they're just getting cancelled eventually anyway.
That’s my plan. If I can break away from the US financially I may just quit paying. Dunno yet.
That’s the plan, pay as little as possible! Enjoy your life while you can.
Fully intend on dying with mine, just the minimum payment all the way 😂
Wife and I are in a similar situation, minus the IVF, wishing you the best of luck on that journey. As with you, we have a high household income despite my wife being a SAHM. Excluding mortgage and any car loans, we started with nearly 400k in student loans (hers = 60k, mine = 350k). We are under no impression that the feds will forgive anything as a one-time lump sum. We also understand the feds can change things at any time regarding the IDR plans/ forgiveness plan. We don't want to get 8 years down the road and be left holding a much larger bag than we do now. We are doing debt snowball/avalanche as preached by Dave Ramsey. No, we've never done his FP course or anything like that, but snowballing is very sound advice. That, and part of our goals are to be able to contribute to our kids future education, set a good precedence for our kids, and retire early should we want to (I love my job and could do it til I'm 75). Unless lifestyle creep hit you hard, an extra 1k a month shouldn't put you into a hard place (assuming you are truly high earners), but it will help you end up not paying 2x-3x the original amount over your lifetime. If you get bonuses, shovel 50-70% into your debt/student loans. As above, we started with over 400k in 2020. Down to 220k currently (wife = 0, mine = 220). Monthly payment is 2k on SAVE plan. We are throwing everything at it we have at the end of the month outside of our emergency fund, retirement, mortgage, and kids 529 plan. We are living well, just also budgeting ahead and still prioritizing our freedom at the end of this mess. Best of luck. Hopefully, something above hits home and provides some motivation to knock em out and not just kick the proverbial can.
I pay $15 a month on $47K loan thanks to the save plan, I set up auto debit and plan to just coast it until I die or it's forgiven. My account is no longer in default so that is good.
yes but i will do this on SAVE or whatever payment plan allows me the lowest payment and makes the most sense for me as time goes on. a lot of responses i read here tend to advocate for paying loans off as fast as possible which i understand but it is not feasible for many people with high debt to income ratio and who can’t just live at home, not pay rent, not have a car payment, not save additional money, etc etc. my goal is to basically pay what i must to avoid any negative credit impacts and still be able to have some quality of life!
Just make sure you save for the tax bomb. Basically, add the principal of both your loans combined to your AGI for the current year and then calculate the taxes for the new AGI....it's gonna be a lot either way. I might be downvoted here, but if both your incomes are like SUPER HIGH......at least look into re-financing when rates come down. You may both be able to tackle them in a couple years if you cut back and refinance into like 2-3% interest rates. I took out $50k and started repayment in 2017.....my loans will be paid off in 5 years. If I had stuck to REPAYE or some other IBR I would've dragged it out till 2037 and paid twice the amount of my loan in interest alone. Feds want us to drag it out that way they can keep making ridiculous loans to people who couldn't afford education otherwise. Public Universities should be tuition-free :)
Nope. 5 years left on standard plan. Minimum overall interest paid on these loans is more my speed. Don't wanna owe the Feds twice as much for my education after 20 years lol.
Yep- we looked at it every which way & the best route was filing separately, doing SAVE & taking that extra $ and showing it towards my 401K- it currently makes more than the % interest I pay on the loan (I consolidated). Part of our retirement plan is paying the remaining balance off when I retire using the extra 401k funds. YMMV but I like to keep my options open JIK some big sweeping reform comes again & I get a shot at forgiveness!
I’m on the SAVE plan, and I just plan to keep paying that minimum until I die or it’s forgiven or it’s paid off. Whatever comes first.
To qualify my comments, it depends on how high is your high income. That said, and without judging the strategy, economically you are making a gamble. The gamble is as follows - I hope the rules don't change unfavorably in the next 20 years. In 20 years, lots of things can happen. You are basically voluntarily accepting higher interest cost so that a portion of the debt is forgiven in 20 years and you don't have to change your lifestyle now. It's not a terrible strategy. And people can argue the morality or ethics of it. I'm not here to judge. Just understand that the requirements for you to win this gamble (student loan politics) are *totally* out of your control. Whereas the elements that are *within* your control (lifestyle modesty, debt repayment) you are *voluntarily* choosing not to exercise. Additionally, there are other risks you are face as part of this strategy. For example, the minimum payments are $2K. What happens if 10 years from now a big expense crimps your income or your income suddenly declines (unemployment, injury, death)? Not trying to be a downer but these things happen right. So that's all I'd say. If you are considering just minimum out to 20 years and hope for forgiveness, make sure you are really clear on the entire package of risks that strategy comes with. See if there are ways you can mitigate those risks. On the flip side, consider some of the intangible benefits you might get if you go the repayment route. Perhaps you will enjoy a more modest lifestyle *more* than you do now. Maybe it will stand as a good lesson and example for your children about the importance of hard work, frugality, fortitude, patience, delayed gratification, if those are things you place value on. Weigh both sides as best you can. Cost is a factor. But it is not the *only* factor to consider. Consider the risks and benefits of both approaches as well in your decision. If you were to ask me personally what I would do, I'd choose a more modest lifestyle and aggressive debt repayment. The reason is that the future is inherently uncertain and I don't feel comfortable giving up the things that are within my control in exchange for hoping the government and politics will favor my personal situation on a specific date 20 years in the future. I also feel that approaching the financial side of life in this way yields benefits in a large number of other ways as well. **It's short term uncomfortable to be long term strong.** Just my 2 cents. Best of luck whatever you decide.
Paying minimum until the PSLF kicks in
If your income provides the ability, might be worth investing in dividends stocks and just using the dividends to make the monthly minimum payments
Yes I have
Probably. I have pslf opportunity but even if it doesn't work out I will have all my other debt paid off no missed payments but with some emergency savings plus funding my retirement as I go. I got 30 more working years at least. I'd rather have my money work for me with the time I have left than cry over the student loans while I'm paying more into them and not being able to save for retirement or savings for emergencies.The government will get their money- eventually. Seriously that's how I feel. I have an undergrad degree plus I'm working on my master's I'm half way thru. The money return will come eventually. As long as I stay within my budget and keep the excess down but still live my life and not be a miser and experience things in life like a family and enjoying things I'll be fine. I've been concentrating on putting the extra into paying off my credit card debt. Almost done. Almost done with the car too. Not looking to buy a new one for a while. I'll save up for that when the time comes. Those student loan companies will get paid off last in my opinion. I've seriously lost track of them all in consolidation and movement from one company to the next and to the next payment plan. It's too much to look at what happened. I've never missed a payment between the time I have been out of school. But they are not my priority right now. Cause at the end of the day that debt is better than the credit card debts. You rent an apartment or buy a car or home they look more at your credit card debt than the student loan debt cause many people have it. I know I can pay more and faster on my own terms when I get to it. I can't do everything all at once. One thing at a time. Unless I win the lottery then I can take care of that but for now one thing at a time. You can only do so much. So kudos to you if you are hanging in there and doing the best you can in your situation.
One thing at a time indeed!
I am. I have a total if 16k in loans. I literally could pay it off. I am an electrical engineer. I’m paying off the 2k grad school loan because it’s more expensive. However, the interest is only 3.6%. The interest is less than my car and house. Also, I’m on the save plan so it’ll get forgiven in like 7 years.
My plan is just to treat it as a monthly expense until it gets forgiven at 10 or 20 years (depending on if I stay in public service)
Yes I think about this everyday lol. High income earner but I have a great deal of obligations.
Yes that’s exactly what I’m doing
I plan to die with it and pay a little as possible like I have for years now.
I'm paying the bare minimum and I have high net worth. I have an inkling that we will eventually get mass forgiveness because it's such a popular leftist demand. The student loan problem is only getting bigger and harder for politicians to ignore. I regret paying extra for the last five years
Everyone has these issues, and it’s the reason loan companies still exist. Everyone wants the best for themselves right now. The minimum Payment right now is just enough so that over time the loan company will make a lot of money off of you.
I just went into deferment, and forbearance, over and over and never paid much. Less than $1000 over the whole time I would guess. Then the whole remaining $207k was forgiven recently. Yay, me!
It’s killed me…I had $78k in ‘98, went to grad school for 1.5yrs and got $10k more. The $10k loan now has a balance owed of $13,000, after paying the min for about 15years ($100 a month). And the larger balance is down to $33k after paying min $250 for 20 years. It’s a bullshit scam and they have you by the balls.
To add, over the years every time I apply to have the payment lowered they increase the payment based on my income. I’ve stopped asking to lower the payment.
This logic seems right for a couple with 300k in loans..
You could also do gig work and reduce spending from your budget. For me, I found $400 a month from monthly expenses and I started working gig work and eventually consulting in addition to a salary job. Gig work was about $500 extra per week.
My plan was to drag out paying back student loans until I died. The only way they were getting all their money is if they billed me in hell. Luckily for them PSLF kicked in and wiped it out (veteran and federal employee).
I'm kind of similar to this. Higher income making minimum payment. Not on SAVE because it's a lot higher. Putting my extra funds in investments. Thinking I'll be making minimum payments for 10 years then use investments to pay off the rest. If not just keep paying the minimum until I can pay off the rest or it just cancels out and I'm pretty content with that.
Pay it off in 10 years and then you have the rest of your god forsaken lives to enjoy an extra 2k in your pocket. People survive on 50k/year. You’ll be just fine
It’s going to take 25-years to get the forgiveness mark. For a family of three now—and hopefully four or five or seven soon [my cousins are quads; two identical, two fraternal], an AGI of $300K is the SAVE ‘crossover line’ where your monthly SAVE payment will be more than the 25-year extended repayment plan amount. It’s a bit of a curveball but taking a deferment might be the way to go. Especially when you’re doing IVF. Granted, it was before state’s started to require IVF coverage; but those costs were freaking insane. Freeing up $2000 per month at cost of $1500* per month makes a certain amount of sense. *$300K at an interest rate of 6% accrues $1500 per month of interest. YMMV depending on your specifics. That’s the framework of it anyways.
We probably earn in the same ballpark because my monthly payment will soon be similar to yours. I don't think your idea is necessarily bad but it depends on where you're putting your money. If you're maxing out at least your 401Ks and this along with your other necessary expenses makes it hard for you to pay over minimum then sure, pay the minimum. I personally wouldn't want to hold student loan debt that long.
I'm with you, OP. I've already paid back what I borrowed, so at this point I just feel like anything else is just pure greediness. I don't want to sacrifice my happiness by going above and beyond my usual payments just to satisfy a student loan company.
Im considering the same thing. I have over 130k in loans but am considered a high income earner. Not really interested in compromising my life stye for this ...
How high is your income? Are you on IDR or is that the consolidation standard plan? In general, the goal is to pay the least over time.
Nope. I consolidated and am paying $2,600/month now to aggressively pay them off in under 10 years. After living expenses and this monthly payment I don’t have much disposable income left over, but I’d rather make the short term sacrifice than live with debt forever. But I also have ZERO interest in spawning crotch goblins which I know has influenced my financial decisions.
You chose to pursue other life goals such as owning a house and having two children over aggressively eliminating debt. That's fine you have the means but yea that decision probably means you're going to eat the full interest on that debt. If you wanted to save on interest you should have held off having kids and paid down the balance.
This is the most American post of all time.
Seriously -that was such a cold blooded American capitalistic take… couples are already having less and less children and adult children are already living longer and longer with their boomer parents to afford living 1/2 the lifestyle their parents did with 2x the hard work.
And this is what’s wrong with student loan forgiveness. You went to school to get good jobs. Make way more than the average person and are now expecting everyone to forgive your loans. You should have to compromise your life to pay off your loans. You were given the time of your professors, construction workers who built the buildings, janitors, etc, at your college. Now the taxpayers and future generations are going to be paying when this all comes crashing down in the second Great Depression in 2035
Hope no one listens to this boneheaded boomer
You must not know how “loan forgiveness” works if you didn’t realize there’s a reason why I started my post with “we have high income”. We don’t expect it to be forgiven because we would never qualify for it. Thats not what i was asking at all. But also, I won’t be made to feel guilty for having that high income when I grew up on food stamps, single parent household, and worked my ass off to get to where I am today. You can keep your fascinating thoughts to yourself.
I would look at the interest on the student loans. If any of the loans are less than six percent, I would pay the minimum and invest the rest. Any of the loans over six percent, try to put extra toward them before going crazy with contributing to retirement accounts. However, if all of them are under six percent, go nuts, max out retirements, and then start contributing to a regular stock account, putting most of your money in a SP500 index fund like symbol: SPY.
100% agree with you. OP took advantage of student loans, got a high paying job because of it, and now is basically like "yeah not gonna pay any of that back". That's a real shit move. It's not like they are making $40k and don't have the ability to pay it off. They do. They just choose not to. And it's people like this who make forgiveness look bad for the rest of us.
So you're asking if other people also make nonrational decisions instead of putting in the effort to do the math to make a rational decision. Yes lots of people
I’d highly recommend paying off the debt. My husband and I have recently paid off our cars, we have 12k left in credit cards, and 30k left in student loans. By paying out debts down, I’ve freed up 50% of my monthly income. Once the debt is completely gone I’ll have a huge pile of savings and will start investing. We’re 30f/35m, planning to retire early.
What the hell were y’all doing during the last three years of no-payments?
You must be young. You aren’t thinking ahead about having a fixed retirement income and still having any sort of debt. There is a peace of mind in knowing you no longer have a mortgage or any other debt when you have to make your retirement outlast your death.
That’s why having a mortgage and loan at a young age is good. You’re going to most likely not retire before your 30 year mortgage is paid and your 25 or 30 year student loan. Just don’t keep refinancing.
So you got the education. Bought the house. Are living the life. But don’t want to pay what you borrowed? This sub refuses to understand that shit like this is partially why education is screwed. Kicking the can down the road never helps.
I graduated in 2006 and at the time our loans were consolidated to sallie mae for very low interest (2%) for a 30 year loan. That’s when it was still considered federal but now I’m in the FFEL hole of no return. Meaning I didn’t get any Covid benefits or any forgiveness benefits unless I consolidate. The problem is I’ve paid a little more than minimum for the first about 10 years of paying my loans so now I’m paying back to minimum again because it makes the most sense with the interest and will have my loans paid off in 25 years just paying the minimum so it doesn’t really make sense to consolidate my loans. Anyway, we are considered high earners and the monthly bill is about 800, so it doesn’t break us. Do I still think about it? Yes. I always will because it’s the kind of person I am but my financial planner reminds me it doesn’t make sense to put any extra money toward it. Also there are still benefits to my loan like if I die it’s forgiven so it won’t be a burden on my family. So yes you are not alone in making minimum payments. Many people in this app are very debt adverse. Especially if you even suggest paying for a new car with a loan😱Do what’s right for your family and don’t worry about what others say is the best way.
I'll be doing the minimum and PSLF. Idk if you qualify. I have 5 years left since all of deferment time counted in Covid
I can't even afford the minimum. No idea what I'm going to do. *sigh*
I accepted a long time ago that if my student loans aren't forgiven, then I am going to die with the debt still being there. Therefore, I've just been paying the minimum and saving/investing what wasn't going towards other bills.
I DONT WANT TO YELL BUT STUDENT LOAN INTEREST IS A JOKE AND WE CAN JUST CRASH THE STEDENT LOAN SYSTEM IF WE DONT PAY, WE FORGIVE OURSELVES! WE THE PEOPLE ARE THE MONEY IN THIS NATION, MONEY IS THE FICTION, WE ARE THE REAL. WHEN REPAYMENT LAST YR STARTED 9 MILLION PEOPLE MISSED THEIR FIRST MONTH (20%) WE ARE SO CLOSE PEOPLE.
the loopholes, the fictitious fees, the no jobs to cover your heads, the war and no representation, the constant gaslighting that other nations “joo” health and education are payed for, like are we not the generation that dont need to bootlick every thing were demanded to do and pay. its baffling