Submitted by BigBigLoans t3_11jnzqz in personalfinance
Hi all,
Due to a long and winding road through college, I currently have ~$420k in student loans. Yes, seriously. How do I even handle this as I begin preparing to plan for the future?
Key info:
• I’m 30, graduated less than a year and haven’t started paying on the student loans yet • Wife is 27 and has no student loans • I am a pharmacist, wife is an RN • I work full time, wife works part time. One of us takes care of our child when the other is working • We have 1 child, less than a year old. We originally wanted 2+ children but after having 1 and going through hell, we aren’t so sure anymore • We are currently living with my wife’s family, and are saving for a house. While we’re happy with this situation now, neither of us wants to live with family long term
Income:
• ~$153k pre tax for both my wife and I combined
Debts:
• ~$420k in student loans (all federal) • ~$25k left total between 2 car payments • ~$7k medical debt • $0 credit card/other loan debt
Assets:
• ~$16k in savings
What I’ve been told is that I’m never really going to be able to begin to actually pay off the student loans, as the interest alone is going to be a killer, so it was recommended that I do one of the repayment programs that pays off student loans after 20/25 years. I work in the private sector so no public student loan forgiveness.
Where do I even begin? I’ve just started to read all of the info on this and other finance subreddits and it seems like I’ll be stuck in this student loan hole with no way out. In the short term (i.e. as soon as we can afford it) we want to buy a small starter house, but beyond that it’s all up in the air.
EDIT: Correct me if I’m wrong here, but wouldn’t I end up paying more if I actually paid off the loan as opposed to doing the loan forgiveness? Assuming I have an average interest rate of 6.5% on $420k loans and take 10 years to pay it off that’s $572k I’d be paying, according to SmartAssest’s calculator. Whereas the calculator on studentaid.gov is saying the lowest I can pay and have my student loans be forgiven is $243,538 https://i.imgur.com/sziEK8i.jpg And even with the tax from the forgiveness of $645k, which comes out to be $224k, that’s still $467k
