In light of all these finance threads poping up, what are YOUR plans to handle the debt?

[Jordan95]

Nailed it.

Can't tell if this is sarcasm.

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[Redtwogreen]

I've never really seen this discussed... Can't people refinance after graduation? I know you will lose the perks of federal loans (IBR, etc etc) which is RISKY, but you can potentially end up with a lower interest rate. I'm talking about consolidators like Sofi, Earnest, DRB, etc... Any thoughts on this for the more experienced?

Absolutely people can refinance. This is our plan.

We recently signed up for REPAYE. We have no intention of actually being forgiven of our loans. We chose REPAYE because of the 50% interest subsidy. We blog about our specific plan over at www.redtwogreen.com if you want all the details. Our current combined student debt load is $599,464. We've paid off about $30,000 in the last few months. I am a lawyer and hubby is a dentist as of this year.

In a few more months, once we are able to prove that our income is solid, among other things, we will refinance to get a lower interest rate. Some of hubby's interest rates for dental school are as high as 7.9%. We definitely need to refinance when we can.

Even though our debt is so high, I am very wary of the IBR programs. The terms that you sign are fairly unfavorable-- basically the terms can get changed on you down the road. That means we don't really know what the tax implications (among other things) will be 10-25 years from now. I am very pro refinance your loans and knock them out as quickly as you can, but I totally understand that it might make sense for some people to choose IBR.

 

[Redtwogreen]

Actually no. A mortgage yes, but not loans. Had an endo discuss this very scenario with me and it was his justification for why he paid off his mortgage first and then his loans.

^^ What @brigdawg521 said, with the assumption that you have federal loans and/or haven't refinanced with a lender that carves out an exception to come after your family.

 

[armorshell]

This isn't the traditional path, but I'm planning on going to my state school, specializing into oral path, and then working for a state school (hopefully my own) as a member of the faculty. By my estimation, I'll need about a $291,000 loan for tuition and living expenses for all four years of dental school. I'm going to finance my loans into the REPAYE/PAYE/IBR (haven't figured out which is best) (https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven) program and then since I plan on working for a state school, I'll be able to utilize the PSLF (https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service) program.

I really love oral pathology and want to teach, so this makes the most sense to me. In theory, I'll be paying 10% of my discretionary income for 10 years (120 payments per month) and then the rest of the debt is forgiven. Since I expect a lower salary due to the nature of academic work, I think this is my best option. Unfortunately this all gets derailed if any of these programs get cut, but this is the best option I've come up with.

When you finally get there, don't forget that these programs are strong incentives for pre-tax savings programs. When you negotiate your academic contract, negotiate for benefits over salary!

These are great programs to drive people into academic practice and the public/non-profit sector, which has long suffered from brain drain.

In terms of the programs disappearing, consider that some of the primary beneficiaries of this program are lawyers, many if whom are in worse positions from a student loan standpoint than any of us. I'd bet any legislative challenge to these programs are going to be hard-fought by the various bar organizations

 

[super frank]

Absolutely people can refinance. This is our plan.

We recently signed up for REPAYE. We have no intention of actually being forgiven of our loans. We chose REPAYE because of the 50% interest subsidy. We blog about our specific plan over at www.redtwogreen.com if you want all the details. Our current combined student debt load is $599,464. We've paid off about $30,000 in the last few months. I am a lawyer and hubby is a dentist as of this year.

In a few more months, once we are able to prove that our income is solid, among other things, we will refinance to get a lower interest rate. Some of hubby's interest rates for dental school are as high as 7.9%. We definitely need to refinance when we can.

Even though our debt is so high, I am very wary of the IBR programs. The terms that you sign are fairly unfavorable-- basically the terms can get changed on you down the road. That means we don't really know what the tax implications (among other things) will be 10-25 years from now. I am very pro refinance your loans and knock them out as quickly as you can, but I totally understand that it might make sense for some people to choose IBR.

Thank you, great blog. I'll take a closer read when I'm home from this interview!

 

[Domonu]

When you finally get there, don't forget that these programs are strong incentives for pre-tax savings programs. When you negotiate your academic contract, negotiate for benefits over salary!

These are great programs to drive people into academic practice and the public/non-profit sector, which has long suffered from brain drain.

In terms of the programs disappearing, consider that some of the primary beneficiaries of this program are lawyers, many if whom are in worse positions from a student loan standpoint than any of us. I'd bet any legislative challenge to these programs are going to be hard-fought by the various bar organizations

Thanks for bringing that up. I had done a little bit of research into some of the ways to reduce taxable income but didn't think to request benefits instead of salary. I love academics and hopefully these programs make it feasible! I suppose if there's a whole team of lawyers backing it, that would tend to increase the longevity of the programs haha

 

[Apramana]

In terms of the programs disappearing, consider that some of the primary beneficiaries of this program are lawyers, many if whom are in worse positions from a student loan standpoint than any of us. I'd bet any legislative challenge to these programs are going to be hard-fought by the various bar organizations

Great prediction.

"Four borrowers and the American Bar Association have filed a suit in United States District Court in Washington against the department."
https://www.nytimes.com/2017/03/30/business/student-loan-forgiveness-program-lawsuit.html?_r=0