300 K in debt after graduation, how to pay off aggressively?

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Feb 11, 2020
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So I just did my exit counseling on my loans and I saw that I have 300 K loans as total balance. I couldn’t believe it was my balance. :(I used to think i can have max of 250 K. Anyways, how do pay this off aggressivel? I am graduating this May and have offer from retail chain for California.

what payment options are good? I won’t have any bills to pay besides this as husband wants me to pay off loans first. This might sound unrealistic but I want to pay it off in 3-4 years max. i am thinking on doing PAYE? is it better option or should I do different option. Also, i heard that if your spouse makes more money then you can have higher payments? We are planning on buying house soon but before that I want to get rid of this loans.

Any one in similar situation? I would really appreciate if someone can share some tips on this.
 

Momus

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It's gonna take you minimum 4 yrs to pay this off assuming you freeload everything off your husband back.

If you depend on this income for your living expenses, expect 6+ yrs minimum to pay it off. Good luck.
 
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rxkrafted

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Punch in the numbers with different interest rates in calculators they provide online and weigh your options...
Student Loan Calculators: Estimate Payments & Payoff | Student Loan Hero

With the information I have so far from you, i'd probably look into an IBR plan and file separate taxes. If you really wanted to payoff in 4 years and refinanced to a 3.5% interest rate, you would have to pay ~$6,700 per month.
 
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If you’re going into retail and not a hospital/non profit/govt, refinance those loans to SoFi, DRB, First Republic, etc for a lower variable rate and aggressively pay off.

Variable rate is a good option at this point due to economic conditions


*refinance after you’ve passed your work probation period and have steady work, if you have risks of unemployment, stay on with federal loans.


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APN-59 rph

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Do as much of the above as possible..then live like a church mouse..No new cars...houses..kids...don't get divorced..keep your job no matter what...It's too late for you..but REALLY people?
 

Gombrich12

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If they are federal loans I would not pay more than the minimum amount on PAYE/PSLF. The loans will be forgiven eventually.
 
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Sine Cura

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In 20 years there will be bigger problems for society at large than tax bombs going off.

Pay the min
 
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If you’re going into retail and not a hospital/non profit/govt, refinance those loans to SoFi, DRB, First Republic, etc for a lower variable rate and aggressively pay off.

Variable rate is a good option at this point due to economic conditions


*refinance after you’ve passed your work probation period and have steady work, if you have risks of unemployment, stay on with federal loans.


Sent from my iPhone using SDN

I got floater position and seems like hours are not guaranteed so will wait around to refinance until I am confident about working situations.
 
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It's gonna take you minimum 4 yrs to pay this off assuming you freeload everything off your husband back.

If you depend on this income for your living expenses, expect 6+ yrs minimum to pay it off. Good luck.

Do you think any other source of income that can expedite the repaying situation? I eventually want to do something non pharmacy stuff as main source of income. Also, I dont want to work in retail forever. I want to try out mail order so I plan on changing jobs in one year when mail order opportunity opens up and I have some experience.
 
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If they are federal loans I would not pay more than the minimum amount on PAYE/PSLF. The loans will be forgiven eventually.

Really? I don’t want to live with burden of having this much debt on me so want to pay that off. Debt forgiveness is nice but we don’t know when that will happen.
 
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MrBonita

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I would move to vegas and work in a strip club. I one time got a lap dance from a girl and she told me her day job was a pharmacist and she said she did this at night to pay off her loans.

 
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mentos

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I would move to vegas and work in a strip club. I one time got a lap dance from a girl and she told me her day job was a pharmacist and she said she did this at night to pay off her loans.


Must be awkward if one of her patients buys a lap dance from her.
 
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Pay the bare minimum. Try not to pay at all! You're nuts if you refinance to private.

Especially during these uncertain times of the pandemic... I agree with you Ace. Federal loans give a lot of protection right now if you lose your job, and giving you 6 free payments essentially right now.
 
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VictorOfHungerGames

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So I just did my exit counseling on my loans and I saw that I have 300 K loans as total balance. I couldn’t believe it was my balance. :(I used to think i can have max of 250 K. Anyways, how do pay this off aggressivel? I am graduating this May and have offer from retail chain for California.

what payment options are good? I won’t have any bills to pay besides this as husband wants me to pay off loans first. This might sound unrealistic but I want to pay it off in 3-4 years max. i am thinking on doing PAYE? is it better option or should I do different option. Also, i heard that if your spouse makes more money then you can have higher payments? We are planning on buying house soon but before that I want to get rid of this loans.

Any one in similar situation? I would really appreciate if someone can share some tips on this.
Do the simple math. You make on average of $130k ish as a pharmacist. Probably abit more in California. After taxes, you'd be paid 100k ish. So if you use ALL of your income working full time, you could potentially pay it off in 4-5 years with interest. Is that a good idea with $300k, fawk no lol

If you file taxes with your husband, when you re-certify your PAYE, they'll consider your hubby's income so if you're doing PAYE, it would be better if you file separately. But that would also depends on your situation with mortgage, kids etc.

Based on my calculation, if you owe more than $150k, it's always better to do PAYE for 20 years. If you're reporting your payroll correctly, you'd be paying about $700 a month on your PAYE for 240 months. That's $170k plus tax on whatever that is forgiven which should be about $10k-30k depending on how much you owe. Still much better deal than paying off your debt in less than 10 years. Good luck.
 
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BMBiology

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Any amount that is forgiven is counted as taxable income on top of your regular income. I say expect to pay > 30% tax. So if $100 k is forgiven, expect to pay $30 k in taxes.
 

BMBiology

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Do the simple math. You make on average of $130k ish as a pharmacist. Probably abit more in California. After taxes, you'd be paid 100k ish. So if you use ALL of your income working full time, you could potentially pay it off in 4-5 years with interest. Is that a good idea with $300k, fawk no lol

If you file taxes with your husband, when you re-certify your PAYE, they'll consider your hubby's income so if you're doing PAYE, it would be better if you file separately. But that would also depends on your situation with mortgage, kids etc.

Based on my calculation, if you owe more than $150k, it's always better to do PAYE for 20 years. If you're reporting your payroll correctly, you'd be paying about $700 a month on your PAYE for 240 months. That's $170k plus tax on whatever that is forgiven which should be about $10k-30k depending on how much you owe. Still much better deal than paying off your debt in less than 10 years. Good luck.

Doesn’t your payment go up as you make more money? So, it is not going to be $700/month at year 20.

What if you make money from selling stocks? Real estate? Does your monthly payment also go up?

If you file your tax separately, you might end up paying more taxes vs filing together.
 

VictorOfHungerGames

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Doesn’t your payment go up as you make more money? So, it is not going to be $700/month at year 20.

What if you make money from selling stocks? Real estate? Does your monthly payment also go up?

If you file your tax separately, you might end up paying more taxes vs filing together.
I haven't had a raise as a pharmacist in 5 years, so I can't imagine things getting any better... lol

Other passive income does not apply to PAYE if you're sending them your pay stub each year.

You could potentially pay more on your taxes but so far we haven't. Maybe once our mortgage is reported on taxes and have kids later down the road, this may change.
 

VictorOfHungerGames

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Any amount that is forgiven is counted as taxable income on top of your regular income. I say expect to pay > 30% tax. So if $100 k is forgiven, expect to pay $30 k in taxes.
The way things are going, there is a good chance that student loans can be completely forgiven at some point haha I'm just waiting for that moment and paying as little as possible.
 
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VictorOfHungerGames

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Try doing that with a 20% pay cut, only 20-30 hours per week, and being fired after two years.



Assuming you make like $80k or something after tax, it's easy to live off of less than $20k a year especially outside of major cities. So $60k a year towards loans for 3 years is easily doable if you budget and be frugal.
I'm making about $100k after taxes. How does one live under $20k? lol That's close to the poverty line so I suppose one could live that way but... in poverty lol
 

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I'm making about $100k after taxes. How does one live under $20k? lol That's close to the poverty line so I suppose one could live that way but... in poverty lol

If you are making $100 k after taxes, then you can surely contribute $50 k to your student loans and live off the other $50 k. But, whatever...it is your life.
 
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mentos

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Did you live with your parents? This would be possible only if you spend no money on car, housing and going out lol

No I shared a one bedroom apt with free utilities with my wife. It was like $1100 or $1200 per month I forget, split between the two of us. We drove old reliable Hondas that we paid cash for. We still ate out and went out. Took advantage of credit card sign up bonuses so vacations were cheap. Chase Sapphire Reserve had 100k signup bonus back then, that's a lot of free flights.

As mentioned above, it was easy to put 50k per year towards the loans.
 
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mentos

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If you are making $100 k after taxes, then you can surely contribute $50 k to your student loans and live off the other $50 k. But, whatever...it is your life.

I believe he said he bought a $50k car previously. So that explains why he can't afford to live on 50k a year.
 
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VictorOfHungerGames

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If you are making $100 k after taxes, then you can surely contribute $50 k to your student loans and live off the other $50 k. But, whatever...it is your life.
Potentially, I could. And first I did. I was very aggressive with my payments but I realized I'll end up with way more money for the next 20 years if I pay minimum towards student loans with PAYE and invest what ever that's left over in things like roth IRA and such.
 

VictorOfHungerGames

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I believe he said he bought a $50k car previously. So that explains why he can't afford to live on 50k a year.
lol true. Even though I got rid of it now. Even without the car, I still wouldn't be able to live that frugally lol
 
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Potentially, I could. And first I did. I was very aggressive with my payments but I realized I'll end up with way more money for the next 20 years if I pay minimum towards student loans with PAYE and invest what ever that's left over in things like roth IRA and such.

We had an amazing stock market bull run for the last 11 years. It seems easy but those days are long gone.

For the last 3 years, people who invested money into the stock market instead of taking a guaranteed return of 6.8% by paying off their student loans are regretting it now.

I think there is also a misperception. On average, the stock market goes up 8-9% per year but after federal (and state) taxes, it is more like 6-7% return. The return is even less if you held onto the stock for less than one year.

So, if your student loan interest rate is 6-7% then you have not made any money. You are taking all the risk but zero additional return.
 
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VictorOfHungerGames

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We had an amazing stock market bull run for the last 11 years. It seems easy but those days are long gone.

For the last 3 years, people who invested money into the stock market instead of taking a guaranteed return of 6.8% by paying off their student loans are regretting it now.

I think there is also a misperception. On average, the stock market goes up 8-9% per year but after federal (and state) taxes, it is more like 6-7% return. The return is even less if you held onto the stock for less than one year.

So, if your student loan interest rate is 6-7% then you have not made any money. You are taking all the risk but zero additional return.
Correct but if you're on PAYE and have the loan forgiven in 20 years, interest would almost become irrelevant. As I said before, if I and my financial advisor did the math correctly, which I am sure we did, I would end up gaining so much more by doing this.

With $250k principle, ~$700/month for 240 months would be about $170K. I don't know what the exact tax on forgiven amount would be but it's predicted to be somewhere in $60-70k range. Even if it's higher, I would still benefit much more on PAYE.
 
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BMBiology

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Correct but if you're on PAYE and have the loan forgiven in 20 years, interest would almost become irrelevant. As I said before, if I and my financial advisor did the math correctly, which I am sure we did, I would end up gaining so much more by doing this.

Your mistake is you listened to a financial advisor. Of course he wants you to play the stock market (and maybe he will make some fees).

If you did something boring like paying off your student loan, then you wouldn’t need him.

You could have easily refinance your student loan to a much lower rate and save a whole bunch of money.

You are not calculating risk into your equation. What if the stock market crashed? What if you lose your job at year 8? You are going to be stuck with a huge tax bill at year 20. The IRS can go after your assets like your 401 k. Paying tax on forgiven debt is nothing new. People have to paying taxes on forgiven credit card debt, medical debt, auto debt, etc.
 
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mentos

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Correct but if you're on PAYE and have the loan forgiven in 20 years, interest would almost become irrelevant. As I said before, if I and my financial advisor did the math correctly, which I am sure we did, I would end up gaining so much more by doing this.

Paying for a financial advisor is throwing money away. You'll do better DCA an S&P.

I also refinanced my student loans to 2.9%-3.2% APR and that allowed me to pay down the principal faster.
 
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What if you lose your job at year 8?

If you refinance and then lose your job you really are screwed. In that case it would have been way better to stay on IBR and not have to make payments while unemployed.
 

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If you refinance and then lose your job you really are screwed. In that case it would have been way better to stay on IBR and not have to make payments while unemployed.

That is why it is important to pay it off ASAP. You don’t want to stretch it out for 20 years because you are taking more risk.

You can also be on PAYE and still pay it off ASAP. It is not mutually exclusive.

I would rather refinance and pay a lower rate but if you are not comfortable with that then you can stay on PAYE.

Of course if you have $300 k then you are pretty screw. You are going to have a hard time paying that much off on a pharmacist salary.
 

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That is why it is important to pay it off ASAP. You don’t want to stretch it out for 20 years because you are taking more risk.

But if you use all your money to pay it off early and then lose your job you are still screwed. In that case it is still better to let IBR take your payments to zero and then use your money for like food and stuff.
 
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But if you use all your money to pay it off early and then lose your job you are still screwed. In that case it is still better to let IBR take you payments to zero and then use your money for like food and stuff.

Then stay on PAYE. You can pay it off early and still stay on PAYE.
 
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Then stay on PAYE. You can pay it off early and still stay on PAYE.

But they still won’t have money for food if they paid off the loan early. Any money spent on the loan is money they don’t have for living expenses while unemployed.

The only way to come out ahead by paying early is by NOT losing your job. Even then there is an opportunity cost involved but at least then you have to compare the savings from paying it off early vs whatever else you would do with the money. If you become unemployed it would always be advantageous to have not put extra money towards the loan so that you can use it while unemployed and let PAYE take care of your monthly payments.
 

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But they still won’t have money for food if they paid off the loan early. Any money spent on the loan is money they don’t have for living expenses while unemployed.

The only way to come out ahead by paying early is by NOT losing your job. Even then there is an opportunity cost involved but at least then you have to compare the savings from paying it off early vs whatever else you would do with the money. If you become unemployed it would always be advantageous to have not put extra money towards the loan so that you can use it while unemployed and let PAYE take care of your monthly payments.

Then go on unemployment benefits. It is not like you are going to be homeless just because you decided to be aggressive.

If you paid it off at year 3 and lose your job at year 8 then wouldn’t it be better that you had already paid off your debt?

People are going to justify it by saying they are going to invest that money. The fact is most people won’t. They are going to spend it on things like cars and take on more debt. It is like force saving.
 
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mentos

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Then go on unemployment benefits. It is not like you are going to be homeless just because you decided to be aggressive.

If you paid it off at year 3 and lose your job at year 8 then wouldn’t it be better that you had already paid off your debt?

People are going to justify it by saying they are going to invest that money. The fact is most people won’t. They are going to spend it on things like cars and take on more debt. It is like force saving.

Can confirm. I paid off 150k in 3 years, but 3 years later I don't have 150k saved in the bank. Spent it on vacations, home improvements etc. I'm good at paying off debt but not investing outside of retirement accounts. I'm thinking of paying off the mortgage aggressively now, otherwise we'll just keep spending our extra income.
 
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Pharm LND

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So I just did my exit counseling on my loans and I saw that I have 300 K loans as total balance. I couldn’t believe it was my balance. :(I used to think i can have max of 250 K. Anyways, how do pay this off aggressivel? I am graduating this May and have offer from retail chain for California.

what payment options are good? I won’t have any bills to pay besides this as husband wants me to pay off loans first. This might sound unrealistic but I want to pay it off in 3-4 years max. i am thinking on doing PAYE? is it better option or should I do different option. Also, i heard that if your spouse makes more money then you can have higher payments? We are planning on buying house soon but before that I want to get rid of this loans.

Any one in similar situation? I would really appreciate if someone can share some tips on this.

Rice and beans. Beans and rice. Scorched earth. Don't want to see you inside of a restaurant unless you're working in it. If you make $130K and live off $30K, the other $100K going to student loans, you'll be done in 3 years. - What Dave Ramsey would say if you called him today

You're welcome. :laugh:
 
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MrBonita

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Here is my story on trying to pay off student loans. When I graduated, I got 3 jobs and worked everyday literally. Some days I would start at one job and finish and start the next. After 9 months, I got really sick and had to stop working 3 jobs and went down to 2. I only managed to save 30k the whole time. Moral of the story. I worked so much, I had to stop at a strip club daily to talk to someone who would listen to my bad days at work and ended up spending most of what I earned. I ended up accepting my fate and just working one job now and living in a mobile home and driving a used dodge.
 

APN-59 rph

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Do the simple math. You make on average of $130k ish as a pharmacist. Probably abit more in California. After taxes, you'd be paid 100k ish. So if you use ALL of your income working full time, you could potentially pay it off in 4-5 years with interest. Is that a good idea with $300k, fawk no lol

If you file taxes with your husband, when you re-certify your PAYE, they'll consider your hubby's income so if you're doing PAYE, it would be better if you file separately. But that would also depends on your situation with mortgage, kids etc.

Based on my calculation, if you owe more than $150k, it's always better to do PAYE for 20 years. If you're reporting your payroll correctly, you'd be paying about $700 a month on your PAYE for 240 months. That's $170k plus tax on whatever that is forgiven which should be about $10k-30k depending on how much you owe. Still much better deal than paying off your debt in less than 10 years. Good luck.
You MAY or MAY NOT make 130k ish....we shall see....The earlier you take a big chunk out of principle the better...All of the "simple math" depends on that first number....
 

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I paid off 168k in 2 years and 4 months. You can too!
1. Set your student loans on a 10 years mark
2. Use you first paycheck of the month to pay for your monthly payments
3. Save your second pay check
4. Every 3-4 months, put all of your saving into the loan that accrued the most interest rate.

My husband made 35k a year and we were living off of just that. We drove old cars with no payments. We cooked most of our meals and packed lunch.

Make friend with your scheduler. I picked up a lot of extra shifts to use towards vacation, but anything extra did go towards student loans.

Good luck!
 
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Mambo#5

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Here is my story on trying to pay off student loans. When I graduated, I got 3 jobs and worked everyday literally. Some days I would start at one job and finish and start the next. After 9 months, I got really sick and had to stop working 3 jobs and went down to 2. I only managed to save 30k the whole time. Moral of the story. I worked so much, I had to stop at a strip club daily to talk to someone who would listen to my bad days at work and ended up spending most of what I earned. I ended up accepting my fate and just working one job now and living in a mobile home and driving a used dodge.
Or find a cheap nice place with roommates for $400 a month everything included. If you get laid off you won’t be under pressure and you can easily get by on unemployment.
 
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