Loans - how long to repay?

[nvshelat]

For those of you who have made it out of this hellish process, how long did/will it take you to pay off your education loans? With interest, I'll be in the red about 325k by the time all is said and done, including undergrad. Weeeee bit worried...

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[Pilot Doc]

Well, let's assume you want to pay off the loans in the quickest possible time

Assume you get a job paying $250K with partnership @350K after 2 years. Assume you have been living on $37.5K/yr throughout residency ($50K with an effective total tax rate of 25%) and want to spend $75K/yr after residency. Remaining income will be devoted to repaying loans

Year 1 & 2 - $250K/yr $100K taxes. $150K take home - $75K spent, $75K to loan repayment.

Year 3 & 4 - $350k/yr $150K taxes - $200 take home, $75K spent, $100K loan repayment

There you go - 4 years, $350K of loans repaid.

You can wiggle the details around a bit, but it's about right. You can't pay off your loans in a year or two, and you can pay them off in much less than 10 years should you desire while still substantially improving your standard of living compared to residency.

 

[militarymd]

took me 11 years

 

[urge]

If the interest is low, i.e. less than what you make in a CD, money market, or online savings account, you should take as long as possible to pay it back.

You could pay them in a few years as suggested but keep in mind you expenses will grow substantially once you become an attending. Nice house, nice car, better food, better vacations......You are probably looking into 10-20 yrs.

 

[Pilot Doc]

you expenses will grow substantially once you become an attending. Nice house, nice car, better food, better vacations......You are probably looking into 10-20 yrs.

Your expenses will only grow if you want them to grow.

But yes, if you want to spend most of what you earn, then it will take a decade or two to pay off your loans.

 

[jetproppilot]

200 large.

7 years.

 

[Gas]

My consolidated interest rate is only 1.75%, so I have financed them over 30 years, the maximum. I plan to retire before they are fully paid off.

All depends on what interest rate you can get, and how you want to live. Simple mathematics. If you want the house/car/vacation/toys, etc, you will take longer to pay them off. If you invest right and yield more than your interest rate, then it's financially better for you to wait like I am.

My advice is to start saving for retirement as soon as you can. The more you save when you are young, the better.

 

[deleted77919]

Ah if only those glory days would return. I suppose at 6.8% it will at least motivate me to get it taken care of quickly.

 

[urge]

Your expenses will only grow if you want them to grow.

Scrooge!!

 

[amyl]

how come we are all getting screwed with these 6+% interest rates and everyone else got 1.something or even 3%?

 

[Gas]

how come we are all getting screwed with these 6+% interest rates and everyone else got 1.something or even 3%?

My guess is that it just has to do with the market forces at that time. Feds are lowering interest rates across the board now, so student loan interest rates should also be coming down. Problem is, it's not the kind of thing you can put off, like a car or house. Once you start paying the loans back, you can deduct what you paid back if your income is below a certain level. However, most attendings will be above that threshold. I chose to pay back only interest during residency.

I think the government needs to do more to help us pay back our student loans. They seem to be focused on this subprime mortgage crisis, even though the people that bought houses they could not afford have only themselves to blame. The public thinks we are rolling in the dough, but six-figure debts are no joke to pay back.

 

[nutmegs]

I chose to pay back only interest during residency.

I'm still working on building some savings for when my 280K mile car quits and putting a wee bit into a roth let alone pay any of that interest