pharmacy school... graduated... licensed... now STUDENT LOANS payment kicks in :(

nng

Feb 17, 2010
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Hi everyone,

I really wish to know all the opinions as well as to learn the strategies of paying student loans.
Please share what you would do and why?

option 1. paying the maximum monthly payment you can afford to pay off as fast as possible

0ption 2. paying the minimum required

thank you !!!
 

mustang sally

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Feb 22, 2007
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Hi everyone,

I really wish to know all the opinions as well as to learn the strategies of paying student loans.
Please share what you would do and why?

option 1. paying the maximum monthly payment you can afford to pay off as fast as possible

0ption 2. paying the minimum required

thank you !!!
Ah, the dreaded month of December!

I applied for IBR. It actually ended up not being the cheapest option for us at this time based on our income, but I went with it anyway since I work at a non-profit. So I pay at least my minimum payment per month. Then I pick one loan that I want to focus on paying off (usually whichever one has the highest interest rate and lowest dollar amount). I decide what extra amount I feel comfortable paying that month and put it towards the balance of that loan.

I still save money each month for retirement and my immediate assets; I don't want to plow all of my money into my debt. Who knows where the student loan crisis is going in the future? It would feel great to get my loans paid off as fast as possible but there is still a part of me that feels like this would be a terrible idea…you need to have something leftover for yourself in the end. I would say my payment strategy is somewhere in between option 1 and 2.
 

Reirrac

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Jul 26, 2009
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If you have any other debt, such as credit card debt, then I would pay those off first.

If you only have student loans, then it's time to do some financial planning. Here's some questions that should be addressed;

1. Do you plan to buy/rent a place to live in? A new car?
2. Do you have a family to support?
3. How much do you make at your current job? (If you have one hopefully...)

Paying off loans quickly has their advantages, but you would have to make some sacrifices to make that happen. Paying it off later with minimum payments cuts less into your paycheck, but you would pay a larger interest over time, a price for borrowed time on your debt obligation.

Speaking for myself, until I somehow get involved with someone I would call my SO, I would pay off the loans as soon as possible and start stashing away the cash somewhere safe and keep building it up until I can finance my own business and/or retire and enjoy my time on this earth.
 

Transformer

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This is good advise for those working at a non-profit

In case the government decides to cancel PSLF, I would pay a little more monthly than what IBR requires.


Ah, the dreaded month of December!

I applied for IBR. It actually ended up not being the cheapest option for us at this time based on our income, but I went with it anyway since I work at a non-profit. So I pay at least my minimum payment per month. Then I pick one loan that I want to focus on paying off (usually whichever one has the highest interest rate and lowest dollar amount). I decide what extra amount I feel comfortable paying that month and put it towards the balance of that loan.

I still save money each month for retirement and my immediate assets; I don't want to plow all of my money into my debt. Who knows where the student loan crisis is going in the future? It would feel great to get my loans paid off as fast as possible but there is still a part of me that feels like this would be a terrible idea…you need to have something leftover for yourself in the end. I would say my payment strategy is somewhere in between option 1 and 2.
 

PharMed2016

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Hi everyone,

I really wish to know all the opinions as well as to learn the strategies of paying student loans.
Please share what you would do and why?

option 1. paying the maximum monthly payment you can afford to pay off as fast as possible

0ption 2. paying the minimum required

thank you !!!
Return to school... lol.
 

sakigt

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Apr 19, 2006
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Im scheduled 50 hours PPP (my choice), so IBR is not an option for me.

So far, just making the minimum payment (10 years) and throwing my extra cash at the cards, the cars and hitting the loan with extra money as I find it. Investing slightly, but 6.8% is good enough for me. The cool thing is since theyre all individual loans I can pay off some of the smaller amounts and decrease the monthly payment.

Plan on picking up ~1 shift a month to make it all go away faster. So far its been an average of 2.

And I hardly ever pay for prepared food. Eating/drinking out is a huge budget buster and isnt worth it to me.
 

MatCauthon

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Sep 15, 2008
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I had about ~120k in 6.8% interest loans and another sizeable balance in 3% loans. My goal has been to get rid of the 120k loan in 3.5 years. It is completely doable if one is motivated. I already took it down to <70k after 1 year. My 3% loan balance is manageable, so I will probably leave that on a 25-year payment plan.

The interest one pays on ~120k per year is ridiculous. Start breaking down the numbers-- it will really motivate you. When I realized I was paying over $20 per day in interest on just one of my loans alone, I became very motivated to get rid of it. That was over ~8k in interest per year. After just 1 year, I am currently now only paying about $13 per day due to my diligence.

There is no point saving much for retirement, investing in many things, or delaying the loans if the interest rate is so high. There are still ways to buy a house without a huge down-payment. Take the noose off that is hanging out your neck and pay off those loans. I don't trust the IBR methods very much. I wouldn't mess around with them too much unless you are elgible for the 10-year IBR program. Too much can change in 25 years.

Work hard and get rid of your loans. The pharmacy field is very uncertain right now. Get rid of all debt while the money still exists. Enjoy yourself while trying to do it in a fiscally conversative way. Get a good accountant and take full adavantage of tax loopholes. Consider starting your own business for additional benefits. I have started a very small business and it does save me quite a bit. I don't want to work 6-7 day workweeks every week, but when I wake up I see the evil grin of my loans staring at me. It is an excellent alarm that keeps my drive alive.

I work hard and play hard, but I know my endgoal and have a defined plan to get me there. Crunch the numbers, set a budget, stick to it, and reap the rewards.
 

kvl1027

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I am married with two children. I was married with two kids while in pharmacy school, so I had to borrow a little more to cover my living expenses. I am enrolled im IBR which really helped free up some cash right out of school to get some credit card debt paid off quick. Now, I'm making larger payments toward the student loan, but there is already some damage done. I borrowed 147k and I now owe 168k.

It is what it is, I can't make the sacrifices that a single guy can make because I have a family. If you are single, for the love of god, please hunker down and pay them off quickly. If you can pick up a PRN position at a hospital and work only one day extra/week it will give you at least an extra 1k-1.2k per month. With that extra income you can have your loan paid off in no time.

If you have credit card or high interest revolving debt, pay that off first and then snowball those payments into the student loan. If you have the oppportunity to buy a home for what you are paying in rent, then go for it. It is an investment that will pay-off in the future (unless you are not interested in locking yourself down to a particular location).

Good luck!
 
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Pharmcat1720

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Dec 27, 2011
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I set my loans up on the extended payment plan, which has a minimum payment of $821 per month. I pick up 2-4 extra shifts each month at a hospital and pay an extra $1000-1500 each month towards the bigger loans. Started at 160k two years ago and down to 100k now.
 
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subieazndoll

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May 18, 2012
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Omg get it paid off ASAP! Would u rather pay on the loan for 25 years or less than 5 years of sacrifice?? I would put 75% of my income toward the student loan and knock it out quick!
 

TonyRx

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I set my loans up on the extended payment plan, which has a minimum payment of $821 per month. I pick up 2-4 extra shifts each month at a hospital and pay an extra $1000-1500 each month towards the bigger loans. Started at 160k two years ago and down to 100k now.
Smart, similar to what I plan on doing. I plan on doing the 25 year plan, that way my required monthly payment is around ~$1100. But, I will pay $3000+ a month so I can knock it out in ~5 years. So, god forbid my wife or I lose our job, I'll only be locked in for the ~$1100 payment and not $1800-2000 under the 10 year plan.
 

Roxan

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Smart, similar to what I plan on doing. I plan on doing the 25 year plan, that way my required monthly payment is around ~$1100. But, I will pay $3000+ a month so I can knock it out in ~5 years. So, god forbid my wife or I lose our job, I'll only be locked in for the ~$1100 payment and not $1800-2000 under the 10 year plan.
If you don't have a job, you do not have to pay your student loan and does not affect your credit because of financial hardship. so first payoff your credit card debt, your car loan and your mortgage. if you do not have job, you still have to pay for those.
 

type b pharmD

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Feb 24, 2009
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Hi everyone,

I really wish to know all the opinions as well as to learn the strategies of paying student loans.
Please share what you would do and why?

option 1. paying the maximum monthly payment you can afford to pay off as fast as possible

0ption 2. paying the minimum required

thank you !!!
Have ~330k in loans. . Going to pay the minimum, which I recommend for pretty much anyone with > 200k.

With forgiveness , depending on the situation , IBR will save you 100-300k in that scenario.

Yes my debt will inflate to $700k by the time all is said and done, but paying $200k over 25 years is way better than paying $400k over 10 .. or even paying it off face value .. still a 100k+ savings on ibr.


If I had <100k. .. I would pay it off within 3-4 years.

Also you can keep deducting that $2500 per year from your taxes!
 

TonyRx

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If you don't have a job, you do not have to pay your student loan and does not affect your credit because of financial hardship. so first payoff your credit card debt, your car loan and your mortgage. if you do not have job, you still have to pay for those.
Well for me, I do/will have a job. Also, my wife and I have no credit debt, no car loans, and the mortgage on our townhouse is $750/month. So, I personally don't mind throwing 40k+/year towards loans just so I can knock them out ASAP. But otherwise, I see where your coming from.
 

msweph

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You can't deduct the student loan interest if you make more than like 65k or something. Maybe your first year out but after that you're not going to be able to.
 

type b pharmD

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You can't deduct the student loan interest if you make more than like 65k or something. Maybe your first year out but after that you're not going to be able to.
130-150k for a couple?

There has also been a lot of talk about increasing the cap.

Student debtors are going to be the next generation and future of society's educated, voting, participating workers.. govt knows this .. hence why student loan deals have been basically getting better each election cycle. (Starting with bush btw)

Student loans are basically already a bail out / bail in if you consider PAYE .. ibr.. pslf , and the fact that they're also unsecured, tax deductible, more or less impossible to default on ..

I actually dont see an outcry over sweetheart loan deals occurring in the future over ideological related issues .. rather.. the real political problem will be when the govt can't afford it and the borrowers can't afford it at the same time. .

But when that happens.. all bets are off anyway.. (ie collapse)

Don't send extra money to the govt today when you could be spending, saving, or investing it. Either you'll pay it in some form later , or, you won't! One thing is for sure. You are given the choice today. You can't really bank on anything 100% in the future.. wouldnt you be glad to have lived while you could? Or spent it all into paying usgov ?
 
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type b pharmD

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Student loans are not really like other loans... financial advice that could be thought of as typically applying thus is rendered useless.

Student loans have unique characteristics. . They have a finite maximum term, unlike recurring (rollover) debt. They have a finite maximum repayment .. and an almost $0 minimum payment. They are almost impossible to default on. It's completely wacky to think about.. no matter what, the expiration clock is ticking on these long term unsecured pieces of paper.

They will ultimately expire due to inflation, government collapse, forgiveness, or even just through death.

Strange things happen when people are lent hundreds of thousands with no collateral required and no legal way for the lender to collect beyond 10-15% of wages earned (ie ibr/paye)

Even if you disagree with the ethics or practicality of my approach, a common sense observer should see that the whole system is completely scandalous

Why would a rational person donate money to such a group?

Play it cautious. Examine your options. Things are not necessarily what they seem with this type of finance!
 
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jiiniix2

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I graduated with just under $100k in loans. I pay $2000 a month, which is over my minimum. I don't remember what my minimum is though. Any extra money I have goes towards my loans. I pick up extra shifts from time to time. I plan to pay it all off in under 4 years. And then I can start help my husband pay off his >$200k loans @[email protected]
 
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koercive

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Hi everyone,

I really wish to know all the opinions as well as to learn the strategies of paying student loans.
Please share what you would do and why?

option 1. paying the maximum monthly payment you can afford to pay off as fast as possible

0ption 2. paying the minimum required

thank you !!!
I am going with option 1..

Don't want to live with the thought of crushing debt for 25 years.

right now, i get paid almost nothing (fellowship).. but as soon as i get a real salary, I am going to put at least 50% of my paychecks towards loans.

Anyone here find any effective strategies to "churn" or earn FF miles/cashback while making these payments? It looks like vanilla reloads works with my lender, Great Lakes
 

stoichiometrist

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Aug 2, 2011
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Anyone here find any effective strategies to "churn" or earn FF miles/cashback while making these payments? It looks like vanilla reloads works with my lender, Great Lakes
You might be able to use Walmart Billpay using a miles-earning debit card, although I'm not sure if Great Lakes is one of the merchants on their list. Your lender may also accept debit card payments for a fee.
 

sakigt

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Just had a thought, want to pay my student loans off asap but Im also a fan of lowering your monthly payments so that if there is a dramatic life event your monthly payments wouldnt be as large.

Any negative consequence to setting up 30 year repayment then paying the usual 10 year payment but staggering it so you pay off individual loans faster, thus decreasing the total monthly payment due? Is there an increase in intrest rate?

ie: Loan #1 is $10k with a $250 payment, Loan #2 is $20k with a $500 payment and Loan #3 is $40k with a $1000 payment. If I paid the minimum on #2 and #3 I could pay off #1 very fast thus decreasing the "bare min" payment from $1750 to $1500.
 

Silent Cool

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MountainPharmD

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Have ~330k in loans. . Going to pay the minimum, which I recommend for pretty much anyone with > 200k.

With forgiveness , depending on the situation , IBR will save you 100-300k in that scenario.

Yes my debt will inflate to $700k by the time all is said and done, but paying $200k over 25 years is way better than paying $400k over 10 .. or even paying it off face value .. still a 100k+ savings on ibr.


If I had <100k. .. I would pay it off within 3-4 years.

Also you can keep deducting that $2500 per year from your taxes!

Someone dumb enough to rack up $330,000 in student loan debt from pharmacy school shouldn't be giving financial advice or opinions to anyone.

No, with a pharmacist salary you do not qualify for the student loan deduction.
 

bananaface

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I ended up with that much since I went OOS, had 65K going in, and then did a residency. :/ Going OOS or to a private school is pretty brutal these days. It would not be so bad if interest rates weren't obscene. I remember the good old days when my savings account gave 2.5% interest (credit union) and student loan interest was like 4%.

With debt load that large, the options are either pay it off or let it ride on IBR. If you let it ride and pay the minimum, the sucker is just going to snowball. And, interest rates could still go up. My calculation was that if I paid the minimum and rates stayed the same my debt would be over a million bucks by the time it was forgiveable. And, if tax laws stay the same, at the end I would end up paying 500K in taxes in 25 years. Yeah, in 25 years, $500K will probably be worth a whole lot less. But, who is ever going to approve a mortgage for someone with a crazy debt load like that. And, who wants to worry about all that ****.

I went with the other option. Throw in everything you can afford to throw in, but be sure to make key investments like retirement and to have somewhat of a life. Making a big dent early is important. Think of everything you spend as taking out a loan at 7.5% and then decide if it is worth spending. Because, when you pay anything you are taking away your ability to pay back on your loan. After a year I got the loan below 300K. I was lucky in that I then happened to inherit money that let me pay down the loan quite a bit and have 20% down for a house. But, I could have paid that sucker off in 10 years. As it stands, I will probably get there in another 2 years. I highly recommend digging. But if you dig half-assed, you will just end up dirty in a hole.

As noted by others above if you have Federal Loans, definitely use the loan level repayment feature on Mohela to pay off the higher interest rate loans first. Also, pay as soon as your money is available. Don't let more interest accumulate when you have the money on the 1st just because your payment is due the 7th. Interest not accumulated is interest you don't have to pay.
 
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Vatic

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http://endoftheamericandream.com/archives/18-sobering-facts-about-the-unprecedented-student-loan-debt-crisis-in-the-united-states

Here's what stuck out:

"#7 Among college educated people, the median net worth of young households that do not have student loan debt is seven times higher than the median net worth of young households that do have student loan debt.

#9 Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined

The problem developing is that earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.

#17 Many Americans are not even using most of their student loan money to pay for college. Instead, many are using much of that money to pay bills or stock the fridge…" Back door food stamps

 

farmadiazepine

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Take 90% the money you get from your paycheck and pay off your loan. Live like you are in college again. Pay it off fast. The faster the better. Being debt free is great. It's a small sacrifice. I don't know why people do IBR or pay their loan off over 20 something years. Pay it off now.
 
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Vatic

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There is a rationale pay off the loan over time with cheaper dollars, but these are not normal times. Even if a new dollar were to be issued at a ratio of 1 new for 3 old or whatever, there is historical precedent for not applying this to debts. If you have 300k in debt and 100k in savings before the transition, you may have 300k in debt still but 33k in savings afterwards.

And here's another thing to watch out for---retroactive liens. There may be a heloc or a car loan that you pay off a few years before a devaluation. Well, the creditor comes back and says you more money. Hey that's not fair you say. Tough luck. What if the creditor is the Treasury who backstopped all these loans. They got the guns, they'll just kick your tukus.
 

awval999

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There is a rationale pay off the loan over time with cheaper dollars, but these are not normal times. Even if a new dollar were to be issued at a ratio of 1 new for 3 old or whatever, there is historical precedent for not applying this to debts. If you have 300k in debt and 100k in savings before the transition, you may have 300k in debt still but 33k in savings afterwards.

And here's another thing to watch out for---retroactive liens. There may be a heloc or a car loan that you pay off a few years before a devaluation. Well, the creditor comes back and says you more money. Hey that's not fair you say. Tough luck. What if the creditor is the Treasury who backstopped all these loans. They got the guns, they'll just kick your tukus.
What are you talking about? Those would be ex post facto laws and/or violate the "takings" clause of the constitution.
 
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tungsten87

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quick question regarding my personal situation:

I graduated in May 2014 from pharmacy school with $102,000 in debt + ~$11K in interest (to date). I am a PGY-1 resident but have been doing my best to save money to take a stab at these loans. In terms of the $2500 student loan tax deduction, is my thinking correct that I can simply pay $2500 towards my student loan interest by the end of 2014 and then when tax season rolls around I can simply deduct this amount from my taxes via form 1040? Thanks!
 

BMBiology

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In terms of the $2500 student loan tax deduction, is my thinking correct that I can simply pay $2500 towards my student loan interest by the end of 2014 and then when tax season rolls around I can simply deduct this amount from my taxes via form 1040? Thanks!
Can you really tell your lender to apply the $2500 toward the interest and not the principle?
 

BF7

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Have ~330k in loans. . Going to pay the minimum, which I recommend for pretty much anyone with > 200k.

With forgiveness , depending on the situation , IBR will save you 100-300k in that scenario.

Yes my debt will inflate to $700k by the time all is said and done, but paying $200k over 25 years is way better than paying $400k over 10 .. or even paying it off face value .. still a 100k+ savings on ibr.


If I had <100k. .. I would pay it off within 3-4 years.

Also you can keep deducting that $2500 per year from your taxes!
I've never been able to deduct student loan interest from taxes because if my income. Please explain how any pharmacist working at least 20 hours a week can qualify for this?
 
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type b pharmD

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I've never been able to deduct student loan interest from taxes because if my income. Please explain how any pharmavist working at least 20 hours a week can wuality for this?
Married, stay at home wife.
 

pezdispenser

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quick question regarding my personal situation:

I graduated in May 2014 from pharmacy school with $102,000 in debt + ~$11K in interest (to date). I am a PGY-1 resident but have been doing my best to save money to take a stab at these loans. In terms of the $2500 student loan tax deduction, is my thinking correct that I can simply pay $2500 towards my student loan interest by the end of 2014 and then when tax season rolls around I can simply deduct this amount from my taxes via form 1040? Thanks!
Yes, I think so. Read Publication 970 from the IRS: http://www.irs.gov/publications/p970/ch04.html

Your $100k loan accrues around $7k in interest per year, so all of your $2,500 payment goes towards the interest first, and won't even touch the principal.

There is a Modified Adjusted Gross Income phase-out for deducting student loan interest of $60k-75k for singles and $125k-$155k for married filing jointly.
 

Vatic

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What are you talking about? Those would be ex post facto laws and/or violate the "takings" clause of the constitution.

Where have you been? Who said the Constitution is in effect? We've been under a continually rolled state of emergencies since the 1933.

http://www.fame.org/HTM/Senate Report 93-549 War and Emergency Powers Acts.htm

  • United States, Senate Report 93-549 states: "That since March 09, 1933 the United States has been in a state of declared national emergency." Proclamation No. 2039 declared by President Franklin D. Roosevelt on March 9, 1933. This declared national emergency has never been revoked and has been codified into the US Code (12 U.S.C. 95a and b).
  • United States declared a state of emergency on September 11, 2001, this state of emergency has been maintained without pause into the present.[59]
There are other national emergency measure in effect. They have to be renewed annually by the President.

http://www.msnbc.com/all/obama-quietly-extends-post-911-state


I don't know how to break this to you kids, but we are not free. We are tax mules.
 

BidingMyTime

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I would vote for option 3, pay extra each month, but not necessarily the "maximum" that you can afford. I would be sure to put in at least the minimum into your 401-K or equivalent, to make sure you get the employer matching. I would also work on building up at least a small savings in your bank account (3 months salary is generally recommended as a minimum.) I wouldn't put too much in savings or too much in 401-K, because you do want to be paying extra on your loans each month, but I wouldn't neglect these 2 just to put money into your loans either.
 

confettiflyer

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http://endoftheamericandream.com/archives/18-sobering-facts-about-the-unprecedented-student-loan-debt-crisis-in-the-united-states

Here's what stuck out:

"#7 Among college educated people, the median net worth of young households that do not have student loan debt is seven times higher than the median net worth of young households that do have student loan debt.
This stood out as really funny, because net worth is assets - liabilities. It might as well have said "people with money are worth more than people who are broke."

#17 Many Americans are not even using most of their student loan money to pay for college. Instead, many are using much of that money to pay bills or stock the fridge…" Back door food stamps
Of course. People have to eat! Besides, cost of attendance figures include rent and living expenses, and most students borrowing know that money is available to them to cover those. I don't see why this idea is so salacious.
 

tungsten87

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Yes, I think so. Read Publication 970 from the IRS: http://www.irs.gov/publications/p970/ch04.html

Your $100k loan accrues around $7k in interest per year, so all of your $2,500 payment goes towards the interest first, and won't even touch the principal.

There is a Modified Adjusted Gross Income phase-out for deducting student loan interest of $60k-75k for singles and $125k-$155k for married filing jointly.
Great, thanks for the post - this is what I figured. So theoretically I could utilize this deduction for two years of residency and possibly my first year as a fully paid pharmacist - so that equals about $7500 that I can simply re-infuse into my student loan payment.
 

BMBiology

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Great, thanks for the post - this is what I figured. So theoretically I could utilize this deduction for two years of residency and possibly my first year as a fully paid pharmacist - so that equals about $7500 that I can simply re-infuse into my student loan payment.
It is a tax deduction, not a tax credit. For example, lets say your effective tax rate is 15% so you would save 7500 x 0.15 = $1125
 
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All4MyDaughter

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I would vote for option 3, pay extra each month, but not necessarily the "maximum" that you can afford. I would be sure to put in at least the minimum into your 401-K or equivalent, to make sure you get the employer matching. I would also work on building up at least a small savings in your bank account (3 months salary is generally recommended as a minimum.) I wouldn't put too much in savings or too much in 401-K, because you do want to be paying extra on your loans each month, but I wouldn't neglect these 2 just to put money into your loans either.
That's what we do. We have automatic savings set up every month for Roth IRA (2), kids' college fund, emergency fund, and of course, pre-tax 401K deduction. We budget really carefully and send extra to the student loan company. No opportunity to do extra shifts at my job, so I have two small side jobs, and all that money goes to debt reduction or savings. Since June we've paid off an additional 15K over our required monthly payment. I wouldn't say we are living cheap, either. We have a nice house (low housing cost here, though) and do fun stuff with the kids. Our biggest barrier to getting the loans paid off quickly is the nearly $2000/month we pay for daycare. Once that expense is lowered/gone, the loans should be paid off in just a few years.
 
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Mar 20, 2010
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That's what we do. We have automatic savings set up every month for Roth IRA (2), kids' college fund, emergency fund, and of course, pre-tax 401K deduction. We budget really carefully and send extra to the student loan company. No opportunity to do extra shifts at my job, so I have two small side jobs, and all that money goes to debt reduction or savings. Since June we've paid off an additional 15K over our required monthly payment. I wouldn't say we are living cheap, either. We have a nice house (low housing cost here, though) and do fun stuff with the kids. Our biggest barrier to getting the loans paid off quickly is the nearly $2000/month we pay for daycare. Once that expense is lowered/gone, the loans should be paid off in just a few years.
What are your side jobs?