Author Topic: Over 100k in student debt: help!  (Read 3850 times)

suzume

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Over 100k in student debt: help!
« on: June 13, 2016, 09:42:04 PM »
Hello! I am hoping some of you can help me figure out the best way to dig myself out of a hole as I'm at a loss. I have about $137k in student debt; ~$46 is private, the rest is federal. Federal loans are broken up into many separate ones with varying interest rates from ~3-6%.  After taxes, I make about $34k, and my monthly living expenses are $1444/month. I don't think I can cut down the budget any further, leaving me with $16,752/year to pay off student loans, save for retirement, and save for a house down payment. My income will probably not increase unless I go back to school and get an advanced degree, which would incur ~$150k more debt but my earning would increase significantly.

I am currently taking classes but have decided to stop after this semester until I decide what to do.  My loans will be on deferment for 6 months, and I'll need to start making payments afterwards. I'm not sure where to start, how to allocate my leftover money, and what my priorities should be.

Any help is appreciated! Thank you!

MDM

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Re: Over 100k in student debt: help!
« Reply #1 on: June 13, 2016, 10:00:42 PM »
After taxes, I make about $34k....
...unless I go back to school and get an advanced degree...
I am currently taking classes but have decided to stop after this semester until I decide what to do.

Are you working full time and going to school full time? 

What degree do you hold, what degree are you currently pursuing, and what degree might you "go back to school and get"?

Are you willing to move to a different part of the country?

randymarsh

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Re: Over 100k in student debt: help!
« Reply #2 on: June 13, 2016, 10:05:00 PM »
The good news is your expenses are pretty low. If we pretended you had one $136,000 loan at 6%, the 10 year repayment would be $1,510.

Your monthly income is $2833 so with the loan payment you'd be at a $2954 total outlay. Since that would leave you negative and your private loans surely have a higher interest rate, you should put your federal loans on an income based payment plan. This will result in a low minimum, allowing you to put most of your monthly payment towards the private loans.

Long term, a higher income is definitely a good idea. Easier said than done I know. I do not recommend you add another 150K of debt unless your income potential is like 300K+.

Dicey

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Re: Over 100k in student debt: help!
« Reply #3 on: June 13, 2016, 10:10:26 PM »
You need a higher paying job, even if it's not your passion. You unfortunately mortgaged your rights to passion by running up such staggering amounts of student debt. Once you get your debts knocked off, then you can chose to follow a low-paying, but passion filled career path once again.

Consider a profession or corporation that offers SL forgiveness. (Sorry, I know zero about this first hand, but have been told these unicorns really exist.)

Forget about saving for a house for now. Try to put a little by towards retirement if you can. I'd advise taking on a side gig that you funnel exclusively to retirement/investment savings. Your future self will thank you for this.

ReadySetMillionaire

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Re: Over 100k in student debt: help!
« Reply #4 on: June 14, 2016, 07:19:42 AM »
Apply for REPAYE for your federal student loans and, once that payment is lowered, work to pay off your private loans.

suzume

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Re: Over 100k in student debt: help!
« Reply #5 on: June 14, 2016, 07:30:31 AM »
After taxes, I make about $34k....
...unless I go back to school and get an advanced degree...
I am currently taking classes but have decided to stop after this semester until I decide what to do.

Are you working full time and going to school full time? 

What degree do you hold, what degree are you currently pursuing, and what degree might you "go back to school and get"?

Are you willing to move to a different part of the country?

Yes, I am working and studying full time. I have two bachelor degrees- one is a BS as I was going down the med school/dental school track. I am taking classes under a master of science program to prepare for dental school, as the requirements have changed since I graduated. Moving is possible.

ender

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Re: Over 100k in student debt: help!
« Reply #6 on: June 14, 2016, 07:32:22 AM »
What's your plan to increase your income?

You mention an advanced degree potentially doing that.

suzume

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Re: Over 100k in student debt: help!
« Reply #7 on: June 14, 2016, 07:35:12 AM »
The good news is your expenses are pretty low. If we pretended you had one $136,000 loan at 6%, the 10 year repayment would be $1,510.

Your monthly income is $2833 so with the loan payment you'd be at a $2954 total outlay. Since that would leave you negative and your private loans surely have a higher interest rate, you should put your federal loans on an income based payment plan. This will result in a low minimum, allowing you to put most of your monthly payment towards the private loans.

Long term, a higher income is definitely a good idea. Easier said than done I know. I do not recommend you add another 150K of debt unless your income potential is like 300K+.

Thanks! I'm pretty sure 300k+ is impossible for me. I was thinking a dentist in my area makes anywhere from 80-250k and hopefully one day I could open my practice.

suzume

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Re: Over 100k in student debt: help!
« Reply #8 on: June 14, 2016, 07:37:26 AM »
What's your plan to increase your income?

You mention an advanced degree potentially doing that.

Right now I see a few options- go to dental school, not go back to school and attempt to freelance and possibly increase income to ~70k, or go back to school for something else (a shorter degree or certification) that could help.

randymarsh

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Re: Over 100k in student debt: help!
« Reply #9 on: June 14, 2016, 09:41:31 AM »
The good news is your expenses are pretty low. If we pretended you had one $136,000 loan at 6%, the 10 year repayment would be $1,510.

Your monthly income is $2833 so with the loan payment you'd be at a $2954 total outlay. Since that would leave you negative and your private loans surely have a higher interest rate, you should put your federal loans on an income based payment plan. This will result in a low minimum, allowing you to put most of your monthly payment towards the private loans.

Long term, a higher income is definitely a good idea. Easier said than done I know. I do not recommend you add another 150K of debt unless your income potential is like 300K+.

Thanks! I'm pretty sure 300k+ is impossible for me. I was thinking a dentist in my area makes anywhere from 80-250k and hopefully one day I could open my practice.

Dentistry might actually be worth it. I just wanted to make sure it wasn't 150K for a Masters in pysch or something. I was being a bit dramatic, you don't absolutely need to make 300K to make it worth it. I think 150-250K income is a decent trade for that debt.

SimplyMarvie

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Re: Over 100k in student debt: help!
« Reply #10 on: June 14, 2016, 10:07:08 AM »
This is not a popular MMM point of view, but I'm gonna say it anyway and take the facepunches as they come.

If you don't think that you can grow your income by a very large margin in the next few years, you need to look into IBR/REPAYE and find a way to qualify for Public Interest Loan Forgiveness.

Actually, first you need to have a very serious think about this whole dental school thing. From your post, I'm guessing that you were not a sparkling medical/dental school candidate when you left undergrad and that these MS courses are meant to prepare you for Dental School. Consider what the total cost of your debt is going to be for dental school + residency + opening your own practice, and then consider how much work you're going to have to do to get out from under that, and decide if that's something you are committed to.

Otherwise, you need to investigate your other options.

REPAYE will help; it will reduce the payments on your federal loans to 10% of the amount you earn over the FPL for your family size. This is probably a good idea so you can pay down those Private loans. However -- and it's a big however! -- any interest that isn't covered by your monthly payment is recapitalized into the loan. This is a BIG DEAL for people who are using these programs for loan forgiveness and are not eligible for Public Interest Loan Forgiveness (PILF), because it means the amount you owe will probably grow, probably a lot. And if the program changes or goes poof in the future, you'd be on the hook for that increased amount. Right now, we have an administration that looks favorably on loan for programs. But for standard forgiveness, you're looking at a 25 year time-frame, and betting that no one in Congress or the Oval Office is going to modify the program substantially before your loans are forgiven. I personally find this unlikely, and am sweating out my 5.5 remaining years (of the original 10) until PILF kicks in, hoping that no major changes will be made before I hit forgiveness. But intelligent minds can differ on this issue.

(You also may have additional options other than REPAYE; For IBR, another income-based program, you get a 3 year grace period... for plain old PAYE, you may qualify for no recapitalization, so check into that.)

At any rate, don't make ANY major changes until you've decided if you're completely done with school, because adding additional loans can screw up your forgiveness timeline, if you're counting on that. Once you're sure you're done -- or that you're going to pay cash for future education -- consolidate the federal loans and chose a NON PROFIT servicer in the consolidation. (I'm with Granite State Management, and while I don't love them, the pain in the butt has been limited so far?) 

Then, I'd seriously consider trying to get a job with a federal government, State or Tribal Government or an Non-governmental organization, because while they pay lower salaries they qualify for PILF, which can make a huge difference. You have to be employed full time according to the organization's classification, so something like adjuncting or another side-gig type work could work for you in this regard. You've got to make full, on-time payments, but in ten years you should be out from under the federal loans and have paid off the Private ones, as well as having a decent nest egg.

mozar

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Re: Over 100k in student debt: help!
« Reply #11 on: June 14, 2016, 04:17:46 PM »
Well I'm going to frame it a different way. 137k is a doable amount to pay off. I had a 135k in student loans and I paid 100k off over 5 years. But that included a masters degree. Is there a way to get a better job while you figure things out?

rubybeth

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Re: Over 100k in student debt: help!
« Reply #12 on: June 14, 2016, 04:40:23 PM »
Can I recommend looking into different medically related fields that aren't dentistry or medicine? What about a nursing degree, or something like speech-language pathology, or possibly physician assistant? These programs are generally 2 years and can be done relatively inexpensively if you stick with state schools. My mind boggles at taking on another $150k in debt to pay off nearly $300k in debt. Do you have any other skills that you could market? I'm thinking business or technology-related. There are 22-year-old kids out there making easily $60k+ for knowing how to code.

And I agree with what SimplyMarvie wrote. Forgiveness may be your best option without getting more education. Looking for a job in a school or non-profit would likely qualify you for Public Student Loan Forgiveness. Something administrative, full-time, do it for 10 years and get the loans forgiven.

Bucksandreds

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Re: Over 100k in student debt: help!
« Reply #13 on: June 15, 2016, 05:26:50 AM »
$300,000 in student debt would be a pretty typical amount for dental school graduates today. Consider they spend 8 years in school and then either 25 following years paying $1500-$2000 per month (not tax advantages due to income) or 5-10 following years paying 50-75% of their after tax income and dentistry is a microcosm of the student loan problem. If you don't get an advanced degree it can be difficult to earn a strong income.  If you do get one then you won't get access to that income for decades because you have so much debt to service.


Also 90% of young dentists will be in the $120,000-$150,000 income range. It takes years for the vast majority to be able to get to $200,000 or more and plenty never do.
« Last Edit: June 15, 2016, 05:29:15 AM by Bucksandreds »

ShoulderThingThatGoesUp

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Re: Over 100k in student debt: help!
« Reply #14 on: June 15, 2016, 05:32:37 AM »
On top of that, the dream of having your own practice takes a lot of money and debt to set up. My brother-in-law bought a practice in this field and it was years before he had any profit to show. Thankfully my sister has a good W2 job.

Well I'm going to frame it a different way. 137k is a doable amount to pay off. I had a 135k in student loans and I paid 100k off over 5 years. But that included a masters degree. Is there a way to get a better job while you figure things out?

I agree, $137k isn't insurmountable by any means.

boarder42

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Re: Over 100k in student debt: help!
« Reply #15 on: June 15, 2016, 05:44:45 AM »
you're gonna be a dentist.  if you got into dental school go ahead and stop working focus on your studies and graduate.  then find an aging dentist with a good practice in a LCOL area b/c i dont see this as a profession that really loses much income based on the COL where they are.  Come on as an associate with the dentist with intent to buy his/her practice when they decide to retire. once you take it over you can hire on more help b.c you will have grown the client base of the business to support one experienced and one new.  give the new dentists you hire profit sharing and grow the practice til all you're doing is counting money.