Here's the situation. I recently started my first position post graduate degree and am looking at some hefty loans to repay, about 140k at 7.3%, ouch! The good news is that my wife and I have a pretty decent combined income of around 150k per year net. We also have an nice emergency fund built up, are fully funding our 401ks and have about 25k in roll over IRAs from previous employers. I have several possible repayment options that I've been mulling over for the last several months, but just can't seem to come to a conclusion so I ask you all.
Option 1: Due to my employer, I qualify for the public service loan forgiveness (PSLF) program. This would eliminate any remaining balance on my loans after 120 payments area made, 10 years. Through another program, income based repayment (IBR) I am able to get my monthly payment down to $868 per month. This will adjust with increases in salary over the life of the loan. At the current amount, I am really just paying interest only. As an estimate, multiplying this $868 by 120 payments yields a total of $104k paid over the course of the next 10 years, with the balance being forgiven after the 120th payment.
Option 2: Get this loan with a ridiculously high interest rate paid off ASAP. I have 50k in a Vanguard Roth IRA that I could throw at it immediately. Using an online repayment calculator, I figure I could pay $2828 per month and have the balance paid off in 3 years. I may also be able to get a lump payment from my parents or in-laws to reduce the interest rate and then just repay them over the next 3 years.
Pros for option 1: This is pretty obvious, the total payment would be about $45k less over the course of 10 years, not even accounting for the investment return of the difference. This would allow us to save much more for a possible home purchase, we are currently renting.
Pros for option 2: While I'm really enjoying my job and could see myself here for 10+ years, I think that within 5-6 years we may want to move closer to family and I'm not sure that I would find another job at a 501c3 and thus may not continue to qualify for the PSLF program. If we were to move after 5 years, I would still owe the 140k that I owe now. With option 2 we would be able to file our taxes jointly. Then there's also the psychological gratification of crushing this huge debt as quickly as possible.
I see taking option 1 as a pretty big gamble that we will be happy in the same position and location for 10 years or that I would be able to find another position at a non-for profit organization. Ultimately I know that this is as much of a psychological choice as a logical one, but am very interested to hear any other opinions. Thanks all.