Holding back on putting the extra towards loans has also been because we aren't sure which to pay toward. Does it make sense to:
1) Aggressively pay off both private and federal over the next 4-5 years (push back having children?)
2) Aggressively pay private but stick to 25 year REPAYE/PAYE/IBR for 25 years while saving for a potential tax bomb (hoping for some level of forgiveness along the way)
3) Take slow approach to private given sub-5% interest rates and put money in index funds instead while aggressively paying high-interest federal
4) Slow approach to private and 25 year plan for federal, with a lot of money going in index funds
Thoughts? Am I missing anything?
I’d first look at your goals and then try working back from there. If you want kids and are 30 I would personally prioritize that. You might want to hammer down the private loans in next year or so and stay on an IBR Federal to increase cash flow for when you have kids.
For a down payment, you don’t need a house to have kids. I’d look at the house goal independently. If you want to FIRE at 40, in 10 years, do you plan still living where you are or moving somewhere else? Use the nytimes rent vs buy calculator to make sure it makes sense to buy in the timeframe you plan on living wherever you are. Determining not only whether, but also to what extent, buying might be advantageous (or not) will help you figure out how much of a priority a down payment should be. And don’t compare renting a 3 bedroom house to buying one, if renting a 2 bed (and then if needed 3 bed) apartment is a legitimate possibility and cheaper than renting a house. Then compare renting an apartment to buying a home.
You should look at 25 year payment + forgiveness vs switching to a standard 10 year plan. What saves you more over the long run? And how does it affect cash flow one? Don’t worry about the private loans in this calculation, your only comparing one federal plan to another. You said your PAYE rate is going up soon to $1000. How close does that bring you to a standard 10 year payment? If it’s close, switch to the standard 10 year plan. No need to calculate. Eyeballing it based on running lots of numbers in the past, I think 95k in fed loans means 25 year repayment will cost you a lot and should only be done if you cannot afford standard payments OR if you’re on IBR temporarily to work on other goals (not for 25 years).
If a 10 year standard plan makes sense for your federal loans (which I think it might based on the soon to be $1000 rate), then you are just comparing interest rates and the flexibility advantage of fed vs private loans. In that scenario, I’d personally wipe out federal above 6 percent today, then work on private loans, then come back to remaining federal. There’s discussions on letting low interest loans ride, but I killed all my private loans, even the one 3% unicorn. My grandparents were co-signers, so I didn’t want them to worry about the loans. This was pre-mmm, but I don’t regret it; it was a huge relief to be done with Sallie Mae/Navient.
Now if you also decided a buying house is much more advantages to renting, then I’d work on your DP and before buying increase your efund to account for repairs. Then work on student loans in order described above as much as possible while trying to have kids. Unless you feel you need more cash flow for when a child comes and an IBR rate is much lower than 10 year rate, then I’d go at private first. Reassess post child on what is manageable.
