Hello everyone.
I was hoping you could help me develop a strategy for paying off my student loan debt.
I make $120,000 per year. Also, I received a lump sum of $50,000 (tax exempt) from the federal government in exchange for 2 years of work (I'm in healthcare) at one of their designated under-served locations. I am halfway finished with this time commitment.
My remaining debt is $40,000. The interest rate is 6.55%.
I know I likely won't make any investments that will garner interest higher than 6.55%, so it would behoove me to pay off the debt as aggressively as possible.
However, at the end of my 2 year commitment with the government, if I choose to sign up for a third year, I will receive an additional $20,000 (tax exempt). If I do not have at least $20,000 of debt at that time, I will be ineligible to receive the lump sum of $20k for loan repayment.
So, would it make more sense to pay off this debt on my own as fast as possible and not worry about that potential lost federally-funded loan repayment.
Or should I make minimal monthly payments on my debt and invest that money elsewhere? (follow up question: if this is preferred, where would you recommend I put that money? I already match my employer's contribution for my 401k and have maximally contributed to my Roth IRA. I'd like to buy land, or a home, or my own practice in the next 5 years - so I'd prefer to keep investments such that I could pull them out for these purposes).
I know a lot of this depends on whether or not I choose to stay for this 3rd year. I wish I knew how I'll be feeling in a year or so when I have to make that decision. But I don't. So I just wanted to bounce this issue off you guys and see if there was a glaringly obvious answer or fresh perspective that I've been unable to see.
Thanks so much for your help!