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Officially student loan debt free

perma said:
Sounds like I’m going to learn something today!
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On your points 1 & 2 - The best answer is always take the lowest rate with the best terms regardless of govt involvement. This may take a little thinking given ones circumstances, but avoiding govt backing on principle is a very expense principle. Many of us (including me) would like to think we can still live in a bright line govt/private world, but the reality is that we live in a hybrid ecosystem where public and private intermingle and to make choices otherswise just doesn't make sense.
On the final point - For some folks pursuing some fields of study some of the govt repayment plans are 5-digit (even 6-digit) gifts. Gift a student's parents and grandparents paid into support and the student will pay in many times over (in taxes) so no reason not to use the system the way it is designed. We can't always write the rules, but we can benefit from some.
 
VikingsGuy said:
On your points 1 & 2 - The best answer is always take the lowest rate with the best terms regardless of govt involvement. This may take a little thinking given ones circumstances, but avoiding govt backing on principle is a very expense principle. Many of us (including me) would like to think we can still live in a bright line govt/private world, but the reality is that we live in a hybrid ecosystem where public and private intermingle and to make choices otherswise just doesn't make sense.
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I didn’t make points 1 & 2 to avoid those loans on principle. But you do make a good point on this ‘hybrid ecosystem’, especially in this century. There was a much clearer line back when I first started between federal and private loans.

Shopping is a good idea, you may find a private entity that will get you a better interest rate.

VikingsGuy said:
On the final point - For some folks pursuing some fields of study some of the govt repayment plans are 5-digit (even 6-digit) gifts. Gift a student's parents and grandparents paid into support and the student will pay in many times over (in taxes) so no reason not to use the system the way it is designed. We can't always write the rules, but we can benefit from some.
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I don’t understand what you mean by gift. Are you referring to forgiveness? I’m all in favor for gaining every corner we can get but I don’t know that I’m reading this one correctly.
 
perma said:
I didn’t make points 1 & 2 to avoid those loans on principle. But you do make a good point on this ‘hybrid ecosystem’, especially in this century. There was a much clearer line back when I first started between federal and private loans.

Shopping is a good idea, you may find a private entity that will get you a better interest rate.


I don’t understand what you mean by gift. Are you referring to forgiveness? I’m all in favor for gaining every corner we can get but I don’t know that I’m reading this one correctly.
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I meant to type "gift" - a sloppy reference to loans that are fulfilled without full payment of principle - which is different than the current post-hoc forgiveness discussions. But probably too sloppy to be useful - sorry.
 
VikingsGuy said:
I meant to type "gift" - a sloppy reference to loans that are fulfilled without full payment of principle - which is different than the current post-hoc forgiveness discussions. But probably too sloppy to be useful - sorry.
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Ohh ok I follow you now, I get what you’re saying.

Can’t comment on that though. Never got to the point where I needed to leverage that, or know of anyone that did. Wouldn’t be mad at someone that did either. I tried a lot of avenues to make the system work for me but never did work out. Might be a lot of ignorance on my part though. The ‘I had enough’ moment came before I could get smart.
 
I took out a ridiculous amount of debt to get 3 degrees from mediocre schools, enlarged by bad decision making in my youth, but I always had the mindset that I was "buying a career". Because of this they are paid off and have had an ROI well over the S&P500 during the 35 years thereafter.

Even as tuition becomes ever more absurd, if there is a clear line of site between cost and career earnings there are few better investments (leveraged or not) than a university education.

But if you are not academically inclined/interested or looking at fields with miserly earning opportunities I suggest folks either be very cautious on the cost/debt side or consider going into the trades as already discussed.
 
Congrats, student loan debt is a significant financial burden for many. My wife and I chose to pursue healthcare careers. While we consider it is noble profession that offers job stability and the opportunity to positively impact people's lives, the cost of education can be daunting. We just finally got hers tackled after 14 years so we can begin to work on mine. Look forward to the day that it’s not hanging over our heads.
 
perma said:
Actually wanted to expand on this now that I’ve had time to sit back and think about it. Maybe it’ll help someone.

I seldom recommend debt but for an 18 YO without a full ride and no good upbringing/savings would make it hard. Some often would suggest to wait a few years and work 40 hours for a few years before going, but I knew if I did that I’d never go to college.

-DO NOT MAKE THIS POLITICAL-

I think if I were to do it again, I’d do it in the following:
- No govt loans. I had a payment that was less than the accrued interest. Makes zero sense.
- Private loans only. Interest is typically higher and they decline most younger folks who apply but there are some that will make it work.
- Cash flow as much as possible. I did this because I didn’t have a choice. I lost out on making friends and college parties because of it, but you gotta do what you gotta do.
- Avoid parent plus loans. Dinner doesn’t taste the same when you owe your in-law. $&@#ing hate that.
- Scholarships. I failed this hard. Just too lazy. I had great grades and was a high school athlete. Pissed it all away.
- If you have to take the govt loan, do not do any of their repayment plans. That’s how bad situations get worse.
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Some very good advice there. I was blessed and used the GI bill so I never had student loans. Man those govt loans are a scary proposition, I wouldn't recommend them to anyone if at all possible. Especially the repayment plans, it just doesn't make sense.

My wife had 20k in loans that were fasfa, which was an outright scam if I'm being honest. We payed those off as fast as possible. Ate a lot of Raman noodles that year when I was an E3 in the marines and scraping by. We got down to 10k and one day it was 0. Come to find out her mom just paid them off. After she sold her house and moved down to Florida. Couldn't tell you how many times we tried to pay her back but of course she refuses and says it was a gift. every year for the last 13 years I send her a check for 10k and it never gets cashed. Always mails it back with a big VOID on the back lol.
 
Congrats to you and your wife @perma. That has to feel good.

My only comment after having three kids get degrees is something you touched on: Scholarships. When our three boys were going through college, we insisted on them spending some time looking for scholarships. It's a pain and is a time suck but was worth it. There is a lot of free money out there if you spend some time trying to find it and applying.
 
perma said:
I didn’t make points 1 & 2 to avoid those loans on principle. But you do make a good point on this ‘hybrid ecosystem’, especially in this century. There was a much clearer line back when I first started between federal and private loans.

Shopping is a good idea, you may find a private entity that will get you a better interest rate.


I don’t understand what you mean by gift. Are you referring to forgiveness? I’m all in favor for gaining every corner we can get but I don’t know that I’m reading this one correctly.
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Unless a private loan has a significantly better rate like 2% better I’m not sure why you’d take private over public… even then I’d take a hard look.

If you’re leaving politics out of it and solely looking at the cost benefit for the loan recipient, today, there isn’t a good reason to touch a private loan or refinance.

Here is a comparison, with all the inputs, comparing all the federal student loan payment plans with a private 7 year term loan at the same interest rate. Under this model a couple has 2 kids, one parent went back to school and got a BA or BS with $100,000 in loans. Both parents work.

Scenario 1 is Married Filing Joint the second is Married Filing separate.

1705335847059.png
1705336032439.png
1705336001613.png

The private 10 and a public 10 year at the same interest rates are obviously the same, a 7 year obviously accrues less interest than a 10.

For the Income Driven Repayment plans (Old IBR, PAYE, New IBR, or SAVE) what's shown is the total pay back amount when you either pay off the loan or when you hit 20/25 years and get forgiveness. This column is inclusive of the tax bomb (Taxes Due) when you get your loans forgiven.

PSLF would be if you were a govt or nonprofit employee who qualified.

So if you're a nurse, a private loan is going to cost you $116,103 more than if you had gotten a federal loan.

That’s not to say that the OP didn’t make the right decision at the time, or that there are folks that would do best with private loans. There are lots of variables and the plans are complicated and require very different strategies.
 
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I had about $60k in debt for a BS and MS. Could have probably got away with <$30k based on my current position. But the MS helped me get into some big corporate jobs that I quickly learned were not for me. I also did a study abroad program in England for 3 months and a 3 week business school program in China. I did a fair amount of partying and worked 25-30 hrs a week, still had enough credits to get my BS in 3.5 yrs.

Paid off in about 6 yrs. Wife had zero loans so made it easier to allocate funds to mine.

My parents have zero money so I was able to get Pell grants and subsidized federal loans. No interest accrued while in school. Ended up with extra loans to cover rent/study abroad programs. Could have definitely done it cheaper. Federal loans made it a helluva lot easier. No idea what the minimum payment was, always paid more.
 
westbranch said:
My parents have zero money so I was able to get Pell grants and subsidized federal loans. No interest accrued while in school. Ended up with extra loans to cover rent/study abroad programs. Could have definitely done it cheaper. Federal loans made it a helluva lot easier. No idea what the minimum payment was, always paid more.
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Yeah more or less this is the biggest takeaway. You and I are cut from the same cloth. Fed or private loan, if this was a math problem or truly about saving money, none of us would have borrowed it in the first place. Sadly, not all of us can avoid that.
 
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