fbpx
U

We Have $300,000 in Student Loan Debt! (What Should We Do?)

January 25, 2023

Transcript

Ron has a question, he says his wife has $300,000 in student loans at seven percent for a doctorate program, but these will be forgiven in six years with her current employer. Ron is wondering if they should treat it as high-interest debt and pay more than the minimum or slow down in investing.

So, Ron, I’ll give you the disclaimer first. It’s really difficult to give specific, unique financial advice to you because we don’t know all the other circumstances and we don’t know what’s going on in your life situation. But we can speak to some things to think about.

Now, Ron, I’m going to recap this to make sure I’ve got the facts correct. His wife has $300,000 of student loans at seven percent with her current employer and she’s on pace for them to be forgiven in six years. Yes, all right, so the debt will be forgiven and so the question is, should he pay on it aggressively or pay the minimum in order to have the most amount forgiven?

All right, so I’m going to take a leap here and assume medical school took a while to get through and accumulate that much. We’re going to say they’re probably in their mid-30s, somewhere in that ball, early to mid-30s.

So, for someone in the early to mid-30s, Brian, approaching this kind of thing, right, $300,000 in debt, there’s this thing that could happen. What are your thoughts? And I’ve got some thoughts, but what are your thoughts on how you would approach that?

Um, here’s what I think you would say, and I kind of agree with this, is that you’ve got a unique take. Look, $300,000 of student loan debt, it’s a holy cow, it’s a lot. That is can you imagine trying to eat that elephant? I mean that just seems overwhelming. Now, you, first of all, hopefully, because you’ve heard our guidance, now it’s always different for professionals because you said it’s a doctorate program. I don’t like people to have more student loan debt than what they can make the first year of the job. So, that just $300,000 is such a big number. But here’s what I want you to think about, you gave the information that in six years this could be forgiven by the employer. I really hope they like their employer, yeah, and I really hope they like that job because that is a tremendous benefit. I mean, if you just take $300,000 and divide it by six, I mean, you can see that that is a substantial sum of compensation that would really make me lean hard on taking that into account when figuring out, do I go take another job because that is, that’s worth a lot of money.

So, that’s part of your handicap process of figuring out the decision making, what is that worth and how realistic it is for your spouse to stay at that job for six years. The next thing you can do to protect yourself is to turn this into a math exercise. Whatever you were going to pay on that, you know, within reason, I want you to be able to track what money got put elsewhere. So that you have an alternate opportunity that if you don’t get the forgiveness in six years. You’ve got to be very disciplined and careful in not letting your lifestyle to expand and spend these dollars elsewhere.

Connect

Subscribe

Most Recent Episodes

How to Recover From 4 HORRIBLE Financial Mistakes!

In our nearly four decades of combined experience managing money, we’ve seen some horrible financial mistakes - here are the four worst we’ve seen first-hand and what you can do to avoid making a similar mistake. In this episode, you’ll learn: The worst financial...

Why Americans Are Actually Broke! (2023 Edition)

Americans might be bad with money, but you don’t have to be. In this episode, we discuss the underlying reason why Americans are so bad with money and how you can do it better. In this episode, you’ll learn: Common financial pitfalls you should avoid Practical steps...

Build Wealth With the 3 Bucket Strategy! (By Age) 2023 Edition

We believe there are three distinct taxable buckets you have the option of investing in for retirement. We’ll talk about how to balance those buckets by age and show a case study by age that shows what your buckets may look like! In this episode, you’ll learn: The...

Debt Ceiling Crisis: World’s Financial System at Risk?

Should you be worried about the debt ceiling crisis? Although political leaders have so far been unable to come to an agreement, we'll tell you what history says will happen and what it means for your finances. For more information, check out our free resources...

Financial Advisors React to INSANE Money Advice on TikTok!

Is financial advice on TikTok all bad or is there some good advice out there? Check out our brand new TikTok react show where Brian and Bo give their honest reactions to trending financial advice. Enjoy the Show? Sign up for the Financial Order of Operation (FOO)...

How to Save Thousands of Dollars in Taxes in 2024

Tax season is over for most of us, but that doesn’t mean it’s time to stop thinking about your taxes! Planning out your tax strategy in advance can save you time and money on your taxes. In this Q&A, we’ll discuss the line items on your return to pay attention to...

Average 401(k) Balance by Age (2023 Edition)

Are you doing better than the average American at saving in your 401(k)? We'll talk about basics of a 401(k), including new limits, employer matches, and vesting schedules, how many millionaires are created by 401(k)s, and of course the average 401(k) balance by age....

TikTok Products That Are Actually Worth the Money!

TikTok has become not only a popular social media platform, but a popular place to find trending new products. Are any of them actually worth it? Let’s find out!   For more information on how to make the most out of your financial life, check out our free...

The Dark Side of Being an American Millionaire! (2023 Edition)

Being a millionaire isn't always sunshine and rainbows in 2023. In this episode, we'll discuss some common pitfalls and traps millionaires fall into, shock-and-awe stats, and how you can handle your money even better than a millionaire. In this episode, you’ll learn:...