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

January 25, 2023


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.



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