Student Loan help

#1

Hey Jeremy! I have a question!

I am a Physician Assistant and 27yo with about 145k in student loan debt. I refinanced twice and my interest rate is at 3.38% over the next 9.5 years. I pay $1492 monthly as the minimum. I do overpay $200/mo so I will pay off the loan in 8.3 years. I have no other debt and I have a 10k emergency fund. I currently make $105,000. With my side hustle that I started, it should be an extra $10,000/year, but that has started within the past month.

I contribute 5% to my company’s 401k and then invest $800/mo into Wealthfront. I am currently up 16% for the year.

Thus, my question is whether I should continue over paying the $200 a month to my student loans or just add that $200 into my investments into Wealthfront to make it $1000/mo. I ran it through a debt calculator and investment calculator and the difference in interest would just be a couple thousand but the investment difference is staggering. Can you help?

#2

I would instead take the $800/month and put it toward your student loans, as long as you’re getting the full employer match on your 401k. How quickly will it be paid off then? 4 or 5 years to be completely debt free, and then you can invest $2500/month going forward!

1 Like
#3

@Jeremy Could you give your two cents on this topic? My wife has a professional degree with over 200k in student loans and we make a monthly payment of $2k/month. Due to the student loan payment being so high and we want to continue to live life, we are considering switching to income based repayment plan to lower our monthly student loan payment per month and invest the difference. Would this be a smart move? I know this is pretty vague, but in general would this be wise?

#4

@Jeremy just wanted to follow up to see if you can give your thoughts on this?

#5

Hey Jae You!

In general, I suggest paying off all non-mortgage debt as the second priority of your money behind the 401k match as explained in this article:

If you are going for some kind of loan forgiveness, I’m not an expert in all the different plans and their details, but in general I’d be cautious of these two things:

So, if it’s me, I would probably sit down and figure out a way to go absolutely ham on those loans and knock them out in 36 or 48 months (instead of 8+ years like the $2K payment will get you, or even longer making smaller payments). If you can get debt free on a timeline like that making huge payments, THEN start investing just half of those payments, you’ll be on the way to build serious wealth!