Pay mortgage or student loan

[Anonymous]

DH has $200k from his grad school in federal student loans at 7%. We also have a $500k mortgage at 3%. He is the sole income provider in our household as I am a SAHM. With the student loan payments starting next month we’ve discussed throwing extra payments at the loans to knock them out. I know that it make financial sense to pay the higher interest rate debt first but I think we should put our extra payments towards our mortgage first because atleast we will have security that we have a home if oneday DH loses his job or can’t work. I’d rather than a paid off mortgage than less student loans. My thought is, if we don’t have jobs and can’t pay our mortgage, the lender will foreclose but if we can’t pay the student loans , oh well, atleast we have our house. What would you do? where would you target your extra payments?

[Anonymous]

Anonymous wrote:DH has $200k from his grad school in federal student loans at 7%. We also have a $500k mortgage at 3%. He is the sole income provider in our household as I am a SAHM. With the student loan payments starting next month we’ve discussed throwing extra payments at the loans to knock them out. I know that it make financial sense to pay the higher interest rate debt first but I think we should put our extra payments towards our mortgage first because atleast we will have security that we have a home if oneday DH loses his job or can’t work. I’d rather than a paid off mortgage than less student loans. My thought is, if we don’t have jobs and can’t pay our mortgage, the lender will foreclose but if we can’t pay the student loans , oh well, atleast we have our house. What would you do? where would you target your extra payments?

I would get a job.

[Anonymous]

I would let math win out over the warm fuzzy feelings and pay the high interest debt over the mortgage.

[Anonymous]

FYI you can usually get free of a mortgage by giving up the house but it’s very hard to get free of student loan debt

[Anonymous]

Seriously lady you need to work. $700K in debt at combined rate of 5% = get your lazy self out of spin class and into a job.

[Anonymous]

Anonymous wrote:FYI you can usually get free of a mortgage by giving up the house but it’s very hard to get free of student loan debt

If you are low income loans eligible for $0 income-driven payments.

[Anonymous]

Anonymous wrote:

Anonymous wrote:FYI you can usually get free of a mortgage by giving up the house but it’s very hard to get free of student loan debt

If you are low income loans eligible for $0 income-driven payments.

We don’t qualify for $0 income driven payments and anyway interest would accrues on that wouldn’t it?

[Anonymous]

Anonymous wrote:

Anonymous wrote:DH has $200k from his grad school in federal student loans at 7%. We also have a $500k mortgage at 3%. He is the sole income provider in our household as I am a SAHM. With the student loan payments starting next month we’ve discussed throwing extra payments at the loans to knock them out. I know that it make financial sense to pay the higher interest rate debt first but I think we should put our extra payments towards our mortgage first because atleast we will have security that we have a home if oneday DH loses his job or can’t work. I’d rather than a paid off mortgage than less student loans. My thought is, if we don’t have jobs and can’t pay our mortgage, the lender will foreclose but if we can’t pay the student loans , oh well, atleast we have our house. What would you do? where would you target your extra payments?

I would get a job.

Right? I don’t think you can afford to SAHM while waxing poetic about your massive debt.

[Anonymous]

You are crazy. Of course you should pay off the 7percnt debt first.

If he loses his job he will find another one. If he doesn’t, you are going to lose the house anyway.

Each $1000 you pay off on the student loans saves you $70 every year on interest, vs $1000 on the mortgage would save you only $30 a year.

[Anonymous]

You should consider income based repayment. Whether it is worth it depends on your income. You'll get forgiveness after 20 years or something like that. If your income is not that high you can save a lot of money by going income based. The biggest issue is you might take a big tax hit when you get forgiveness. Especially if your balance grows over that time. That being said, even if you have to pay like $80k or whatever in taxes on your forgiven loans that is an awesome deal compared with paying off the full $200k plus interest.

[Anonymous]

Put it toward the house. If he divorces you, the equity in the house will be split 50/50. You get nothing from paying down his debt.

[Anonymous]

Anonymous wrote:Put it toward the house. If he divorces you, the equity in the house will be split 50/50. You get nothing from paying down his debt.

Great point!

[Anonymous]

Why didn't you knock off some of the student loan debt over the last few years. That is an awful lot of money. In addition, I am not sure how old your kids are, but 200K a year with that much debt will be hard to save for college and other expenses. You may want to consider a way to earn income.

[Anonymous]

Dafuq kind of degree does he have that cost $200k? That better be some sort of professional degree and he’s now making bank.

[Anonymous]

$200k on his education and he can’t answer a very basic math question like this?

He should demand a refund.