If you took out six figure student loans for a professional degree, what was your strategy

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06/05/2023 19:33

Subject: If you took out six figure student loans for a professional degree, what was your strategy

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Anonymous

DH and I both had undergrad and law school debt to the tune of about 450K combined. We both went to law school wanting public interest jobs and we only applied to schools that had generous loan repayment programs that would pay our loans for us. As we were graduating, our law school changed their LRAP programs to rely on PSLF forgiveness, though they still covered the monthly IBR paymentsif your income was under a certain cutoff. We both took government jobs, me for the Feds and him for the state. After my second year working, my income was over the cutoff, but they continued to pay DH's loans until the end.

Because our loan payments were always capped and tied to our actual income, student loan payments have just been a bill we've paid every month, and they have never been a hardship that prevented us from reaching other financial goals.

We bought a house for 380K two years after graduating with a 5% down payment. Similar houses in my neighborhood sell for 600-700K now (seven years later), so we were lucky to buy when we did.

Our law school would give us a lump sum payment annually to cover DH's loans, which we put towards his Roth IRA. We always maxed out while we were eligible for it. I have always contributed to my TSP and have increased the contribution as my income has increased. I finally started maxing out during the pandemic when student loan payments were paused and we weren't paying for daycare or other costs on things like eating out and travel. We are on track for retirement.

We have one kid and did not delay having a kid on account of student loans. Because we live in a legitimately middle class neighborhood, our childcare costs have always been reasonable. We've been able to able to contribute to their 529, typically up to the tax deductible max without it being a stretch. We aren't going to get financial aid and we don't expect to be able to afford the most expensive of private schools, so our kid will have some limitations on where they can go to school if they want to graduate debt free or with minimal debt. But that's just a reality of our incomes and the cost of college and aren't because we've had to pay student loans.

Our loans were forgiven earlier this year and our only outstanding debt is our remaining mortgage.

In general, relying on PSLF has limited my job changes. I may have gone someplace else during periods of time when my job was frustrating, but in staying I've learned that frustrating times at work come and go. DH has always loved his job and never contemplated leaving.

The other thing, is that buying a home early when our salaries were much lower and never trading up is what allowed us to grow our wealth in other areas. Even though the schools aren't as "good" buying an inexpensive home has meant that we've always been able to save for other major expenses along the way like new cars, retirement. However, it wasn't until the student loan payment pause that we've been able to spend more on major home repairs, so that seems to have been where we've been most impacted by having student loans.