Need Advice Post-Grad on Loans / Debt
Hey everyone, I’d appreciate some advice on the best way to approach my student loans once I start full-time this summer.
By then, I’m expecting to have about $27.5k in federal student loans at ~5.25%, plus roughly $93k in Parent PLUS loans (in my mom’s name) at ~8.25%. My family isn’t in a position to help with repayment, so I’ll be handling this on my own.
For context, I’ll be making $110k base with a $15k sign-on bonus, and I’ll be paying $2,250/month in rent (including utilities). I’m trying to figure out whether it makes sense to max out my 401(k) (my company matches 4.5%) and/or contribute to a Roth IRA, or whether I should prioritize paying down the loans as aggressively as possible.
I’m not a big spender, I'm thinking of budgeting around $200–$300/month for personal spending. I’m also willing to go into the office on weekends to take advantage of meal stipends so I can keep food costs as low as possible.
If anyone has thoughts on how to balance retirement contributions / saving vs. paying off high-interest loans, I’d really appreciate it. Looking for advice too if anyone has experience refi'ing parent plus loans.
Bump - same boat lol
Do the match, and then aggressively pay down what ever you can on the 8ish percent loan
Do you think I should refi the loan since 8% is crazy high? Also do you recommend investing in Roth IRA anyway or save that till until after I paydown all the loans?
I refinanced mine down to 5.8ish. Basically just paying it down slowly, praying for a good bonus in July.
Get the match first, free money, then put into Roth IRA is what I’d do.
Yes to both. Refi that awful loan down into the 5's (I was lucky enough to get it sub 3 when I refinanced, but those days are over) and get it out of your mom's name. That's a really nice gift as a son.
And then save as much money and eliminate as much debt as you can when you are young. You will sleep so much better and be in more control of your own destiny for the future.
Would definitely refi. Just got mine that was over 10% down to 5.9%.
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Bump need help here lol
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I was paying about $800+ a month on my student loans, and that was the minimum payments. Had about $74k in undergrad loans and $171k for my MBA.
I'd just pay that minimum monthly amount until my bonus hit and would throw my whole bonus and the most amount of loans that I could. I had 18 loans in total, my 8 federal loans totaled $23.5k any my 10 private loans totaled about $222k. Since I didn't have to make payments on the federal loans, I would use my whole bonus on the private loans first. Like I'd just pay off an entire $30k loan with one payment.
My first analyst bonus was only about $40k after taxes, the following year was more, and the following years after that were obviously more after I got promoted. Then when I hit my 4th year the shares I had vested and I took them out and threw all that at my loans.
It'll probably take me another year to pay it all off, don't have much more to go. Obviously as I paid off the loans the monthly payments have decreased. Now I'm only paying about $130 a month in minimum payments. I could pay it off faster if I pay more than the minimum maybe, but I just wait til the bonus hits every February and use that.
will note that this only really works if you're getting six figure bonuses. Taxes will take nearly half of the bonus. Not sure what your bonus situation is like tho. I was also not contributing more than the match for my 401k.
were you able to save/invest during this time as well? or are you sort of at square one when it comes to that? genuine question as im not sure if i should be paying student loans down more or investing after minimum payments.
I first made sure I had $20k in my savings account before I started attacking the loans. Apart from the 6% 401k contributions I'm making, I'm not doing any other investing. Paying off the loans is the priority right now since my interest rates are so high. I would not be able to out earn that interest through investing. I'm also not even able to buy single stocks since I work for a bank lol.
damn do you find the loans worth if your 5 years in without investments besides 401k? have you had to be frugal all those years or were you able to enjoy life? curious more as to your mindset with the loans and investments versus spending and such. I am in a similar situation but only a year into work.
In hindsight, I should have lived more frugally, invested more in a Roth or something, or saved more. Maybe have gone to a cheaper business school, too, but I wanted to go to a top 10.
The truth is, I still have enough to do whatever I want. I eat out at restaurants when I feel like it, I can go on nice vacations, I live in the West Village and go to a nice gym.. I never let having student loans ruin my life. I paid off nearly $200k worth of loans in only a short number of years. Yes, it would be nice to have kept that money and saved it or invested it, but getting my MBA was one of the best experiences of my life, I made all my best friends in business school. I made great connections and have a great income because of it, so I don't regret the opportunity cost. In another year they'll all be paid, a year after that I'll get to keep my whole bonus and not have to think about them anymore. So I'll be able to save a lot of money very quickly once I get these loans out of the way.
Be smart about your budgeting. If you're unsure what your bonus situation is, then maybe don't plan on using that to pay them off or talk to a colleague that's been in your group for a while what the compensation situation is so you can plan accordingly.
Bump - slightly worse situation (~140k). Had been expected to afford then was broken the news that the debt would likely fall on me individually. Currently starting as a Associate in a T2 consulting firm w/ 100k base and 20% bonus, looking to exit to buyside. Wondering how do I stomach this and does anyone have resources on how to financially model this out to plan?
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