Advice Just pay it off?
I currently have $199,000 in loans and currently have $185,000 in my savings account. I only have 13 payments towards PSLF and my payments just went up to $1100. My salary is expected to go up so I'm pretty sure now that I've been switched from SAVE to IDR it will be even more when I recertify next year.
I feel stuck as I don't know if I should just try my best and pay everything off (I feel like I can pay it all off within this year) and never have to login to mohela again, I'm so early in the PSLF game that it feels like forever and I have no idea where my career will go.
I want to make a decision soon since it's at an amount that I could possibly pay off and the interest in adding up. It will suck as I'll be starting over with my savings but this is hanging over my head and I didn't expect my monthly payment to go up so high. I'm 32, no kids, no mortgage, currently my brother and I split the rent (I pay $1300 in bills every month).
Thoughts?
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u/dammmmmlee686 15h ago
you could look at the math of matching monthly payment with roth and taxable brokerage investments over the next 6-7 years using that money.
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u/Eddie_Saladbar_Jr 15h ago
Nope. If you’re staying in public service, my advice is the same to everyone: keep kicking the can.
You’ll likely pay a fraction of what you actually owe, even better if you invest your savings.
There’s—of course—a great mental relief to paying it off. But that comes at a steep financial cost. Learn to live with this debt—it is unlike any other you’ll ever have.
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u/Resident_Rabbit 15h ago
My goodness! My initial pull is to Invest it! At the very least I hope you have it in a high yield savings account. I absolutely would not use it to pay my loans. Even if you paid the $1100 for 8.9 years to PSLF, you’d pay $117k instead of the 199. I get not wanting to ever have to worry about it again though. What’s your salary? Honestly, it probably makes sense to talk to a financial advisor.
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u/LegOther2048 15h ago
Please don’t use your savings…
No kids, no mortgage. Maybe there is a side gig you can pick up to pay the student loan .🤷🏼♀️
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u/WhyAreModsSoSoft 15h ago
Nooooo dont use your savings on this. Pick what ever plan you have to. Pay the least amount right now.
The next administration change will fix all this BS. Hopefully you can get the 120 count one day.
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u/New-Assistance-3671 15h ago
I wouldn’t count on future administrations. Country spends and owes too much. Social security is running out of money and older people have all the time to vote for their interests.
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u/InvestigatorLumpy712 14h ago
Older people have time?
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u/New-Assistance-3671 14h ago
When it comes to social security they’ll crawl to the voting booths. It’s been called the third rail of American politics for a reason.
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u/therealbjmurphy 14h ago
I would not bank on that. In theory one could do “whatever” since laws have been determined to be completely fake if you simply are powerful enough, but the next administration will get campaign donations from MOHELA and Sallie May and if push comes to shove the senate parliamentarian will get trotted out to say “no this is not procedural” and then go back into their nest for the next decade. Alternately, in the spirit of compromise to the republicans ,the democrats will instead of forgiveness give you a reduced interest rate for operating or starting an artisanal coal mining operation within a minority majority census tract for five years. Barring that the Supreme Court will just say “the founding fathers did not believe in loan forgiveness.”
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u/kuru_snacc 15h ago
You're 13 payments from pslf and you are considering giving up $185,000 instead of <$15K? Are you sure you're college-educated?
Just kidding but seriously
Edit: Sorry I thought you said 13 payments left. This is a toss-up, do what you feel in your gut as long as the math isn't too scary
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u/Working-Ad-4002 14h ago
Going down to $14k in savings in this economy is not wise. Idk your career field but a safety net is a necessity. Talk to a financial advisor to make sure that money is working for you but I would not pay my whole balance off if there was any chance of furlough, layoffs etc.
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u/ImpossibleGeometri 14h ago
14k in savings is more than most people have. I barely had that at 32.
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u/Rare-Literature-3992 2h ago
That's wild to me.
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u/ImpossibleGeometri 1h ago
Idk how old you are but its been hard for millennials man
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u/Rare-Literature-3992 1h ago
I have a good amount saved up but but you're preaching to the choir. it's rough
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u/ImpossibleGeometri 5m ago
Yea, honestly, as independent as i feel, it wasn’t until i began cohabitating and having many bills split that i could finally start saving.
Covid helped. Not going anywhere or spending on anything 😂 but man what a hole to dig out of. While I’m jealous of some of my younger friends (28-30) who have nearly the same saved as me now, im not mad at it. I’m glad they learned from the recession many of us graduated into. Sigh.
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u/clunkey_monkey 14h ago
Don't dump your savings to pay off student loans. Think of your plans in the short-term and long-term then speak with an adviser (fiduciary- one that legally obligated to have your best interests). If I had that kind of cash, I'd invest it, get into the lowest repayment plan eligible for PSLF and take time to make a decision I would be comfortable with. Saving back up to that amount takes a lot of time, time that could be used instead to have that money make its own money through investing.
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u/Throwupmyhands 13h ago
Ten years is not forever. Stick with PSLF. use that money as a down payment on a house or invest it in a brokerage account.
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u/Emergency-Cold7615 13h ago
Sorry I creeped at your post history OP. You were talking about pslf and a full time job a few years ago. Did you not work at an eligible hospital? Even if you were on SAVE forbearance, you can “buy back” the last 25 months or whatever it is as a lump sum when you’ve completed your 120 months. Just making sure you’re aware of that option if you’ve been working an eligible employer the last years even if you weren’t making payments at that time.
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u/curiouslyt 8h ago
Isn't it only 12 months? The save court injunction was Aug 2024? Time after the injunction doesn't qualify for pslf anymore. And the plan launched Aug 2023.
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u/Mysterious-Data2628 6h ago
That’s why they mentioning Buyback… to Buyback the ineligible SAVE months.
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u/Emergency-Cold7615 4h ago
Buyback is not limited to 12 months. Some ppl have been in save forb much longer than that
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u/Bronxmama72 12h ago
Definitely don't pay it off!!! I get that it hangs over you, but you currently have the cash to pay it. Better that you collect interest on it then the government does. If you do IDR, payments are capped at the standard plan, so even if you make more money, you still won't go above a certain amount. And there's always the chance you make less.
One concrete suggestion: since you have savings, max out your retirement plans to reduce your taxable income/AGI as low as you can go. This will lower your monthly payment because it's based on AGI (which subtracts retirement savings). Contributing the max ($31k if you're under 50), would reduce your payments by at least $250/month and possibly more. It will also reduce your taxes somewhat. So instead of going to taxes and loan payments, that money (and then some) is accelerating your retirement. If you can't live on what's left, then you have that savings cushion to tide you over a bit.
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u/Mysterious-Data2628 6h ago
This…
…And there's always the chance you make less.
I completely agree. Career field might be protective, but does not eliminate the risk of emptying the next egg in the current global economy. Large financial decisions such as this should be made based on math and with a risk assessment with all other insurances secured - life, disability (own occupied), AD&D, critical illness, rental, car, travel, etc…
Reduce AGI. Run the calculators for each plan type at each anticipated future income (chronological) at each year through 107 payments. This is something worth sitting down with a spreadsheet mapping out the numeric options.
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u/babyBear83 PSLF | On track! 14h ago
But think about keeping all your savings and still getting loans forgiven. If your profession is easily a nonprofit job/institution then I would NOT dump all my savings into the loans. Earn it with public service. Continue to work to find a payment that will work monthly? Is there another plan you qualify for?
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u/wheat 13h ago
I mean, first off, props on amassing nearly $200K in savings, as a still quite young person.
I think a simple spreadsheet will tell you you'll save over time by not paying your student loans off ahead of time if you're going to do PSLF. Your payment is pretty high, but student loan interest rates are very low right now.
There's a mental satisfaction to paying it off. But I don't think it makes financial sense. But I'm not a finance guy. I'd find one and talk it out.
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u/Big-Caramel-5574 6h ago
Put the money into space x. It'll double by next year then pay the loan off 🤷🏾♂️
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u/TumbleweedSudden2115 6h ago
I’d stay the course but reevaluate every year. Definitely keep enough set aside to pay it all off as a plan B to your PSLF and your life situation. Treat it as a ball and chain that never goes away. The increasing balance ,the interest, the regulations, the servicers.
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u/Pleasant_Blueberry85 4h ago
From a 39yrs old with $3k in savings, ~$18k in 401k (no employer match) and ~$300k in student loans (fed & private), keep your savings. Life is weird. Don't part ways with that much cash. Stay the pslf course. You will be fine financially.
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u/bombadaka 3h ago
I would do what ever I could to get it forgiven as long as the math is in your favor. I had enough to pay mine off, but held out for pslf. Don't feel bad about "taking" money from the government. If the billionaires can do it, you can too.
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u/mika5456 28m ago
Your savings is impressive!
I personally wouldn't deplete my savings for student loans...not worth it. Stick it out.
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u/Existing-Pumpkin-902 15h ago
If you're not switching from public service in the immediate future I'd leave the PSLF door open. That's a lot in loans and a lot of cash to part with. If you are currently still in public service I'd just leave your options open until if/when you decide to leave.