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Last night, a few days after my 45th birthday, we did something that I have been waiting to do since beginning my undergraduate education in 1995. We paid off our student loans. I was not your traditional medical student. I took 2 years off during undergraduate school to serve a mission for my church, and I spent 7 years working on my Ph.D prior to going to medical school. By the time we finished medical school I had 4 kids, $300,000 in student loan debt, and was celebrating my 35th birthday.
I spent 5 years in residency, and during that time we made the minimum payment using income based repayment hoping for PSLF after a total of 10 years. Thanks to changes in student loan interest rate changes during medical school, my interest rate was 6.8% or higher, rather than the 1% interest rates I enjoyed in graduate school. The result was over $400,000 in student loan debt by the time I finished residency in the summer of 2017, but I was half way to PSLF.
Unfortunately the best job in the best location for my family was working for a not for profit hospital as a for profit contracted physician under a PSA contract. As such, PSLF was out the window. I would have to pay off my debt the old fashioned way. So after a 6 month grace period, we refinanced our student loans with SOFI on a 5 year variable interest rate at around 2.25%. But rates quickly dropped to less than 1% and stayed there more or less until about Jan 2022. With rates rising and the end in sight, we decided to escalate our already rapid payoff schedule and last night we paid a lump sum over $50,000 to be done with our student loans. You see, we had been saving for the last 5 years to put a down payment on the construction of our dream home, but with current building conditions in Idaho deteriorating to the point that we couldn’t justify pulling the trigger on our dream home build. So in stead, we opted to use that saved cash to pay off our student loans. Hopefully housing conditions will normalize and our dream home won’t be forever out of reach, but with both price and interest rates climbing, our physician dream home is starting to feel like a dream that will never become reality.
At least we can find joy in hitting our 5 year student loan payoff goal! Our only remaining debt is a very modest 15 year fixed rate mortgage at 2.25%, and I don’t think we will be paying off this negative bond early.
I’ll admit, we didn’t exactly live like a resident for the last 5 years, but we reigned in the fixed expenses and made sure we were on track with our student loans and savings goals before spending money on experiences.
So far, I am sleeping well at night in my average house, grateful that I am almost debt free rather than saddled with millions of dollars of mortgage debt knowing that much of my future earnings are spent for as long as 30 years. Now I have much less pressure to work until I am 75.
I spent 5 years in residency, and during that time we made the minimum payment using income based repayment hoping for PSLF after a total of 10 years. Thanks to changes in student loan interest rate changes during medical school, my interest rate was 6.8% or higher, rather than the 1% interest rates I enjoyed in graduate school. The result was over $400,000 in student loan debt by the time I finished residency in the summer of 2017, but I was half way to PSLF.
Unfortunately the best job in the best location for my family was working for a not for profit hospital as a for profit contracted physician under a PSA contract. As such, PSLF was out the window. I would have to pay off my debt the old fashioned way. So after a 6 month grace period, we refinanced our student loans with SOFI on a 5 year variable interest rate at around 2.25%. But rates quickly dropped to less than 1% and stayed there more or less until about Jan 2022. With rates rising and the end in sight, we decided to escalate our already rapid payoff schedule and last night we paid a lump sum over $50,000 to be done with our student loans. You see, we had been saving for the last 5 years to put a down payment on the construction of our dream home, but with current building conditions in Idaho deteriorating to the point that we couldn’t justify pulling the trigger on our dream home build. So in stead, we opted to use that saved cash to pay off our student loans. Hopefully housing conditions will normalize and our dream home won’t be forever out of reach, but with both price and interest rates climbing, our physician dream home is starting to feel like a dream that will never become reality.
At least we can find joy in hitting our 5 year student loan payoff goal! Our only remaining debt is a very modest 15 year fixed rate mortgage at 2.25%, and I don’t think we will be paying off this negative bond early.
I’ll admit, we didn’t exactly live like a resident for the last 5 years, but we reigned in the fixed expenses and made sure we were on track with our student loans and savings goals before spending money on experiences.
So far, I am sleeping well at night in my average house, grateful that I am almost debt free rather than saddled with millions of dollars of mortgage debt knowing that much of my future earnings are spent for as long as 30 years. Now I have much less pressure to work until I am 75.
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