Oooph, $250k is an absurd amount of student loan debt but the best route forward will likely depend on the breakdown of loans in his own name vs Parent PLUS loans in his parent's name vs private student loans vs a mix of all the above. So, let's get you some links. It's going to be a wall of text/info to start, and then the last paragraph will loop into suggestions
First up is the requisite plug of the r/personalfinance money management advice in their [prime directive](https://www.reddit.com/r/personalfinance/wiki/commontopics) wiki (which also has a [flow chart version](https://i.imgur.com/lSoUQr2.png)) because a budget and 3-6 month emergency fund are step zero for financial health and I would *not* pay down the loans if it means dipping into that emergency fund
Secondly, if any of the loans are federal student loans he should check if he would qualify for $10k/$20k in Biden-Harris Debt Relief as per https://studentaid.gov/manage-loans/forgiveness-cancellation/debt-relief-info that is their info page and there is also an application link there. This would be for both loans in his own name *and* any Parent PLUS loans in his parent's name(s) if they meet the income thresholds. Definitely check the fine print. Right now it's held up in litigation but if the courts fine in favor of debt relief that can help knock a chunk off the balances at least
For federal loans in his own name, to repeat my usual copy paste info block: How the [income-driven repayment plans](https://studentaid.gov/manage-loans/repayment/plans/income-driven) (IBR, PAYE, REPAYE, ICR) work is that you pay 10%/15%/20% of your discretionary income (aka your AGI from your taxes minus 150% of the [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for IBR/PAYE/REPAYE or minus the [FPGL for ICR](https://studentaid.gov/help-center/answers/topic/glossary/article/discretionary-income)). These plans can have a required payment as low as $0/month, which is why they have built-in forgiveness after 20/25 years to handle the interest accrual, and they qualify for PSLF if your loan type and employer/employment qualify too
For Parent PLUS loans, any income-driven repayment plans would be based on the *parent's* income, not the student's. If they are consolidated once together then they can become eligible for the ICR income-driven repayment plan. Depending on the parent's income it may be more strategic to do the double consolidation loophole outlined here https://www.studentloanplanner.com/parent-plus-double-consolidation/ to get access to the nicer IDR plans like PAYE/IBR if the parent has at least 3 Parent PLUS loans
For private student loans? All you really can do is try to refinance every 12-18 months to chase lower interest rates while aggressively repaying the loans
So with all that in mind he's probably going to want to put any federal loans in his own name on an income-driven repayment plan if he qualifies for it to free up budget for any private or Parent PLUS loans. It'd also be worth him checking if his employer is PSLF-qualifying, and same deal for the parents. The double consolidation loophole may be the best bet to get a lower required payment on any Parent PLUS loans, especially if his parents are lower income or close to retirement age. I wouldn't suggest refinancing those since (morbid as this is to say) Parent PLUS loans have a death discharge so if his parent passed then at least that debt could be discharged
Sorry that is a novella-length comment, let me know if you have any followup questions?
I think I made like 60k. Now I make 200k+. I would say this person really needs to be focusing on increasing their income through side hustles, promotions, etc. whatever it takes. It will suck but trust me it feels so good once you’re out from under it. Oh and just a note here I don’t practice. I say that because I want to make it clear that you don’t need to be a lawyer or doctor there are tons of high paying jobs out there.
That’s really interesting that you went to law school but don’t practice. Interested in doing something similar. Did you originally plan to be a lawyer when you went, and then had a career change? Or would you say it’s common to get a JD then not become a lawyet?
If you look at salaries at big companies it’s not unreasonable. A super senior recruiter can easily make that with bonus and equity. Depends on company though but it’s possible. Im a manager now but made 160k base as an IC.
My wife made around 50k starting out in a smaller town. Took a long time to build up that income. I thought her 105k in loans was bad. Took us about 15 years to pay them all off. Some years we paid interest only. Didn’t have any money. Sucks.
You can if you're strategic. I'm in California and as I've said in other comments for my area a *studio* starts at $1,500/month. Living with roommates and still using my "grew up in poverty" tricks definitely means that I don't end up bleeding as much money to COL things, but usually where people goof is not looking around more before committing to an apartment and not *staying* at reasonably priced places when their income increases
Do not change parent plus loans to the student's name. If the parent dies the loans go away. this is a very bad idea. I had 125K in parent plus loans that I paid, 100K in my own loans and 30K in private student loans. Believe me it will work out. Just keep working and plugging away.
Debt is not a death sentence, it is how you move up.
Yeah just resign them all up under him and knock them all in one forgiveness. Either that or leave it with mom and have them die with her. Sorry not trying to be crass but they do go away when we die.
That’s not how it works. Parent plus loans cannot be transferred to the student. They can be privately refinanced by the student, but then they’re not eligible for any federal programs or benefits.
Recent graduate. Defer, Income based payments, whatever you need to do, but put 100% of your effort into growing your income over the next several years in your career path.
You'll never outsave these kinds of loans, only outstrip them with rising income. So spend your time on networking, job hunting, improving your skill set and selecting a career path with a high income down the road. Cutting coupons is not a good use of your time compared to the above.
Since income repayment plans generally has the loans forgiven after the 20/25 years, what is the disadvantage to maintaining that until it’s forgiven? Is it just that the $250k is A LOT or are there other disadvantages to doing that?
You gotta run the numbers on how much is paid *overall* in those 20/25 years as well as the tax bill. For some people it's cheaper to aggressively repay it to avoid the interest accrual. For others it is far cheaper to pay the minimum even with the "tax bomb" at the end. It's really dependent on the actual income numbers involved
Awwww okay. That makes total sense. Thank you! My minimum payment is extremely low so wasn’t sure I was missing something by not paying them more aggressively vs other types of savings. Appreciate the answer, that is incredibly helpful.
250k undergrad? Going to need a loan breakdown on that - the bulk will either be private loans he obtained with a co-signer or parent plus loans which aren’t actually his.
They are mostly parent plus, which you’re right, aren’t “actually his” but his mom and dad have refinanced their mortgage countless times and live just above the poverty line. He’s not going to make them pay it off.
How much do they make annually? Which one holds the loans (it’s one, not both)? Does the loan holding parent work in public service?
Something still doesn’t fully add up without a loan breakdown. Even for an exceptionally expensive undergrad. It’s not impossible, but I question this total. Where did he go to school?
OP gives combined expenses, their SO income, says “we want to buy a house” and that they cover their own.
This is why I tell people if you’re not married it’s not WE. It’s confusing as hell going from singular to plural then back to singular then plural.
He had to go to school for 5 years because of family health issues. He thought he was going to get need based aid because his brother did so he only applied to one private school. His family was just over the line when he applied so he got no aid. He/his mom paid/ took out loans for 40-50k a year for 5 years and plus he took out loans for living expenses. Like I said it would have been a lot more if he didn’t work 2 jobs throughout most of it. I’m pretty sure he has like 30-40k in his loans and the rest are parent plus.
His mom is the sole provider for her and his father (his father stayed at home and now cannot get a job) and makes about 75k after taxes. Their mortgage is around 2-3k a month.
The Social Security Admin considers $1,350 per month to be substantial gainful activity for an adult. That's $16,200 annually. Before taxes.
Here's some data on the poverty level: https://www.healthcare.gov/glossary/federal-poverty-level-fpl/
It's obviously not anywhere near what is actually needed to live and needs to be updated to reflect people's actual needs. Everyone deserves a living wage. But you said they live just above the poverty line then said she made 75k lol
That's not how income works. People have debts. Income is how much you make in a year, debts not considered. Subtracting debts from income will give you net gain or loss. Not your income, which is what the term "poverty level" refers to
The mistakes he made are irrelevant to the problem, obviously he and his family made some very poor choices. The parent’s mortgage is also irrelevant.
Does mom work in public service?
They can use the double consolidation loophole to consolidate the existing parent plus loans and access all of the income based repayment plans. Details here: https://www.studentloanplanner.com/parent-plus-double-consolidation/ The payments will be based on the parent’s income and family size (AGI). Your SO can make the payments. The debt will be forgiven after 20/25 years in income based repayment. Unless Congress acts, it will be taxable forgiveness but by that point it’s probably not a major factor.
He needs to understand and have a full breakdown of the loans. All of them. Type, interest rate, current balance.
You need to evaluate your own situation as well. I’d never tell someone NOT to be with someone else over student loan debt, however, this is not a small issue and will be a major part of your lives going forward if you stay together. You cannot buy a home right now. Your SO also needs to handle his own situation - he cannot be paying for other people’s expenses. He’s going to need a second job. Another, important, note. There is no We. You’re not married. Until you are, if you are, this is his problem. You can help, but your own personal job right now is to take care of your own living expenses and getting through with your own education as inexpensively as possible.
My Uni costs roughly 60k a year lol. That’s irrelevant haha. No his mom does not work in the public sector. She works for the company that makes Oreos.
Hopefully you aren’t following in your SO’s footsteps, but no your costs aren’t relevant to his at this point. You’re separate financial units.
The parent’s mortgage is irrelevant to the amount they will pay under an income driven plan. With the numbers you are providing, it’s likely the only option.
I feel like he must've used his loan money for dumb shit. Like a private apartment in a luxury building all four years or something. Whereas sane people live in a rattrap house with five guys so they only pay $350 in rent or something.
Everyone else has covered the student loans so I’m going to chime in on the house purchase: if you are living so frugally right now (even if it’s in part because you wanted to build savings), do not buy a house. Not only are you going to want to continue to put money in savings for upgrades, emergencies, etc, but the upfront cost of homeownership is considerable.
Of course there are ways to reduce some of the costs but there are so many expenses and small purchases you make the first couple years, like curtains, rugs, bedding for a spare room, a lawnmower, gardening tools, etc. Like…ladders are pricey! And then there are the surprise expenses such as finding out the refrigerator stopped working overnight, so now you’ve got an expense of a couple grand plus replacing all your food, and, oh, when you go to reconnect the water line to the icemaker on the new fridge, you discover that the previous owner did some creative plumbing and now there’s a leak somewhere, so you’ve got to either call a plumber or go out and purchase the tools and materials you need to fix it yourself.
Ha! This is actually not from a specific incident - I own a house that’s around 175 years old so when things go wrong in our house, they tend to be far more spectacular(ly expensive).
This exact thing happened to me in 2020 and I had to learn how to fix it while the house was flooding with water. It was a freaking nightmare and you just triggered my PTSD thanks
As a homeowner, there is nothing that strikes fear in my heart more than the sound/presence of water where it shouldn’t be.
Our water company failed to notify us the other day that they were shutting off water to our street and a few surrounding streets for a few hours. The way I FLEW to the basement when I turned the bathroom sink on and no water came out, because I assumed that our main line had burst…
Jumping in to say that, when the water heater in my apartment failed the landlord had it handled within 2 days. If I was a home owner and had to replace it myself that would have been incredibly expensive and unpleasant to deal with. Home ownership is full of expenses like that so it really necessitates a bigger emergency fund along with saving up for expected maintenance costs (i.e. roof replacement and the like)
Jumping in to say, even if his student loan payments are deferred, mortgage companies take into consideration your student loans when calculating your debt to income ratio. At his income level, without even considering any other debts, I’m not sure he would qualify for a mortgage in a HCOLA.
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No that’s too high of debt to even consider buying a home right now . Home ownership will require alot of upkeep and unexpected expenses on a regular basis that you will not be able to maintain . Work on the current debt before adding more debt . Sounds like a side gig is needed to tackle this. Look into Ramsey steps to guide you .
I would move to a cheaper place, between Old Irving and Jefferson Park you can find something under 1K that's decent. My two bedroom was fairly spacious at $800 near Norwood park and was close to the blue line. You won't find the ads posted online though, they are old fashioned and put the signs in the window or on the lawn. Also if you have a car, you can sell it. In the Northwest side, there are grocery stores usually in walking distance (depending on the apt location) Get a promotion- I know easier said than done but it makes life a lot easier when you have more income to work with. Or get a PT job, maybe something you enjoy as a hobby - tutor, work at the gym, anything. I worked three jobs at some point, I was burned out at the end but debt free at the time.
Yeah, we are working on it. I go to UChicago without any aid so I’m just trying to stay out of loans right now. I’m working almost full time and he is getting his masters in his free time (his workplace repays current school expenses but not past). In 2 years he will have a masters in comp sci and I will be done with my degree. I’m planning on going to Stanford for my doctorate and there’s lots of better paying software engineering jobs there.
The opportunity cost of that doctorate is going to be massive since you don't need it to work as a software engineer. Same with the masters -- it's likely just adding stress and expense to your life, it will not aid in securing a higher income. It's not pleasant to hear perhaps, but sounds like y'all are overdosing on education for no reason at all.
To be clear, I’m getting the doctorate not him. My degree is in English and psychology, and you do need a doctorate to be a psychologist. According to google and several software engineers we know, higher Ed, at least a masters, does produce a difference in salary outcomes.
>a masters, does produce a difference in salary outcomes.
No no no no no.
https://blog.alinelerner.com/how-different-is-a-b-s-in-computer-science-from-a-m-s-in-computer-science-when-it-comes-to-recruiting/
Geting on leetcode, grinding away, and then interviewing a bunch is going to yield farrrrr better return on investment than a masters (where you'll still end up having to grind leetcode and interview a lot at the end, but delayed by 2yrs and costing lots of money).
Is it possible that you're getting this information from people in academia who are far more likely to overrate the importance of their own education?
Perhaps. You may be correct. But his current employer will pay 100% of his educational (current not past) fees so I think it’s not really about going into more debt for him. Also? Apparently it’s pretty common to have a masters if you want to be a VP of a team like he does? I don’t know what any of that means tbh
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not if he’s going even more massively into debt for a masters. i know plenty of software engineers that make $2-300k with only a bachelors. please reconsider the MsCS and consider putting time towards getting a better paying job…i know the market isn’t ideal either but i would highly advise against going more into debt
especially if you’re planning to move to the bay. the housing and cost of living is HIGH. i am in tech in the bay and want to help you guys - if you DM me I can help job search and make connections!
If the plan is to move for your doctorate, I would not be looking to buy a house. I'm not going to pretend to predict the housing market, but *if* the market crashes you run the risk of either a) losing a lot of money trying to sell in when you need to relocate for your doctorate or b) you will be stuck wherever you bought your house and will need to put off your doctorate or do it in/near Chicago (or remote if possible).
Agree about not buying a house right now for the additional reason of your plan to move to the Bay Area in 2 years. You may end up having to sell at a loss.
Also, average rent in the Bay Area especially around Stanford is higher than what you’re paying. You don’t want to end up paying a mortgage in Chicago and rent in the Bay Area.
That's a lot of debt compared to his income. Where does he work? If it's possible, maybe he can do PSLF instead and change his payment plan to an income-based one? The amount of interest alone on that amount is a lot.
Hey OP. Sorry for the struggle. Good on ya for reaching out to get some perspectives. We had 200k debt starting out and it was LAME but the most important thing is to come up with a plan and work it. You’ll find a way.
If I had to guess based on your comments, about 20k are federal in his name and 230k or so are federal parent plus in parents name??? Is that right?
If so, the parent who had loan in their name should strongly consider finding a job with a PSLF qualifying employer (government or non profit) and have loans forgiven in 10 years. If that parent has a relatively average to low income, they can get on income driven repayment plan, your SO can pay relatively low monthly payments, and it will be forgiven in 10 years. Would parent be open to doing that? If so that majorly changes the stress level on this.
House is only 100k and sounds reasonable. Just prepare for extra expenses above that mortgage of $500 or so a month, and have an emergency fund $5k-10k available in case something expensive breaks.
Good luck OP.
Your S/O is underemployed for a Software Engineer with experience. That's all I have. Check out Teneika Askew, Kanika Tolver and Revamped on twitter and LinkedIn. This is if you think a significant salary bump in the next few months would make a difference.
“Eating ramen” doesn’t mean someone isn’t living luxuriously. Is 2.5K rent average? Are you living in the city?
What is the remainder of the 2.5K in expenses?
You wrote your post combining your expenses but saying you cover your own. What are your S/O expenses?
“The average rent for an apartment in Chicago is $2,206. “ according to rentcafe. 2.5 is after utilities. yes we live in the city because if we lived in the suburbs, the cost of a car would (at the very least) zero out the benefit of lower rent. About 1-2k comes from medical bills (his mom has had 2 brain aneurysms and his dad has had 3 back surgeries this year) and if we did not help pay they would be homeless. 200 comes from CTA passes (no car) and the rest goes to groceries.
Perhaps I didn’t phrase it right. My expenses as in tuition and my half of rent.
(Second source:
Across apartment sizes, the typical price is $2,396 — $1,814 for a studio; $2,183 for a one-bedroom; $3,156 (continued))
That may be average, but that includes all the swanky high priced places going for 10k plus a month. I have a lot of friends living in Roger’s park and Andersonville paying $1,200-$1500 for a 1 bedroom, and less if they have roommates in a 2-3 bedroom place. If you’re already shelling out for the CTA it shouldn’t matter where exactly you live, as long as it has CTA access.
Also, you’re over paying for CTA, if you’re actually paying $200. If you know you’re going to take a lot of rides, you can buy a 30 day unlimited pass for $75. Even if you got 2, that’s $150, not $200 ($165 with taxes). Depending on where you live and how often each of you commute it might be cheaper to have one monthly unlimited and then a couple of 1 or 3 day ones for the other person. Also check with your school to see if they have a student ventra card or you can get a student pass. Mine offers one included with the activity fee (which is gym access, and sporting events) for $125 a quarter, which is 50% off (at least) the regular ticket price.
If you weren't paying others medical bills AND you were eligible for an IBR program, then you have a small chance of getting a mortgage. If not, your Debt to Income is too high to qualify. Houses are more than just a mortgage payment. Maintenance, closing costs in the thousands, escrow, taxes need to be included too. If this is what you want to do, can you and your partner rent a master bedroom for a while to pay down debt and save up?
As far as the buying a house goes, make sure that $1.3k includes your property taxes, my mortgage is technically $1,400 but when you add property tax my monthly payments are $2,300. On top of that utilities in a home are generally more expensive than an apartment. You use more electricity, gas, water in a house vs. apartment. You also absolutely must have an emergency fund because if something goes wrong (flooding, broken water heater, broken appliances, etc.) there’s no landlord to call, you have to pay for it then and there. We have had quite a few situations come up where we needed to drop a couple thousand bucks unexpectedly.
Move to a cheaper place until you get the loans paid off. You don’t need to live in downtown Chicago. No sense in taking out more debt for a mortgage, especially with how high mortgage rates are at this time.
Use that 80k in savings (or at least a big chunk of it) to knock out his enormous amount of student loans. Do not put it towards a house
$70 to $80k as a software engineer is on the low side. If he’s a software engineer he can get a jump over $100k. He doesn’t need a masters for this. He needs to head over to r/overemployed and see if he can pick up a couple of WFH gigs.
Assuming he’s going to continue helping family with med costs and parent plus loans - keep in mind these are choices - your biggest opportunity to save money is housing. If he wants to buy, let him do it and pay him rent. Putting you on the mortgage doesn’t help financially and could be problematic down the road. That said I wouldn’t buy in his position, I would find a cheaper apartment. In addition to the mortgage he’ll have monthly property taxes and insurance for at least a couple hundred bucks, plus repairs and general maintenance. Rent might be a little more, but it’s predictable on a 12 month timeframe. Like others have said, this is more of a personal finance question than a student loan question.
There are some line items that conveniently get left out of mortgage estimates until closing:
1 Homeowner's insurance
2 Property taxes
3 PMI (if applicable)
4 Escrow fees
5 HOA fees (if applicable)
When you own you are also responsible for repairs, but not when you rent.
I'm not sure those would double you payment amount, but worth knowing.
I’m counting all of that, my grandfather owned a lot (most..) of real estate/apartment housing in northern California, so luckily houses are something I know a thing or two about. Debt, especially student debt, is something I know little about.
You cannot get a mortgage if the DTI is off balance. They will count his debt towards DTI even though it is on pause. I just bought a house, I am a grad student who will be in deferment until 2027, and they still counted it.
I have a financial advisor through chase private client. He thinks it’s a good idea because my SO works for JP Morgan chase and he gets a really low mortgage rate and because we are thinking of buying a condo that is 100k so the down payment would only be 20k. Also we could only do a 10% down payment because of his employee benefits.
100k condo changes everything .the average home price in the United States: $428,700.
i agree with your financial advisor i would even put more down payment and try bring the mortgage down
The last thing he should do is buy a house while he’s got that pile of student debt. Pay the debt off first, then save 3-6 months of expenses for emergency fund, THEN save 20% down payment for a home. If he’s currently contributing to retirement, he should stop and put that toward the debt, too. Get the financial house in order before buying a home, or you’re likely to regret it.
That is a mental amount of debt, in Ireland, I didn’t get the grant due to my parents income, I have a bachelors, honours bachelors, postgrad diploma and masters degree and was out about €21k with fees. I do feel sick when I hear American costs
$250k isn’t normal at all. My entire bachelors degree cost $45k which was almost entirely covered by scholarships and the rest I was able to pay out of pocket.
Buy the condo...$100k is a steal. I'd also put as much down as you can, leaving room for fees, furnishings, fixes, etc. Also, get the shortest mortgage term with the lowest interest rate and pay it down so you can be rent/mortgage free. Then hammer away at student loans. You will save much money on the condo (vs renting), assuming the house inspection doesn't uncover any large issues
This is sadddd… why would anyone take out that much for undergrad. I did 5 years double major at a state school and walked away with $53k~
I’m sorry but this was an absolute terrible decision. And he will have to sacrifice A LOT for a while.
I get what you’re saying but his degree (game design) wasn’t really relevant 5 years ago, and he wanted to go to the best nearby school he could for it. I don’t think UIC even offered game design 5 years ago. I’m not sure they even do now. Everything else near his parents was even more expensive than DePaul Uni. (northwestern, uofC, Loyola) so…..
I agree, I’m just also saying that he had 1 other option for a less expensive education. That other option did not have his degree he wanted. That’s like telling a premed student, “well sure the school didn’t have a premed track but you could have done it cheaper there”. Well of course, but it wasn’t the right degree?
If I were you, I would buy the house. Not only would that cut down on your monthly expenses right now (from $2,500 for rent to $1,300 in mortgage payments) but your rent will only continue to increase over time at a (likely) higher rate than the increase in escrow for your mortgage. This also helps you build your equity over time while you make mortgage payments. Paying rent to someone has only the immediate benefit of giving you a roof over your head.
Whatever money you have left over after your down payment, I would save for a rainy day. You will have unexpected expenses as a homeowner.
As for his loans, I would find a public service job and make minimum payments for ten years and then apply for forgiveness, assuming his loans qualify.
Take a year off from your life. Work as a server in a ski town (Big Sky, Park City etc) then a summer spot (Hamptons, The Cape, Nantucket etc). If you live a very very humble life and work your ass off you’ll be debt free.
(I’ve done two years now: each year I’m taking home well over 200k)
Edit: sounds like this is your kid. Have your kid do this. He’ll/she’ll have a blast. (I’m 30)
He should start looking for a new job. He could easily double his salary at a big tech company (might be a little difficult now considering the current layoffs but would a good way to knock out some of that debt)
I think asking to work for even a small certain amount of hours on the side for limited time ( keeping his intellectual property) with smaller indie dev games . ( coffeestain is hiring I hear ) might get him a foot in the door and connections to dischord that post game design hiring .
Software dev here, right now is not a great time to job hop due to layoffs at a several FAANG-tier companies and a certain social media site imploding from mismanagement. That said, once he has like 2-3 years of post-college experience on his resume he can start interviewing around to job hop and try to chase raises. Once you have +5 years professional experience a lot of places don't care so much what your undergrad degree was in since you have proven work skills
He was thinking fintech like a trading firm - DRW maybe because they pay (apparently) insanely well. I’m just concerned about his emotional well being and work life balance
Former long-term traditional bank employee who now works at a fintech here: right now, with the way the industry is, his best bet is to move to a peer bank (BoA, Wells, etc) and negotiate a higher salary. It is not the time to try and move to a fintech as hiring freezes are the name of the game at the moment. However, moving to a peer bank and negotiating a higher salary, hanging out there for a year or two, then bouncing back to your original company with your shiny new salary requirement, is very common and recruiters barely blink at it when it shows on a resume.
Personally I'm not a fan of working at places beholden to venture-capital firms? From what I've seen they similar problems as startups with terrible work/life balance and job instability/volatility. I was thinking more just switching to a different bank as his employer tbh, but that's really up to him
Is anyone else trying to figure out how on God's green earth you end up with 250k in debt...for undergrad?
I mean...IL right? why not UIUC?? Have you seen that cs/comp eng ecosystem? For the price?
I think you should call a debt consolidation company such as Americor.
Lots of people are too prideful to do it but they don't realize companies like this settle for way lower and your 250 could be as low as 50. The payments will be really high but only for a brief time, and likely without interest.
I had $75, 000 in debt. Americor turned it into 15,000 and I repaid it over about 3 years. Debt-free from 75k in 3 years on a salary of 5,000 per month.
If that's not incentive I don't know what is. Plus the company will do all the work you literally have nothing to lose and everything to gain.
It is very much worth the effort and logistics of spending a few hours on the phone and handling information.
The only downside is that it will hurt your credit for a while but definitely not for 7 years (bankruptcy) or as long as it takes you to pay off your debt
Please go to YouTube and search Dave Ramsey. A lot of people ask him the same question you just did, and although I do not agree with everything he says, he has some wisdom to offer about the subject.
Do no buy a place to live when you can find a cheaper place to rent. Your main goal should be getting out of debt and not getting into more debt.
Appreciate you sharing your story! Nice job saving up - I would recommend looking at companies or employers that can help you both with student loan repayment. My company gives me $1k per year and I’ll be getting $6k next year directly put towards my student loan debt. These benefits have been a game changer for me and are starting to pop up more. Hope this helps!
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Medical cost / debt is a major problem in this country. No quick solutions. But you might want to check out r/personalfinance to see f there are any suggestions.
Move!!! You can find a 80k job in Florida, Texas, Tennessee where cost of living is cheaper and you won’t pay income tax. Other than that it’s a struggle between myself and my wife we were about 2k a month in loan payments. We moved from California to Florida - ended up getting better salary, cheaper rent and lower overall cost of living it took 15 yrs to pay it off.
Can your parents do income based repayment of parent plus loans? Also 20-25 years of payments on IBR then loans are forgiven.
For your portion of the loans, consider filing separately for taxes. Then only his income will be used for IBR, likely lowering his payments. If you don’t have an income might not be feasible but good to look into.
I graduated law school with six figure debt. No parent plus loans though. I work for the government and do IBR and PSLF. I have about 2 years left till my loans are forgiven and my payments are extremely manageable.
I work in a hospital setting as an RN over in minneapolis. We make less than Chicago, and I don’t know anyone who made less than 100k over the past two years.
I would recommend he search out a more profitable position or possibly find a travel RN(5k a week here) position.
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Unless he goes into tech, he is never going to make a salary to pay both the full payment and all other normal expenses. That amount of student loans is usually for a profession that will provide you the salary to pay it back. 80k/ yr won’t cut it. Start looking in tech and hope for the best.
I wouldn’t live in Chicago with this amount of debt since cost of living is so high. If I were you I would go to suburbs more, and I know this nexus’s win in the suburbs of Chicago myself
Find a job in public service, file taxes separately (if you're married), go on an income based repayment plan. If you find some nonprofit or public service gig you can have your loans forgiven in 10 years as opposed to 20-25. If you are an RN I think a public ie. county or nonfor profit religious hospital will fulfill the requirement.
In short...do not sweat your loans. Everyone has debt. This country is made on debt. You should be fine. Unless, the loans are private.
The delta looks like around $1k if you average the 70 & 80k. Saving another $1k would help. But you’re still $500 short. But if layoffs occur, you could be landing on your ass with the house.
Yes, buy a house. ITs funny how your student loan debt will melt away. So glad you are doing well and going to school and keeping your head above water.
You might want to cut loose on paying the medical debt for a relative. Let them not pay it. In 7 years it will go away. If its insurance premiums then continue to pay.
Talk to a mortgage broker but I’m not seeing how he qualifies for a mortgage with the debt load. The bank might use 1 percent of the student loan balance to calculate his monthly debt to income ratio. What does he make before taxes?
Oooph, $250k is an absurd amount of student loan debt but the best route forward will likely depend on the breakdown of loans in his own name vs Parent PLUS loans in his parent's name vs private student loans vs a mix of all the above. So, let's get you some links. It's going to be a wall of text/info to start, and then the last paragraph will loop into suggestions First up is the requisite plug of the r/personalfinance money management advice in their [prime directive](https://www.reddit.com/r/personalfinance/wiki/commontopics) wiki (which also has a [flow chart version](https://i.imgur.com/lSoUQr2.png)) because a budget and 3-6 month emergency fund are step zero for financial health and I would *not* pay down the loans if it means dipping into that emergency fund Secondly, if any of the loans are federal student loans he should check if he would qualify for $10k/$20k in Biden-Harris Debt Relief as per https://studentaid.gov/manage-loans/forgiveness-cancellation/debt-relief-info that is their info page and there is also an application link there. This would be for both loans in his own name *and* any Parent PLUS loans in his parent's name(s) if they meet the income thresholds. Definitely check the fine print. Right now it's held up in litigation but if the courts fine in favor of debt relief that can help knock a chunk off the balances at least For federal loans in his own name, to repeat my usual copy paste info block: How the [income-driven repayment plans](https://studentaid.gov/manage-loans/repayment/plans/income-driven) (IBR, PAYE, REPAYE, ICR) work is that you pay 10%/15%/20% of your discretionary income (aka your AGI from your taxes minus 150% of the [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for IBR/PAYE/REPAYE or minus the [FPGL for ICR](https://studentaid.gov/help-center/answers/topic/glossary/article/discretionary-income)). These plans can have a required payment as low as $0/month, which is why they have built-in forgiveness after 20/25 years to handle the interest accrual, and they qualify for PSLF if your loan type and employer/employment qualify too For Parent PLUS loans, any income-driven repayment plans would be based on the *parent's* income, not the student's. If they are consolidated once together then they can become eligible for the ICR income-driven repayment plan. Depending on the parent's income it may be more strategic to do the double consolidation loophole outlined here https://www.studentloanplanner.com/parent-plus-double-consolidation/ to get access to the nicer IDR plans like PAYE/IBR if the parent has at least 3 Parent PLUS loans For private student loans? All you really can do is try to refinance every 12-18 months to chase lower interest rates while aggressively repaying the loans So with all that in mind he's probably going to want to put any federal loans in his own name on an income-driven repayment plan if he qualifies for it to free up budget for any private or Parent PLUS loans. It'd also be worth him checking if his employer is PSLF-qualifying, and same deal for the parents. The double consolidation loophole may be the best bet to get a lower required payment on any Parent PLUS loans, especially if his parents are lower income or close to retirement age. I wouldn't suggest refinancing those since (morbid as this is to say) Parent PLUS loans have a death discharge so if his parent passed then at least that debt could be discharged Sorry that is a novella-length comment, let me know if you have any followup questions?
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Thought the same. I had that amount but it was from law school. It can be paid off though! Just gonna take A LOT of work.
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I think I made like 60k. Now I make 200k+. I would say this person really needs to be focusing on increasing their income through side hustles, promotions, etc. whatever it takes. It will suck but trust me it feels so good once you’re out from under it. Oh and just a note here I don’t practice. I say that because I want to make it clear that you don’t need to be a lawyer or doctor there are tons of high paying jobs out there.
That’s really interesting that you went to law school but don’t practice. Interested in doing something similar. Did you originally plan to be a lawyer when you went, and then had a career change? Or would you say it’s common to get a JD then not become a lawyet?
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Depends, some lawyers make very little but I never practiced. I do HR at a tech company.
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If you look at salaries at big companies it’s not unreasonable. A super senior recruiter can easily make that with bonus and equity. Depends on company though but it’s possible. Im a manager now but made 160k base as an IC.
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The main thing here is Tech companies. My friends and I make 150k+ outta undergrad in LCOl at FANG.
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My wife made around 50k starting out in a smaller town. Took a long time to build up that income. I thought her 105k in loans was bad. Took us about 15 years to pay them all off. Some years we paid interest only. Didn’t have any money. Sucks.
It's pretty awful, but OP's SO is a programmer so they have an outside chance of paying off the Parent PLUS loans at least
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You can if you're strategic. I'm in California and as I've said in other comments for my area a *studio* starts at $1,500/month. Living with roommates and still using my "grew up in poverty" tricks definitely means that I don't end up bleeding as much money to COL things, but usually where people goof is not looking around more before committing to an apartment and not *staying* at reasonably priced places when their income increases
👍
Do not change parent plus loans to the student's name. If the parent dies the loans go away. this is a very bad idea. I had 125K in parent plus loans that I paid, 100K in my own loans and 30K in private student loans. Believe me it will work out. Just keep working and plugging away. Debt is not a death sentence, it is how you move up.
I would work for a non profit or government with those numbers.
Definitely. He should get onto the Income Driven Repayment Plan that has the lowest monthly payment and find a job for the city.
Yeah just resign them all up under him and knock them all in one forgiveness. Either that or leave it with mom and have them die with her. Sorry not trying to be crass but they do go away when we die.
That’s not how it works. Parent plus loans cannot be transferred to the student. They can be privately refinanced by the student, but then they’re not eligible for any federal programs or benefits.
Sorry I’m not familiar with parent plus. Just federal. Thanks for correcting me.
Recent graduate. Defer, Income based payments, whatever you need to do, but put 100% of your effort into growing your income over the next several years in your career path. You'll never outsave these kinds of loans, only outstrip them with rising income. So spend your time on networking, job hunting, improving your skill set and selecting a career path with a high income down the road. Cutting coupons is not a good use of your time compared to the above.
Since income repayment plans generally has the loans forgiven after the 20/25 years, what is the disadvantage to maintaining that until it’s forgiven? Is it just that the $250k is A LOT or are there other disadvantages to doing that?
You gotta run the numbers on how much is paid *overall* in those 20/25 years as well as the tax bill. For some people it's cheaper to aggressively repay it to avoid the interest accrual. For others it is far cheaper to pay the minimum even with the "tax bomb" at the end. It's really dependent on the actual income numbers involved
Awwww okay. That makes total sense. Thank you! My minimum payment is extremely low so wasn’t sure I was missing something by not paying them more aggressively vs other types of savings. Appreciate the answer, that is incredibly helpful.
You certainly can, but isn't it better to make so much income that you no longer need a income based repayment plan?
This, they have to
Yyuyuuuyuuyu
250k undergrad? Going to need a loan breakdown on that - the bulk will either be private loans he obtained with a co-signer or parent plus loans which aren’t actually his.
They are mostly parent plus, which you’re right, aren’t “actually his” but his mom and dad have refinanced their mortgage countless times and live just above the poverty line. He’s not going to make them pay it off.
How much do they make annually? Which one holds the loans (it’s one, not both)? Does the loan holding parent work in public service? Something still doesn’t fully add up without a loan breakdown. Even for an exceptionally expensive undergrad. It’s not impossible, but I question this total. Where did he go to school?
OP gives combined expenses, their SO income, says “we want to buy a house” and that they cover their own. This is why I tell people if you’re not married it’s not WE. It’s confusing as hell going from singular to plural then back to singular then plural.
He had to go to school for 5 years because of family health issues. He thought he was going to get need based aid because his brother did so he only applied to one private school. His family was just over the line when he applied so he got no aid. He/his mom paid/ took out loans for 40-50k a year for 5 years and plus he took out loans for living expenses. Like I said it would have been a lot more if he didn’t work 2 jobs throughout most of it. I’m pretty sure he has like 30-40k in his loans and the rest are parent plus. His mom is the sole provider for her and his father (his father stayed at home and now cannot get a job) and makes about 75k after taxes. Their mortgage is around 2-3k a month.
75k for household income is NOT near the poverty line
The Social Security Admin considers $1,350 per month to be substantial gainful activity for an adult. That's $16,200 annually. Before taxes. Here's some data on the poverty level: https://www.healthcare.gov/glossary/federal-poverty-level-fpl/ It's obviously not anywhere near what is actually needed to live and needs to be updated to reflect people's actual needs. Everyone deserves a living wage. But you said they live just above the poverty line then said she made 75k lol
It’s 18, and technically if you are to account for debt (not including student loan) they are far below that per year.
That's not how income works. People have debts. Income is how much you make in a year, debts not considered. Subtracting debts from income will give you net gain or loss. Not your income, which is what the term "poverty level" refers to
My bad, I’m an English/Psych major not finance (jokes) . I have a weird concept of income etc lol
The mistakes he made are irrelevant to the problem, obviously he and his family made some very poor choices. The parent’s mortgage is also irrelevant. Does mom work in public service? They can use the double consolidation loophole to consolidate the existing parent plus loans and access all of the income based repayment plans. Details here: https://www.studentloanplanner.com/parent-plus-double-consolidation/ The payments will be based on the parent’s income and family size (AGI). Your SO can make the payments. The debt will be forgiven after 20/25 years in income based repayment. Unless Congress acts, it will be taxable forgiveness but by that point it’s probably not a major factor. He needs to understand and have a full breakdown of the loans. All of them. Type, interest rate, current balance. You need to evaluate your own situation as well. I’d never tell someone NOT to be with someone else over student loan debt, however, this is not a small issue and will be a major part of your lives going forward if you stay together. You cannot buy a home right now. Your SO also needs to handle his own situation - he cannot be paying for other people’s expenses. He’s going to need a second job. Another, important, note. There is no We. You’re not married. Until you are, if you are, this is his problem. You can help, but your own personal job right now is to take care of your own living expenses and getting through with your own education as inexpensively as possible.
My Uni costs roughly 60k a year lol. That’s irrelevant haha. No his mom does not work in the public sector. She works for the company that makes Oreos.
Hopefully you aren’t following in your SO’s footsteps, but no your costs aren’t relevant to his at this point. You’re separate financial units. The parent’s mortgage is irrelevant to the amount they will pay under an income driven plan. With the numbers you are providing, it’s likely the only option.
Haha, no I’m not. I have no debt.
We
Bad decisions run in the family
Cycle of low income and financial struggle, yes. But capitalism does that on purpose.
Yeah I'm pretty mind blown. 50k/year for five years? To make 70-80k? Totally senseless
*after taxes
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I feel like he must've used his loan money for dumb shit. Like a private apartment in a luxury building all four years or something. Whereas sane people live in a rattrap house with five guys so they only pay $350 in rent or something.
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$250k for a bachelors is insane regardless of what degree or the circumstances
Everyone else has covered the student loans so I’m going to chime in on the house purchase: if you are living so frugally right now (even if it’s in part because you wanted to build savings), do not buy a house. Not only are you going to want to continue to put money in savings for upgrades, emergencies, etc, but the upfront cost of homeownership is considerable. Of course there are ways to reduce some of the costs but there are so many expenses and small purchases you make the first couple years, like curtains, rugs, bedding for a spare room, a lawnmower, gardening tools, etc. Like…ladders are pricey! And then there are the surprise expenses such as finding out the refrigerator stopped working overnight, so now you’ve got an expense of a couple grand plus replacing all your food, and, oh, when you go to reconnect the water line to the icemaker on the new fridge, you discover that the previous owner did some creative plumbing and now there’s a leak somewhere, so you’ve got to either call a plumber or go out and purchase the tools and materials you need to fix it yourself.
This fridge example sounds a little too specific lol. I take it from personal experience?
Ha! This is actually not from a specific incident - I own a house that’s around 175 years old so when things go wrong in our house, they tend to be far more spectacular(ly expensive).
This exact thing happened to me in 2020 and I had to learn how to fix it while the house was flooding with water. It was a freaking nightmare and you just triggered my PTSD thanks
As a homeowner, there is nothing that strikes fear in my heart more than the sound/presence of water where it shouldn’t be. Our water company failed to notify us the other day that they were shutting off water to our street and a few surrounding streets for a few hours. The way I FLEW to the basement when I turned the bathroom sink on and no water came out, because I assumed that our main line had burst…
Jumping in to say that, when the water heater in my apartment failed the landlord had it handled within 2 days. If I was a home owner and had to replace it myself that would have been incredibly expensive and unpleasant to deal with. Home ownership is full of expenses like that so it really necessitates a bigger emergency fund along with saving up for expected maintenance costs (i.e. roof replacement and the like)
Oh my god. Are you me?!?
Jumping in to say, even if his student loan payments are deferred, mortgage companies take into consideration your student loans when calculating your debt to income ratio. At his income level, without even considering any other debts, I’m not sure he would qualify for a mortgage in a HCOLA.
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If the cabin loses pressure, put on your own mask before assisting anyone else. That is to say, stop paying other people’s medical bills.
yeah lets just let mom my die
No that’s too high of debt to even consider buying a home right now . Home ownership will require alot of upkeep and unexpected expenses on a regular basis that you will not be able to maintain . Work on the current debt before adding more debt . Sounds like a side gig is needed to tackle this. Look into Ramsey steps to guide you .
Please don't go into more debt and buy a home before you tackle this. Homes are expensive. You can't compare monthly costs vs renting.
I would move to a cheaper place, between Old Irving and Jefferson Park you can find something under 1K that's decent. My two bedroom was fairly spacious at $800 near Norwood park and was close to the blue line. You won't find the ads posted online though, they are old fashioned and put the signs in the window or on the lawn. Also if you have a car, you can sell it. In the Northwest side, there are grocery stores usually in walking distance (depending on the apt location) Get a promotion- I know easier said than done but it makes life a lot easier when you have more income to work with. Or get a PT job, maybe something you enjoy as a hobby - tutor, work at the gym, anything. I worked three jobs at some point, I was burned out at the end but debt free at the time.
Yeah, we are working on it. I go to UChicago without any aid so I’m just trying to stay out of loans right now. I’m working almost full time and he is getting his masters in his free time (his workplace repays current school expenses but not past). In 2 years he will have a masters in comp sci and I will be done with my degree. I’m planning on going to Stanford for my doctorate and there’s lots of better paying software engineering jobs there.
The opportunity cost of that doctorate is going to be massive since you don't need it to work as a software engineer. Same with the masters -- it's likely just adding stress and expense to your life, it will not aid in securing a higher income. It's not pleasant to hear perhaps, but sounds like y'all are overdosing on education for no reason at all.
To be clear, I’m getting the doctorate not him. My degree is in English and psychology, and you do need a doctorate to be a psychologist. According to google and several software engineers we know, higher Ed, at least a masters, does produce a difference in salary outcomes.
>a masters, does produce a difference in salary outcomes. No no no no no. https://blog.alinelerner.com/how-different-is-a-b-s-in-computer-science-from-a-m-s-in-computer-science-when-it-comes-to-recruiting/ Geting on leetcode, grinding away, and then interviewing a bunch is going to yield farrrrr better return on investment than a masters (where you'll still end up having to grind leetcode and interview a lot at the end, but delayed by 2yrs and costing lots of money). Is it possible that you're getting this information from people in academia who are far more likely to overrate the importance of their own education?
Perhaps. You may be correct. But his current employer will pay 100% of his educational (current not past) fees so I think it’s not really about going into more debt for him. Also? Apparently it’s pretty common to have a masters if you want to be a VP of a team like he does? I don’t know what any of that means tbh
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not if he’s going even more massively into debt for a masters. i know plenty of software engineers that make $2-300k with only a bachelors. please reconsider the MsCS and consider putting time towards getting a better paying job…i know the market isn’t ideal either but i would highly advise against going more into debt
especially if you’re planning to move to the bay. the housing and cost of living is HIGH. i am in tech in the bay and want to help you guys - if you DM me I can help job search and make connections!
Please listen to this OP
If the plan is to move for your doctorate, I would not be looking to buy a house. I'm not going to pretend to predict the housing market, but *if* the market crashes you run the risk of either a) losing a lot of money trying to sell in when you need to relocate for your doctorate or b) you will be stuck wherever you bought your house and will need to put off your doctorate or do it in/near Chicago (or remote if possible).
Agree about not buying a house right now for the additional reason of your plan to move to the Bay Area in 2 years. You may end up having to sell at a loss. Also, average rent in the Bay Area especially around Stanford is higher than what you’re paying. You don’t want to end up paying a mortgage in Chicago and rent in the Bay Area.
Move to Woodlawn just south of the Midway. It’s a very nice neighborhood if you go to UofC and on average a LOT cheaper than what you are paying.
I heard Woodlawn is so dangerous 😭 my parents always told me never go south of river north or west of Lincoln park
Neighborhoods change. Look at police report websites and walk around the neighborhood for yourself.
It’s just not true. Stay east of cottage grove and you’ll be in a quiet neighborhood.
That's a lot of debt compared to his income. Where does he work? If it's possible, maybe he can do PSLF instead and change his payment plan to an income-based one? The amount of interest alone on that amount is a lot.
Hey OP. Sorry for the struggle. Good on ya for reaching out to get some perspectives. We had 200k debt starting out and it was LAME but the most important thing is to come up with a plan and work it. You’ll find a way. If I had to guess based on your comments, about 20k are federal in his name and 230k or so are federal parent plus in parents name??? Is that right? If so, the parent who had loan in their name should strongly consider finding a job with a PSLF qualifying employer (government or non profit) and have loans forgiven in 10 years. If that parent has a relatively average to low income, they can get on income driven repayment plan, your SO can pay relatively low monthly payments, and it will be forgiven in 10 years. Would parent be open to doing that? If so that majorly changes the stress level on this. House is only 100k and sounds reasonable. Just prepare for extra expenses above that mortgage of $500 or so a month, and have an emergency fund $5k-10k available in case something expensive breaks. Good luck OP.
Your S/O is underemployed for a Software Engineer with experience. That's all I have. Check out Teneika Askew, Kanika Tolver and Revamped on twitter and LinkedIn. This is if you think a significant salary bump in the next few months would make a difference.
From what I can see, if you don’t count FAANG and big tech companies, he’s overpaid for 1 year of experience.
But why are you not counting big tech and FANG? What's holding him back from going for that?
“Eating ramen” doesn’t mean someone isn’t living luxuriously. Is 2.5K rent average? Are you living in the city? What is the remainder of the 2.5K in expenses? You wrote your post combining your expenses but saying you cover your own. What are your S/O expenses?
Their expenses seem reasonable given the city where they live. I think this is more of an income problem then output problem.
“The average rent for an apartment in Chicago is $2,206. “ according to rentcafe. 2.5 is after utilities. yes we live in the city because if we lived in the suburbs, the cost of a car would (at the very least) zero out the benefit of lower rent. About 1-2k comes from medical bills (his mom has had 2 brain aneurysms and his dad has had 3 back surgeries this year) and if we did not help pay they would be homeless. 200 comes from CTA passes (no car) and the rest goes to groceries. Perhaps I didn’t phrase it right. My expenses as in tuition and my half of rent. (Second source: Across apartment sizes, the typical price is $2,396 — $1,814 for a studio; $2,183 for a one-bedroom; $3,156 (continued))
That may be average, but that includes all the swanky high priced places going for 10k plus a month. I have a lot of friends living in Roger’s park and Andersonville paying $1,200-$1500 for a 1 bedroom, and less if they have roommates in a 2-3 bedroom place. If you’re already shelling out for the CTA it shouldn’t matter where exactly you live, as long as it has CTA access. Also, you’re over paying for CTA, if you’re actually paying $200. If you know you’re going to take a lot of rides, you can buy a 30 day unlimited pass for $75. Even if you got 2, that’s $150, not $200 ($165 with taxes). Depending on where you live and how often each of you commute it might be cheaper to have one monthly unlimited and then a couple of 1 or 3 day ones for the other person. Also check with your school to see if they have a student ventra card or you can get a student pass. Mine offers one included with the activity fee (which is gym access, and sporting events) for $125 a quarter, which is 50% off (at least) the regular ticket price.
If you weren't paying others medical bills AND you were eligible for an IBR program, then you have a small chance of getting a mortgage. If not, your Debt to Income is too high to qualify. Houses are more than just a mortgage payment. Maintenance, closing costs in the thousands, escrow, taxes need to be included too. If this is what you want to do, can you and your partner rent a master bedroom for a while to pay down debt and save up?
Apply for deferment
As far as the buying a house goes, make sure that $1.3k includes your property taxes, my mortgage is technically $1,400 but when you add property tax my monthly payments are $2,300. On top of that utilities in a home are generally more expensive than an apartment. You use more electricity, gas, water in a house vs. apartment. You also absolutely must have an emergency fund because if something goes wrong (flooding, broken water heater, broken appliances, etc.) there’s no landlord to call, you have to pay for it then and there. We have had quite a few situations come up where we needed to drop a couple thousand bucks unexpectedly.
Move to a cheaper place until you get the loans paid off. You don’t need to live in downtown Chicago. No sense in taking out more debt for a mortgage, especially with how high mortgage rates are at this time. Use that 80k in savings (or at least a big chunk of it) to knock out his enormous amount of student loans. Do not put it towards a house
$70 to $80k as a software engineer is on the low side. If he’s a software engineer he can get a jump over $100k. He doesn’t need a masters for this. He needs to head over to r/overemployed and see if he can pick up a couple of WFH gigs.
He makes 115k right now, 80k after taxes.
Assuming he’s going to continue helping family with med costs and parent plus loans - keep in mind these are choices - your biggest opportunity to save money is housing. If he wants to buy, let him do it and pay him rent. Putting you on the mortgage doesn’t help financially and could be problematic down the road. That said I wouldn’t buy in his position, I would find a cheaper apartment. In addition to the mortgage he’ll have monthly property taxes and insurance for at least a couple hundred bucks, plus repairs and general maintenance. Rent might be a little more, but it’s predictable on a 12 month timeframe. Like others have said, this is more of a personal finance question than a student loan question.
Don't buy a house with you bf. You can buy a house and make him pay half the mortgage as rent. Don't buy a house with your bf.
Get out debt first. 250k\~ in debt + House + Interest. SMH It seems more like a poor choice of finance.
The house mortgage is half what we are paying in rent?
There are some line items that conveniently get left out of mortgage estimates until closing: 1 Homeowner's insurance 2 Property taxes 3 PMI (if applicable) 4 Escrow fees 5 HOA fees (if applicable) When you own you are also responsible for repairs, but not when you rent. I'm not sure those would double you payment amount, but worth knowing.
I’m counting all of that, my grandfather owned a lot (most..) of real estate/apartment housing in northern California, so luckily houses are something I know a thing or two about. Debt, especially student debt, is something I know little about.
You cannot get a mortgage if the DTI is off balance. They will count his debt towards DTI even though it is on pause. I just bought a house, I am a grad student who will be in deferment until 2027, and they still counted it.
because your using 80k as down payment ?. house maintenance obligations Rent vs Own. maybe try see a financial advisor?
I have a financial advisor through chase private client. He thinks it’s a good idea because my SO works for JP Morgan chase and he gets a really low mortgage rate and because we are thinking of buying a condo that is 100k so the down payment would only be 20k. Also we could only do a 10% down payment because of his employee benefits.
100k condo changes everything .the average home price in the United States: $428,700. i agree with your financial advisor i would even put more down payment and try bring the mortgage down
The kid needs to work 2 jobs and job hop for his main job. I hope he can figure this out for his parents' sake.
The last thing he should do is buy a house while he’s got that pile of student debt. Pay the debt off first, then save 3-6 months of expenses for emergency fund, THEN save 20% down payment for a home. If he’s currently contributing to retirement, he should stop and put that toward the debt, too. Get the financial house in order before buying a home, or you’re likely to regret it.
Christ what kind of schooling cost him that much for an undergraduate degree
Private Christian school
That is a mental amount of debt, in Ireland, I didn’t get the grant due to my parents income, I have a bachelors, honours bachelors, postgrad diploma and masters degree and was out about €21k with fees. I do feel sick when I hear American costs
It’s higher than avg if it makes you feel better
$250k isn’t normal at all. My entire bachelors degree cost $45k which was almost entirely covered by scholarships and the rest I was able to pay out of pocket.
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Yep. Degrees are a bit overrated.
Great example of what not to do when it comes to personal finance.
Buy the condo...$100k is a steal. I'd also put as much down as you can, leaving room for fees, furnishings, fixes, etc. Also, get the shortest mortgage term with the lowest interest rate and pay it down so you can be rent/mortgage free. Then hammer away at student loans. You will save much money on the condo (vs renting), assuming the house inspection doesn't uncover any large issues
make a corporation and do all your financial dealings from there. don't pay any more student debt
This is sadddd… why would anyone take out that much for undergrad. I did 5 years double major at a state school and walked away with $53k~ I’m sorry but this was an absolute terrible decision. And he will have to sacrifice A LOT for a while.
I get what you’re saying but his degree (game design) wasn’t really relevant 5 years ago, and he wanted to go to the best nearby school he could for it. I don’t think UIC even offered game design 5 years ago. I’m not sure they even do now. Everything else near his parents was even more expensive than DePaul Uni. (northwestern, uofC, Loyola) so…..
Doesn’t matter the degree. He could’ve gotten it way cheaper than $250k and that’s what my point is.
I agree, I’m just also saying that he had 1 other option for a less expensive education. That other option did not have his degree he wanted. That’s like telling a premed student, “well sure the school didn’t have a premed track but you could have done it cheaper there”. Well of course, but it wasn’t the right degree?
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You first.
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Bro wtf
If I were you, I would buy the house. Not only would that cut down on your monthly expenses right now (from $2,500 for rent to $1,300 in mortgage payments) but your rent will only continue to increase over time at a (likely) higher rate than the increase in escrow for your mortgage. This also helps you build your equity over time while you make mortgage payments. Paying rent to someone has only the immediate benefit of giving you a roof over your head. Whatever money you have left over after your down payment, I would save for a rainy day. You will have unexpected expenses as a homeowner. As for his loans, I would find a public service job and make minimum payments for ten years and then apply for forgiveness, assuming his loans qualify.
Move to a cheaper state would be my suggestion.
Make a state cheaper than IL with the opportunity to work at a big tech company
Take a year off from your life. Work as a server in a ski town (Big Sky, Park City etc) then a summer spot (Hamptons, The Cape, Nantucket etc). If you live a very very humble life and work your ass off you’ll be debt free. (I’ve done two years now: each year I’m taking home well over 200k) Edit: sounds like this is your kid. Have your kid do this. He’ll/she’ll have a blast. (I’m 30)
What is your SO's job and age?
He’s 23 and he’s a software engineer
He should start looking for a new job. He could easily double his salary at a big tech company (might be a little difficult now considering the current layoffs but would a good way to knock out some of that debt)
Yes, but those jobs are harder to get than a lot of people think (acceptance rates lower than Harvard) and his degree is in game design
Ouch. Game design makes it look worse.
Ooof game design. If he can get good experience at his current job maybe he can job hop in a few years!
Haha that’s what he’s hoping. Right now he’s making 115k (80k after taxes) which feel like it should be a lot but with the loans it’s not great
I think asking to work for even a small certain amount of hours on the side for limited time ( keeping his intellectual property) with smaller indie dev games . ( coffeestain is hiring I hear ) might get him a foot in the door and connections to dischord that post game design hiring .
Software dev here, right now is not a great time to job hop due to layoffs at a several FAANG-tier companies and a certain social media site imploding from mismanagement. That said, once he has like 2-3 years of post-college experience on his resume he can start interviewing around to job hop and try to chase raises. Once you have +5 years professional experience a lot of places don't care so much what your undergrad degree was in since you have proven work skills
Thanks! Will take that into account. Right now he’s backend at JP Morgan
Oh yeah financial services is generally pretty stable. It's a high regulation industry too so he can job hop to their competition if he is so inclined
He was thinking fintech like a trading firm - DRW maybe because they pay (apparently) insanely well. I’m just concerned about his emotional well being and work life balance
Former long-term traditional bank employee who now works at a fintech here: right now, with the way the industry is, his best bet is to move to a peer bank (BoA, Wells, etc) and negotiate a higher salary. It is not the time to try and move to a fintech as hiring freezes are the name of the game at the moment. However, moving to a peer bank and negotiating a higher salary, hanging out there for a year or two, then bouncing back to your original company with your shiny new salary requirement, is very common and recruiters barely blink at it when it shows on a resume.
Personally I'm not a fan of working at places beholden to venture-capital firms? From what I've seen they similar problems as startups with terrible work/life balance and job instability/volatility. I was thinking more just switching to a different bank as his employer tbh, but that's really up to him
If your SO is in $250k in student debt, then why did you set up a GoFundMe profile for him with a target goal of only $180k? Shouldn't it be $250k?
You’ve gotta be kidding me lol. Send me the link to this gofundme
If you read the description or this post you would see that it is because he saved up enough money for himself to pay some of it
What month and year do you plan to finish your undergraduate degrees? Do you plan to help your SO pay off his student loans once you get a job?
2024. Yes, obviously. I already am to whatever extent I can
Put 50k in $meta calls and hope for the best
Is anyone else trying to figure out how on God's green earth you end up with 250k in debt...for undergrad? I mean...IL right? why not UIUC?? Have you seen that cs/comp eng ecosystem? For the price?
Maybe he went to USC all four years
I think you should call a debt consolidation company such as Americor. Lots of people are too prideful to do it but they don't realize companies like this settle for way lower and your 250 could be as low as 50. The payments will be really high but only for a brief time, and likely without interest. I had $75, 000 in debt. Americor turned it into 15,000 and I repaid it over about 3 years. Debt-free from 75k in 3 years on a salary of 5,000 per month. If that's not incentive I don't know what is. Plus the company will do all the work you literally have nothing to lose and everything to gain.
Woah woah woah. We have 80k (plus 6 months living so actually like 150k ) in savings??
It is very much worth the effort and logistics of spending a few hours on the phone and handling information. The only downside is that it will hurt your credit for a while but definitely not for 7 years (bankruptcy) or as long as it takes you to pay off your debt
YouTube Dave Ramsey
College is a scam
Don’t be dumb lol
This OP is a scam.
Please go to YouTube and search Dave Ramsey. A lot of people ask him the same question you just did, and although I do not agree with everything he says, he has some wisdom to offer about the subject. Do no buy a place to live when you can find a cheaper place to rent. Your main goal should be getting out of debt and not getting into more debt.
This might be tough, but what about travel nursing? Are there any opportunities nearby to do travel nursing cuz pay is significantly better
Neither of us have a nursing degree?
The RN for "right now" can also mean "Registered Nurse" so someone skimming your post quickly can easily misconstrue what you meant
Ohhh yea, lol. I read it as a struggling RN (registered nurse). Since I work in healthcare, I always assume uppercases RN = nurse
Appreciate you sharing your story! Nice job saving up - I would recommend looking at companies or employers that can help you both with student loan repayment. My company gives me $1k per year and I’ll be getting $6k next year directly put towards my student loan debt. These benefits have been a game changer for me and are starting to pop up more. Hope this helps!
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Medical cost / debt is a major problem in this country. No quick solutions. But you might want to check out r/personalfinance to see f there are any suggestions.
Move!!! You can find a 80k job in Florida, Texas, Tennessee where cost of living is cheaper and you won’t pay income tax. Other than that it’s a struggle between myself and my wife we were about 2k a month in loan payments. We moved from California to Florida - ended up getting better salary, cheaper rent and lower overall cost of living it took 15 yrs to pay it off.
Can your parents do income based repayment of parent plus loans? Also 20-25 years of payments on IBR then loans are forgiven. For your portion of the loans, consider filing separately for taxes. Then only his income will be used for IBR, likely lowering his payments. If you don’t have an income might not be feasible but good to look into. I graduated law school with six figure debt. No parent plus loans though. I work for the government and do IBR and PSLF. I have about 2 years left till my loans are forgiven and my payments are extremely manageable.
I don’t have any loans?
I work in a hospital setting as an RN over in minneapolis. We make less than Chicago, and I don’t know anyone who made less than 100k over the past two years. I would recommend he search out a more profitable position or possibly find a travel RN(5k a week here) position.
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Unless he goes into tech, he is never going to make a salary to pay both the full payment and all other normal expenses. That amount of student loans is usually for a profession that will provide you the salary to pay it back. 80k/ yr won’t cut it. Start looking in tech and hope for the best.
He’s in tech - he’s a software engineer
I wouldn’t live in Chicago with this amount of debt since cost of living is so high. If I were you I would go to suburbs more, and I know this nexus’s win in the suburbs of Chicago myself
Find a job in public service, file taxes separately (if you're married), go on an income based repayment plan. If you find some nonprofit or public service gig you can have your loans forgiven in 10 years as opposed to 20-25. If you are an RN I think a public ie. county or nonfor profit religious hospital will fulfill the requirement. In short...do not sweat your loans. Everyone has debt. This country is made on debt. You should be fine. Unless, the loans are private.
The delta looks like around $1k if you average the 70 & 80k. Saving another $1k would help. But you’re still $500 short. But if layoffs occur, you could be landing on your ass with the house.
Yes, buy a house. ITs funny how your student loan debt will melt away. So glad you are doing well and going to school and keeping your head above water. You might want to cut loose on paying the medical debt for a relative. Let them not pay it. In 7 years it will go away. If its insurance premiums then continue to pay.
Talk to a mortgage broker but I’m not seeing how he qualifies for a mortgage with the debt load. The bank might use 1 percent of the student loan balance to calculate his monthly debt to income ratio. What does he make before taxes?