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Hello! New to the forums -- I have a question... I have been searching for the answer for awhile now, but I can't find a concrete answer.

I am fresh out of college and found a job making just over 30k a year. I have a considerable amount in student loans (i wish i would have made some better choices, but hindsight is always 20/20). So here's the deal.

I'm paying my private student loans down right now on the 10 year standard repayment plan. The payment is around 230 a month and I owe about 25,000.

I have some government loans that are at about 28k. I have qualified for IBR payments and because of my income/situation they have me set on a $0 payment. So do I shoot for debt forgiveness in 25 years? Or do I bite the bullet and pay it down? (Im in a profession that will rarely see my income raise much higher than 38K a year). Thanks!
 

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With the rate of inflation, one can not say you will never make much more than 38k..

In 10 years, 38k will be like making 20K today. And so on. So, anticipate that you will be making more than 38k at some point in the 25 years. You will need to pay. Unless of course, you will be retiring. You didn't state your age.

Also, if you ever marry, the spouse's income counts. never say never. ;)

So, anticipate that you will be repaying the loans at some point in your life. that is, if you actually work. If you're not working - then I guess you'd qualify for forgiveness.

ETA: if you put this in Dave Ramsey... he says to PAY YOUR DEBTS! ;)
 
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Like Frugal Nurse said, there are a LOT of factors that can change you IBR, it's recalculated every year. If you do nothing now, like the payment is, you'll only accrue and capitalize interest, and your debt will grow exponentially. If later you get married to someone who has significant income but also significant debt, IBR doesn't care about other debts, only other gov student loans. Also, who's to say IBR will still be around in 25 years, or at least in the form it is now. And who's to say you don't move do to love or something where you do the same job and make much more, or you hate your career and pick up a different one in 5, 10 years?

I would look into consolidating your loans, getting on IBR, and at LEAST paying the interest you accrue on it, because it'll save you money in the long run, and in most all cases, you will be able to deduct up to $2,500 of interest paid from your Gross Income on your taxes. Something I just thought of as being a super smart money move in college would have been to at least pay that $2,500 in interest every year in college because whether or not you've graduated, you can pay on the loans and still get that tax deduction (and it's not an itemized deduction that only some can take unlike home mortgage interest regardless of whatever a mortgage loan salesman tells you). And also, Dave says pay your debts.
 

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Would it make a difference if the OP was in public service aiming toward the 10 year forgiveness? Has DR addressed whether he considers this similar to an employer sponsered student loan forgiveness benefit? Since public service jobs tend to pay less, this program provides an incentive for educated professionals to enter the public service.

Also, to the OP - if you're going to go for the 25, figure out what your tax bill is going to be and start budgeting for it now. The 10 year forgiveness for public service is tax free, but the 25 year for everyone else is a taxable event.
 

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Would it make a difference if the OP was in public service aiming toward the 10 year forgiveness?
No, because 10 years is a long time and 5 years in the person may realize, "I was not meant for this."

Has DR addressed whether he considers this similar to an employer sponsered student loan forgiveness benefit?
Doesn't matter because of the above.
Since public service jobs tend to pay less, this program provides an incentive for educated professionals to enter the public service.
But some things can make it not worth staying in a given job, public or private, regardless of the potential long term benefit.

Ultimately your long term plan is up to you. If you pay off your debt faster the potential downside is the opportunity cost of your employer not having as much to pay off for you at the end of 10 years or whatever. If you don't pay off your debt faster, the potential downside is if you leave the job for any reason, and they don't pay off that debt for you, then you've paid a lot more in interest and still owe a ton.
 

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I'm not sure if your question really got answered. Dave would tell you, if this is your only debt, then go "gazelle intense" on paying off the private student loans first. You don't want to be paying off that $25K for the next 10 years. That would be awful. You're used to being a poor student so just maintain that lowly lifestyle and wipe out that debt as quickly as you can - 3 years? Less?

Then, when you have that debt gone, start working on the rest of the debt. Yes, you do have to pay off ALL your student loans. However, if you can get credit as paying off those loans because of the kind of job you take, then go ahead and do that. For instance, the VISTA program pays minimum wage and you typically work at the job for a year or two. At the end of your term you can get a credit of $3000 to $8000 toward your federal student loan. That credit is in lieu of salary and people who don't have student loans receive compensation in another form (a lump sum payment that is far less than the loan forgiveness amount). IF you qualify for such forgiveness, great.
 
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