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Old 06-25-2011, 06:22 AM   #1
daonlydann
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Give me some advice on how to manage 180K student loan debt

Hi,

I'm a recent graduate of pharmacy school. Just reviewed all my loans and it is a whopping $180,000. What an expensive "investment"!

$130,000 are federal loans ranging from a fixed interest rate of 6.8% to 8%.
$50,000 are private variables loans and are low right now at about 2%-3%.

If I am able to find a job, I will be expecting to gross $120K annually.

I don't know if I should pay down my debt as quickly as possible or pay the minimum and use the extra cash flow to invest elsewhere. 8% interest I think is pretty high and those variable interest rate will rise no doubt.

Should I save money for a home, business, investing, or paying down debt?
What would be the ROI for a home/ each?
I know historically the stock market has yielded 8-10%.
Those of you who do option trading, is it basically like gambling?

On a sidenote, I currently have a roth IRA which I would put in some money ever since I was 18. I just watched the documentary "Inside Job" and have lost faith in wall street and trading.
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Old 06-26-2011, 04:20 PM   #2
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If I am able to find a job, I will be expecting to gross $120K annually.


You don't sound very confident. I hope things work out for you , especially with 180k in student loans.

Remember if you are paying 8 percent interest on your student loans, then every dollar above the minimum you make is like getting a 8 percent return on your money.
Because, that is 8 percent you don't have to pay.

Historically, the stock market has gone up 8 percent a year. However, a few years ago, my IRA went down 24 percent one year and 18 the next. Nothing is guaranteed.

I would pay off the student loans first. You can forget about a home until they are significantly paid down.

Keep putting money in your IRA and forget about options. Option trading is for serious investors.
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Old 06-26-2011, 04:50 PM   #3
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insane. its things like these that make me wonder if any of it is worth it.
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Old 06-26-2011, 08:41 PM   #4
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insane. its things like these that make me wonder if any of it is worth it.
It is if you have the right major.

But....I think that colleges charge as much as they can get away with. And I think that student loans are a contributing factor. Tuition has risen faster than the rate of inflation for many years.
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Old 06-26-2011, 10:21 PM   #5
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yes, but what happens if he cant land a job in his field that pays him right, what then.
how many people with doctorates out there cant get appropriate work?
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Old 06-26-2011, 10:43 PM   #6
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If I am able to find a job, I will be expecting to gross $120K annually.


You don't sound very confident. I hope things work out for you , especially with 180k in student loans.

Remember if you are paying 8 percent interest on your student loans, then every dollar above the minimum you make is like getting a 8 percent return on your money.
Because, that is 8 percent you don't have to pay.

Historically, the stock market has gone up 8 percent a year. However, a few years ago, my IRA went down 24 percent one year and 18 the next. Nothing is guaranteed.

I would pay off the student loans first. You can forget about a home until they are significantly paid down.

Keep putting money in your IRA and forget about options. Option trading is for serious investors.
Thanks for your insight. I guess paying down the 8% interest is basically a guaranteed fixed 8% i'm gaining rather than investing which would have risks. Looks like the only smart choice I have is to live very menially for a few years to pay this down.

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It is if you have the right major.

But....I think that colleges charge as much as they can get away with. And I think that student loans are a contributing factor. Tuition has risen faster than the rate of inflation for many years.
Tuition is ridiculous. It seems for the past few years, every year my school would raised 1K per semester just because they felt like it.

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yes, but what happens if he cant land a job in his field that pays him right, what then.
how many people with doctorates out there cant get appropriate work?
That is a scary thought and I'm afraid it's going to happen soon in our profession of pharmacy. It used to be pharmacists were always in demand. I think with the economy tanking people are starting to realize there is job stability in the healthcare industry. Pharmacy seems like a happy medium between a nurse and a doctor. More pay than nurses and less work/sacrifice than a doctor. The number of pharmacy schools nationwide has almost doubled in the last 10-15 years and still rising. If i graduated 5 years ago, I could have worked anywhere I wanted and have nice hefty sign on bonuses 20K+. Those days are over and I would be lucky to find a job and relocate to a boring town.
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Old 06-27-2011, 12:58 AM   #7
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Wow, I couldn't image having that much in student loan debt...even if I was making $120k/yr. I have around $100k in student loans but about half of that is with Stafford loans that are LOCKED in at 1.75% for 25 years and the rest of the private loans are at Prime -.50% or 2.75%. For now I'm just paying the minimum but as the interest rate on the private loans rises I'll be paying that off. Student loans are no lie!
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Old 06-27-2011, 06:34 AM   #8
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i dont mean to scare you op, but its a fear of mine, and all i have is an assoc, and i want to go back for the BS but i dont want anymore debt than i already have and im nowhere near you.

i really hope you do find a good paying job, but the fear alone would stress me the fuk out too much.
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Old 06-27-2011, 07:15 AM   #9
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Wow, I couldn't image having that much in student loan debt...even if I was making $120k/yr. I have around $100k in student loans but about half of that is with Stafford loans that are LOCKED in at 1.75% for 25 years and the rest of the private loans are at Prime -.50% or 2.75%. For now I'm just paying the minimum but as the interest rate on the private loans rises I'll be paying that off. Student loans are no lie!
Those were the days not too long ago. Congress and the bush administration changed the stafford to fixed rates of 6.8 - 8% for graduate students. I wish they were still variable.

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i dont mean to scare you op, but its a fear of mine, and all i have is an assoc, and i want to go back for the BS but i dont want anymore debt than i already have and im nowhere near you.

i really hope you do find a good paying job, but the fear alone would stress me the fuk out too much.
I'm sure a BS would not be as expensive as a doctorate degree from a private university. What career are you going into?
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Old 06-27-2011, 09:11 AM   #10
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thats the next thing too, im not sure what i want to do.
i have a CAD degree, but i really dont enjoy it anymore.
i may be going back into the military to be an EOD tech, becaue i love blowing up sh1t. but dont know what id study.
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Old 06-27-2011, 03:56 PM   #11
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Have you considered becoming a pharmacist in the military ?
You won't make 120k starting out, but your salary and your job are guaranteed, free housing and you can defer your student loans for 3 years.
Pharmacists are in the medical field. That is a different animal from the mainstream military whether you are in the Army, Navy or Air Force.
Something to consider if you can't find a job right away.
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Old 06-27-2011, 05:38 PM   #12
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Have you considered becoming a pharmacist in the military ?
You won't make 120k starting out, but your salary and your job are guaranteed, free housing and you can defer your student loans for 3 years.
Pharmacists are in the medical field. That is a different animal from the mainstream military whether you are in the Army, Navy or Air Force.
Something to consider if you can't find a job right away.
I agree with Raymond, you can do a few years and get your student loans paid off and the work is not even close to what you do on the outside. I went with the BSN program and fell in the OE pay scale and our nursing retention bonus is $20K per year for four years RN ISP. Now tell me what nurse will make that in the south. BTW, we only have a nurse to patient ration of 1:1 where I work. Man use all your options. My brother in law graudated in DC with his PharmD and had to take a job at Walgreens in Clovus, NM
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Old 06-27-2011, 10:10 PM   #13
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Originally Posted by daonlydann View Post
Hi,

I'm a recent graduate of pharmacy school. Just reviewed all my loans and it is a whopping $180,000. What an expensive "investment"!

$130,000 are federal loans ranging from a fixed interest rate of 6.8% to 8%.
$50,000 are private variables loans and are low right now at about 2%-3%.

If I am able to find a job, I will be expecting to gross $120K annually.

I don't know if I should pay down my debt as quickly as possible or pay the minimum and use the extra cash flow to invest elsewhere. 8% interest I think is pretty high and those variable interest rate will rise no doubt.

Should I save money for a home, business, investing, or paying down debt?
What would be the ROI for a home/ each?
I know historically the stock market has yielded 8-10%.
Those of you who do option trading, is it basically like gambling?

On a sidenote, I currently have a roth IRA which I would put in some money ever since I was 18. I just watched the documentary "Inside Job" and have lost faith in wall street and trading.
Try to take pharmacological boards that are accepted in many places and be flexible where you will work.

Consider applying for jobs in public health then applying for NHSC loan repayment. A bill is being proposed to allow pharmacists to participate.

They pay a very competitive wage(better than most)and you will be not be working for the Gov but sign a 2yr contract to work at your job.
You will be working in a under-served area so dont expect to be in so cal(some decent places are hiring) http://nhscjobs.hrsa.gov/Search_HPOL.aspx.
They give an additional 30k per year for first 2 years and 40k 3-4 all being tax free that 30k ends up being ~ 40k+ if it was standard income.

I have many friends who have graduated from dental/pharm/optometry/med school and 120k for a 1st year pharmacist is very optimistic but possible in retail where cost of living is high. I have 5 friends who are new grads and only 2 have broken 100k(spread over 4 states/mid to high end cost of living) so just don't set your sights too high.

If it were my debt I would join the armed forces or NHSC.

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Old 06-28-2011, 09:21 PM   #14
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#1 Pay down your student loan. Every payment you make is equivalent to earning 8% returns. Even more when you consider the tax benefits.

#2 You're not going to start out with a job $120k. Maybe 70-80k for a new pharmacist, but it'll take a few years to reach 120k.

#3 DO NOT think of a home in terms of ROI. As we've seen home prices do not go up up up forever. Buy it if it makes sense financially when compared to renting, but do not do it thinking it'll go up in value.

#4 Stock market doesn't return 8-10% a year. It have wild swings and a lot of downturns. In fact money invested 10+ years ago in standard stock index is earning 0% return over this timeframe.

#5 I would stay away from trading individual stocks, options, etc. and just stay with low-cost index funds.

Read bogleheads.com for the correct passive investment approach.
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Old 06-29-2011, 12:52 PM   #15
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#1 Pay down your student loan. Every payment you make is equivalent to earning 8% returns. Even more when you consider the tax benefits.

#2 You're not going to start out with a job $120k. Maybe 70-80k for a new pharmacist, but it'll take a few years to reach 120k.

#3 DO NOT think of a home in terms of ROI. As we've seen home prices do not go up up up forever. Buy it if it makes sense financially when compared to renting, but do not do it thinking it'll go up in value.

#4 Stock market doesn't return 8-10% a year. It have wild swings and a lot of downturns. In fact money invested 10+ years ago in standard stock index is earning 0% return over this timeframe.

#5 I would stay away from trading individual stocks, options, etc. and just stay with low-cost index funds.

Read bogleheads.com for the correct passive investment approach.
I'm sorry, that's completely wrong.
Almost all pharmacists still make atleast 110k here in socal, even right out of the school. The Ceiling is usually $140k, lifetime. It's one of the few professions that you start very high but don't have much room to grow.
I do agree with most of the stuff you wrote besides that.

In either case, joining any Military or whatever won't benefit you in terms of pay. The pay is substantially lower even if they do cover 30-40k a year of loans. However, if that is your desire, then you should go for it.

OP, Unless you have a sure thing investment (which are effectively unheard of, especially right now) Pay off your loans ASAP. Debt is a form of slavery and the longer you wait, the longer it is to pay off.

Live the way you have been living durning pharmacy school for 2-3 years, and you'll be easily able to pay off 50k/year in loans. After that, you're debt free.

The sign on bonuses from 4+ years ago have dwindled down and jobs in the Center of OC/LA are limited as well, but since you're still young and flexible, you should just land a job and pay down your debt so you won't have constantly worry.
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Old 06-29-2011, 12:59 PM   #16
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I stand corrected on the pharmacist pay. Thx.
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Old 06-29-2011, 04:20 PM   #17
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REALLY that much WTF..........now I am worried about my 4 kids going to college, they are all under 6 yr/old.

As far as you, you do the math. Pay the high interest, take advantage of the ZERO interest offers for 6 to 12months...move them around. Lower your standard like selling your E46 and play stocks.
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Old 06-29-2011, 04:44 PM   #18
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Better get cracking on those 529 plans then.
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Old 06-29-2011, 07:22 PM   #19
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Great great advice everyone. Thank you. I'm very surprised by what a car forum has to offer!

My plan is instead of taking the 10 year standard repayment schedule, I plan to go for the 25 year extended repayment schedule on all my loans. I will pay the minimum for my lower interest loans and divert as much money I can to pay off the higher interest loans until they are paid off.

I heard that when you make a payment, you can always pay more than the minimum and it will be applied to the principal if you indicate so.

Soon I will be asking advice on my to budget! Boglehead is a great site thanks.
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Old 07-06-2011, 05:18 PM   #20
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Great great advice everyone. Thank you. I'm very surprised by what a car forum has to offer!

I heard that when you make a payment, you can always pay more than the minimum and it will be applied to the principal if you indicate so.

Soon I will be asking advice on my to budget! Boglehead is a great site thanks.
Well, you're in a knowledgeable sub-forum. not general OT

On my grad loans, I have the option of paying down principal or applying it to future payments. I paid a few hundred extra on each loan for the future to make sure I wouldn't incur any fees, but now all extra payments reduce principal.

Although in theory, either choice pays off the loan for the same amount.
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