Student Loans vs Retirement

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just a resident
Posts: 1
Joined: Sat Sep 15, 2018 1:07 pm

Student Loans vs Retirement

Post by just a resident » Sat Sep 15, 2018 2:06 pm

Hello. I am new to posting to the forum but have been reading it for about 9 months now. I also read the white coat investor. I have a question regarding paying student loan debt vs investing while under the REPAYE program.

Nuts and bolts:
30 yo M living in VHCOL. Bummer. No kids. Girlfriend.
Salary: 55k + weird add on stuff like a meal card for free hospital food.
Oral surgery resident 2 years from graduation. Using REPAYE to cut my interest rate while in residency and will switch over to traditional payment once I graduate to knock down the student loan debt as quick as possible. I will pay it in full.

Student loan debt $312,000 at ~ 6.5% enrolled in REPAYE
Rent an apartment, own my car, no CC debt. I have disability insurance if I get injured.

Roth IRA (Schwab), Index Funds, (contributing $5500/year): $36000
University 401k-like plan(Fideity), Index Funds, (Contributing $4800/ year): $1000
Savings account: 3-4k emergency fund

Background: While using the REPAYE program, Uncle Sam will pay half of your interest that accumulates each month (with a small subsidy from me). Basically, my interest is $1600/month, I would pay ~$400, Uncle Sam pays ~$400 and the remaining $800 is added to my total loan balance. If I pay extra any month, it decreases the amount Uncle Sam pays.

I want to try and pay ~1000/month to my student loan debt or retirement while in training. Here are the three options as I see it.

#1: Pay 400/month to my student loan debt. Uncle Sam pays 400. I save the remaining $600 per month in a savings account. In two years I refinance my student loan to a lower rate, and make a single large payment of ~$14000 to my student loan debt. Continue to fund Roth IRA as normal and University plan taken out of my paycheck as normal.

#2: Pay 400/month to my student loan debt. Uncle Sam pays 400. I place the remaining $600 per month 403b/457b plan (pretax). Continue to fund Roth IRA and No company match.

#3: Save in cash for large life events. Buying a practice, marriage, kids or the like. (Less inclined to save for this over retirement)

Thoughts? Thanks!

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