New grad dentist here (graduating this May) and trying to decide the smartest way to handle my loans.
I have about $460k in federal student loans at ~7.7% interest, currently on PAYE. I’m expecting my income to grow over time, but obviously not huge right away.
I’m stuck between two strategies:
Option 1:Pay off ~$200k right away (family help/savings), then aggressively knock out the remaining ~$260k within 2–3 years.
Option 2:Stay on PAYE long-term, make minimum payments, and go for forgiveness after 20 years (and deal with whatever tax situation exists then).
I keep going back and forth because:
PAYE gives flexibility early on
but 7.7% interest feels really high to just let it sit
and I don’t know if the “tax bomb” is something I should seriously plan around or not
For those of you in dentistry (or similar high-debt, high-income fields):
Did you go aggressive payoff or ride out IDR?
If you paid aggressively, did you regret losing liquidity early?
If you stayed on PAYE, did the growing balance stress you out?
Would really appreciate hearing real experiences before I commit to a path.
Student loan advice please with 460K loan
byu/Byaaaaak inStudentLoans
Posted by Byaaaaak
7 Comments
Option 1! Especially if you can pay almost half right now. Then live within moderate means for a few years, especially if you don’t have a family.
Why not PSLF?
I believe PAYE is no longer going to be an option starting in 2028.
Paye is gone in 2028. But if you never took a loan prior to July 2014 ibr will have the same payment and forgiveness timeline. You should choose whichever strategy will cost you the least over time
Option 3: go on RAP as soon as it’s available. Any interest that it’s greater than your monthly payment is waived so your loan balance won’t grow. As your income increases, reevaluate to see if another payment plan is better.
Leave the savings alone, especially what it is not actually your money
That’s tough — 7.7% is about as good as you can expect to earn in investments over a long term with mostly stocks. But as a new dentist, your earnings should grow rapidly as your practice expands, or you’re not doing it right. Maybe keep the $200k handy as a cushion for expenses you will have (rent, salaries for hygienists, billing staff, equipment payments). Take the plan with the lowest payments, and when you can afford to, pay the loans off early. The interest is tax-deductible to some extent, until your income is fairly high. You got this, this is inky what a mortgage for a condo would be, and you have a valuable skill.
Option 1. PAYE goes away. And you’re gonna be on 25 years IBR or RAP, and as a high income earner you’re going to be smack taxed on the amount forgiven.