As you all know, because I have exclaimed loudly, proudly and repeatedly, I finally paid off my student loan debt earlier this year. It was a huge weight off of my shoulders. However, I have always wondered if I was a fool for paying it all off.
I have a friend who graduated with approximately $200,000 in student loan debt from law school! She is determined to utilize the Public Student Loan Forgiveness program to erase all of that debt. She has to make payments on the loans for 10 years and work for, in her case, the State (or some other qualifying employer) for that entire 10 year time period. She is on a income based repayment plan, which means her payments are about $700 a month. All and all she had a pretty cushy job. She makes about $70,000 a year, she has a retirement plan (to which the state contributes a portion) and she receives about 6 weeks of vacation time a year. Her job is pretty secure. The only uncertainty is, will the Public Student Loan Forgiveness Program still be around, in the small form as it is now, when her 10 years are up.
It took me 10 years to pay off all of my debt and I paid over $75,000
back in total (the loans totaled about $61,000 before interest). I now make $80,000, have 3 weeks of vacation time and no retirement plan (ROTH IRA it is). Oh and I paid back every penny that I owed- less about $3,000 that I received as an employment perk several years ago.
Okay, tell me was I silly to make all of those monster debt payments? I could have stayed with the State for 10 years and paid, probably, a small payment and gotten the majority of the loans forgiven. (I promise if I was still working for the State my salary would probably only be in the 60,000s and when I first worked for the State I had so much debt that my discretionary income would have been minimal.) I would not have had to make $2000 payments in order to pay it all off and I could have kept more money for myself in the long run.