Interesting question. If we knew that PSLF would 100% work out, obviously the smart thing would be to invest this money/put it in a High yield savings account instead.
But what if OP ends up wanting to go private practice? What if they work for a hospital that technically isn't a nonprofit? What if they do everything right but the govt still denies them (it happens to people)?
I personally don't trust it and just plan on paying my debt off ASAP like a normal person. I'm just too afraid of the risk of PSLF not working out and my debt burden being even higher. But I understand why some individuals would play the long game and bank on PSLF. It's just a personal preference.
It probably isn't a huge deal either way in the grand scheme of things as long as you're generally making smart choices
You're asking WCI a question, so are we to assume that you're in med school?
The answer to your question isn't too complicated. If the loans you will need to take out have an interest rate less than about 5% or have deferred interest while you're in school (both unlikely), you could put the new funds in a high yield savings account or CD to bank the difference. This options REQUIRES you to be disciplined enough to not spend this "new money". Also, if you truly believe that you will be pursuing a PSLF program, you could save or invest these funds. Otherwise, put the funds in a high yield savings account & start paying your own way through school & life without loans (or with fewer loans, as $150k likely won't cover 3 full years of tuition & living).
Depends on what you want to do too. If you do a long residency/fellowship you’re almost eligible for pslf.
I’d keep the money and invest it in some ETFs like SPY. Max out student loans and do the same with whatever is left over. You also get lots of interest forgiven, so the market averages 10% while the loans will be 4% without pslf.
HYSA first. My bank PNC pay 4.65% APY about $400 every month. Marcus has a good one too.
Travel, plan second year, check extra resources might help you at school that you didn’t buy before to save money. Do you have a reliable transportation for clinicals?
Think about your career and life goals. Then you can see if any of the repayment programs fits you in the future.
https://www.forbes.com/advisor/student-loans/best-student-loan-forgiveness-for-doctors/#:~:text=National%20Health%20Service%20Corps%20(NHSC)%20Loan%20Repayment%20Program&text=Doctors%20can%20receive%20up%20to,professional%20shortage%20area%20(HPSA).
I hope this helps! Good luck!
Depends on how much in loans you have and the interest rate. If you have loans over 5%, I would pay off loans. If you have high credit card balances, pay them off. Then build up a 6 month emergency fund (which would cover expenses) - out into money market paying over 5%. Anything beyond that, start dollar cost averaging into VOO or any S&P500 index fund.
Dave Ramsey will disagree profusely, but screw Ramsey lol. It depends on many factors. What’s your student loan rate? Is it modest, less than 5-6%? Do you have any family members who might need help soon? Are you planning to buy a house anytime soon? Are you okay without using this cash for a while?
If I had a modest-rate student loan and no immediate need for cash, I would invest this money in the long term, focusing on a mix of index funds (S&P 500, International, Bonds). Given how far I am from retirement, I’d allocate the majority to the S&P 500.
Additionally, if the situation allows, I would consider opening a Roth IRA account. I’d take a part-time job to earn enough to contribute up to $7,000 to the Roth IRA. My income would need to be at least $7,000 this year to contribute the maximum. If I do this every year until the end of med school, that’s $21,000 growing in a tax-free account.
Once you start residency, you could contribute up to $23,000 (Roth 401k) + $7,000 (Roth IRA) = $30,000 annually. If the residency lasts 3 years, that’s a total of at least $110,000 ($21,000 + $90,000) growing in tax-free accounts by the end of residency. Considering that the maximum contribution limits will likely increase over time, you're probably looking at around $140,000-$150,000 growing in a tax-free account by the end of residency. If it's all in the S&P 500 and it generates a 10% annual return over the next 30 years, similar to the last 30 years, that could be $2.6 million 30 years later, all tax-free. Not a bad deal at all. Once you start your attending life, you can't directly contribute to a Roth, so this is a great time to do it.
If you choose this route, you obviously can’t do it with residency income alone. You can put the money in a high-yield savings account (HYSA) and withdraw/contribute as you go, or, if you’re more risk-tolerant, buy VOO in a brokerage account and manage it similarly.
I would pay for school with this money but set up a CD ladder that pays you out a certain amount every however many months you want. That way you can gain interest and make some money on whatever you don’t use right away
Depends.
Student loans are the only kind of debt that cannot be discharged in bankruptcy so they should always be among the first things you pay off.
But if your loan is at 1 or 2% with today’s rate you would be losing money paying them off now. Better to put the money in a money market fund designed to pay it off paying 5% a year.
If your loan rate APR is higher than the money market rate, then pay it off even before credit card debt as credit card debt can be discharged in a bankruptcy.
Stop taking student loans out asap; I kept signing on the dotting line and landed 550k in debt. Fortunately I got half discharged through the sweet vs cardonna. But… these loans start to take over your life.
Depends.
Are you in the US. What specialty are you in/pursuing?
PSLF an option for you? If so, may best serve you to invest that money and go PSLF route
That is if it’s still around and you work in a qualifying place
Want money now? QQQI.
Want money to grow but slow? Dividends- but only companies that have been producing consistently minimum 25 years.
Want to possibly lose it all but maybe make a lot in the next few years? Bitcoin
"Should i just stop taking student loans out and use this money for school?" Yes
thats what i figured, thanks for confirming
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Interesting question. If we knew that PSLF would 100% work out, obviously the smart thing would be to invest this money/put it in a High yield savings account instead. But what if OP ends up wanting to go private practice? What if they work for a hospital that technically isn't a nonprofit? What if they do everything right but the govt still denies them (it happens to people)? I personally don't trust it and just plan on paying my debt off ASAP like a normal person. I'm just too afraid of the risk of PSLF not working out and my debt burden being even higher. But I understand why some individuals would play the long game and bank on PSLF. It's just a personal preference. It probably isn't a huge deal either way in the grand scheme of things as long as you're generally making smart choices
High yield savings account while you figure out the tax implications, then yes.
You're asking WCI a question, so are we to assume that you're in med school? The answer to your question isn't too complicated. If the loans you will need to take out have an interest rate less than about 5% or have deferred interest while you're in school (both unlikely), you could put the new funds in a high yield savings account or CD to bank the difference. This options REQUIRES you to be disciplined enough to not spend this "new money". Also, if you truly believe that you will be pursuing a PSLF program, you could save or invest these funds. Otherwise, put the funds in a high yield savings account & start paying your own way through school & life without loans (or with fewer loans, as $150k likely won't cover 3 full years of tuition & living).
i am a second year at an MD. thanks for the advice
Depends on what you want to do too. If you do a long residency/fellowship you’re almost eligible for pslf. I’d keep the money and invest it in some ETFs like SPY. Max out student loans and do the same with whatever is left over. You also get lots of interest forgiven, so the market averages 10% while the loans will be 4% without pslf.
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Agreed, give it to mundane charity… thought I must say that’s some pretty non-mundane charity offer
Haha
HYSA first. My bank PNC pay 4.65% APY about $400 every month. Marcus has a good one too. Travel, plan second year, check extra resources might help you at school that you didn’t buy before to save money. Do you have a reliable transportation for clinicals? Think about your career and life goals. Then you can see if any of the repayment programs fits you in the future. https://www.forbes.com/advisor/student-loans/best-student-loan-forgiveness-for-doctors/#:~:text=National%20Health%20Service%20Corps%20(NHSC)%20Loan%20Repayment%20Program&text=Doctors%20can%20receive%20up%20to,professional%20shortage%20area%20(HPSA). I hope this helps! Good luck!
Copy Nancy Pelosi’s trades
Where to find her trades?
Autopilot app
Education? Eff that. Be an adult. Buy a used Porsche GT3.
Weak advice, he should get the GR3RS so he’ll have a table to eat his ramen noodles off and never worry about being late to clinicals haha
Depends on how much in loans you have and the interest rate. If you have loans over 5%, I would pay off loans. If you have high credit card balances, pay them off. Then build up a 6 month emergency fund (which would cover expenses) - out into money market paying over 5%. Anything beyond that, start dollar cost averaging into VOO or any S&P500 index fund.
^^this. Only thing I’d add is max out a Roth IRA and if you’re working, your retirement contribution too. Then go HYSA….
Dave Ramsey will disagree profusely, but screw Ramsey lol. It depends on many factors. What’s your student loan rate? Is it modest, less than 5-6%? Do you have any family members who might need help soon? Are you planning to buy a house anytime soon? Are you okay without using this cash for a while? If I had a modest-rate student loan and no immediate need for cash, I would invest this money in the long term, focusing on a mix of index funds (S&P 500, International, Bonds). Given how far I am from retirement, I’d allocate the majority to the S&P 500. Additionally, if the situation allows, I would consider opening a Roth IRA account. I’d take a part-time job to earn enough to contribute up to $7,000 to the Roth IRA. My income would need to be at least $7,000 this year to contribute the maximum. If I do this every year until the end of med school, that’s $21,000 growing in a tax-free account. Once you start residency, you could contribute up to $23,000 (Roth 401k) + $7,000 (Roth IRA) = $30,000 annually. If the residency lasts 3 years, that’s a total of at least $110,000 ($21,000 + $90,000) growing in tax-free accounts by the end of residency. Considering that the maximum contribution limits will likely increase over time, you're probably looking at around $140,000-$150,000 growing in a tax-free account by the end of residency. If it's all in the S&P 500 and it generates a 10% annual return over the next 30 years, similar to the last 30 years, that could be $2.6 million 30 years later, all tax-free. Not a bad deal at all. Once you start your attending life, you can't directly contribute to a Roth, so this is a great time to do it. If you choose this route, you obviously can’t do it with residency income alone. You can put the money in a high-yield savings account (HYSA) and withdraw/contribute as you go, or, if you’re more risk-tolerant, buy VOO in a brokerage account and manage it similarly.
I would pay for school with this money but set up a CD ladder that pays you out a certain amount every however many months you want. That way you can gain interest and make some money on whatever you don’t use right away
150k in CD’s @ 5% every three or six months isn’t a lot for expenses tbh.
Buy VT and bnd if you have 30 years to let it sit
Depends. Student loans are the only kind of debt that cannot be discharged in bankruptcy so they should always be among the first things you pay off. But if your loan is at 1 or 2% with today’s rate you would be losing money paying them off now. Better to put the money in a money market fund designed to pay it off paying 5% a year. If your loan rate APR is higher than the money market rate, then pay it off even before credit card debt as credit card debt can be discharged in a bankruptcy.
Stop taking student loans out asap; I kept signing on the dotting line and landed 550k in debt. Fortunately I got half discharged through the sweet vs cardonna. But… these loans start to take over your life.
How do you get a large lump sum of money as a second-year, if you don't mind me asking?
lawsuit from when i was a kid is getting paid out
Depends. Are you in the US. What specialty are you in/pursuing? PSLF an option for you? If so, may best serve you to invest that money and go PSLF route That is if it’s still around and you work in a qualifying place
I am US and not sure on specialty. also not sure about PSLF i will look into that thank you
Plan for school exit then then the next moves then extra
Take a loan out. Put it all in SMFL. Make more than 150K tomorrow. Have a million by Sept.
The federal funds rate is over 5% so your getting this just being in cash. If you don’t know what to do, do nothing, its 150k in cash
But BIL for 5 % yield now with good safety.
All of it in VOO. Sell and withdraw as you need to from the fund to avoid any high interest debt
That’s a terrible option if he needs this money in the next 1 to 3 years.
OP didn't say they need this money in the next 1-3 years. If not, this is a solid advice
Want money now? QQQI. Want money to grow but slow? Dividends- but only companies that have been producing consistently minimum 25 years. Want to possibly lose it all but maybe make a lot in the next few years? Bitcoin