I had the happy occasion yesterday to go looking for our student loan statements. Sadly, I found them.
Here is the sobering news. Our total student loan debt (just medical school) now has a balance of $300,800.05 - next month it will likely be more. No, we haven't borrowed a dime since medical school but this balance is multiplying like rabbits! Maybe faster than rabbits:-)
In March of 2011 I documented our total student loan balance as $290,707 and growing. In 18 months the balance increased by almost $10,000! We have even made monthly payments of $230 on this loan ($2,760 last year and $2,070 so far this year). All those payments haven't slowed the snowball. If you are familiar with Dave Ramsey, our debt snowball seems to be working in reverse.
What is sobering is the total amount borrowed to attend medical school was only $240,725.31. The other 60,074.74 is all capitalized interest (and we have already paid interest that isn't included in that total). It's probably more like $65,000 over the last 6 1/2 years.
And then I read that you cannot deduct student loan interest payments from your income taxes if your modified adjusted gross income exceeds $150,000 married filing jointly (see IRS Publication). Guess what? For the tax year 2013 our income will exceed that! Or at least it better be so we have a fighting chance to pay back our student loans.
I know you can't deduct interest paid on most sources of debt: vehicles, credit cards, personal loans, etc. It would be a nice gesture if there were some kind of "break" for that portion of our future income that will be diverted to paying down this huge debt.
In the end the amount of "interest" we will pay will probably be around $80-100K depending on how fast we can get it paid.
Luckily, our interest rates are low: 3.375% on the majority of the balance, and 2.75% on about 1/4 of the balance. I know that for many of my friends, and readers, who started later you have much higher interests rates. I am so sorry, because I know your final numbers will look even more dreary.
If you have the ability to make payments on your student loans while in residency, consider doing it. At least you will be able to deduct the interest you pay on your taxes at a much lower rate and possibly increase your tax refund by reducing your taxable income. I know it's already pretty low, but lower is better.
If you can't, then you will deal with it later - like I am. It would have been impossible to start paying back our loans any earlier than we did. (Maybe not impossible, nothing is impossible). The only reason we started paying is because we had to. There was no way around it, and maybe we should have started residency planning on doing it instead of planning on deferring for as long as they would allow.
It will be happy day when I log on to post: WE DID IT- SALLIE MAE HAS BEEN PAID!
What is left to be decided is will we live like this until we do, or are we going to live a little? I know what my husband wants to do, so we will have some compromises to make. What are your plans for tackling student loan debt?