My wife and I are looking for some advice on how to best allocate our current savings ($101k) to minimize our total interest burden. We have gone through various scenarios and ideas but haven't settled on anything yet and were hoping to get some advice from you guys.
A bit of context:
My wife is in her first year of PA school, her tuition is 45k/year and she is grandfathered into the previous loan terms. For this first year of PA school, we borrowed $20,500 at 8% and $9,500 at 9% through federal loans. She has a $5k scholarship for the first year and then we will be paying the remaining 10k from our savings.
I have interviewed at some med schools and will be starting in Fall 2026 if all goes well. The tuition at the universities I have interviewed at is $47-55K per year, and I will be subject to the BBB loan limits.
Currently, we have $101,000 saved from our jobs and various scholarships. Additionally, we have $14k in roth IRAs and 5k in taxable mutual funds.
Questions:
How should we allocate the savings between our schooling costs versus investing for retirement in roth IRAs for the coming year?
Should we plan on paying off her loans and then focusing on mine when she is working while I am in MS2-MS4?
What should we plan on at this point to be debt free as soon as possible considering how high the interest rates are for federal grad loans?
Idk but imagine going to med school in 2027 while your wife is making PA money, that would be so nice. She can easy hold it down while you go to school id imagine
We’ve talked about that a lot, so if things end up not going my way then it will make a lot of things simpler!
Both should consider PSLF, SLRP or NSHC pathways after you graduate. This can greatly reduce loan totals quickly with a few years of sacrifice. Do not touch your Roth or mutual funds. Instead add to them whenever possible. Live way below your means for as long as possible. Be careful when creating new debt. Especially when it comes time to buy a house. Rent if it makes more sense. Buy when you start a family. Do not be influenced by getting on the hedonic treadmill to keep up with your colleagues. Understand that nobody really cares what you have. They are focused on themselves a great majority of the time. Take it from me, all of this is true. I can speak to you from experience. I was a PA in the ER for half of my 23 years in medicine before quitting and becoming a CFP.
Thanks for the advice! We are both considering hospital-based specialties and we are from a pretty rural state so hopefully there will be some good possibilities for loan repayment. Any advice as far as tackling all of my wife’s loans versus splitting them between both of ours?