Paying off my wife's student loans while I'm in school

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whatisthisstuff

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So I'm a M2 and I am trying to navigate my way to the best financial decision but I'm a little unsure on some things. I've looked around on the internet (including WCI) for help but seem to find the answer to my specific question. I'm married and my wife is a full-time nurse with around 20k of student loan debt herself. I have 20k from masters and then have been taking out the full COA from my state school (58k year). All our loans are federal and interest rates are very close if not the same.

I don't necessarily need to take out the full COA from my school every year with her income as we could survive on less. That said, she doesn't make enough to where I wouldn't have to take out any living expense money. We are probably looking at anywhere from 4-8k/year I could take out less for living expenses. Now she's in about year 4 of a 10 year repayment plan but we've recently been paying that down more aggressively with the goal to have it paid off at the end of school (including the tax refunds we've gotten its doable).

Now my question is am I being stupid because I'm essentially paying off debt with debt? Which is what I've always heard not to do. I could take out less and we would pay down her debt less. But my thought is theoretically ANY money we put towards her loans is paying off debt with debt assuming I am taking out any money for living expenses. My other thought is even though I'm taking out more loans than I need, my refinance options as a physician in the future should be better than what she has now? So by paying off her loans quickly then I would be able to refinance mine with a lower interest rate in the future. I'm just not well versed with the way interest accumulates or capitalizes and what strategy would save me the most money over the longer term.

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I guess it depends on what the interest rate that you could get on each one and if it's even worth it financially to pay off debt with debt. I had a private loan from college that I used medical school loan monies to repay, and ended up saving perhaps 2% interest in the process. If the wife's loans are about the same interest rate, I might not want to put in the effort to "consolidate" the debt. $20k at this point may seem like a lot but in the grand scheme may not matter that much.

Would rather just live frugally at this point until you get into your first few years of real work. Then you can start knocking down the loan debt quickly.
 
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What are the rates for her loans versus your loans, and what sort of origination fee are you paying? That will help you figure out if paying off her loans with your loans is wise.
 
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They are both federal unsubsidized so pretty similar with the interest rates. Don't have the exact numbers in front of me but a quick google search on past rates would have hers at 6.8% and mine are all less than that. Looks like this year the interest rate is 5.3% so thats significantly less. Origination fee is 1%. So I think that answers my question.
 
So I'm a M2 and I am trying to navigate my way to the best financial decision but I'm a little unsure on some things. I've looked around on the internet (including WCI) for help but seem to find the answer to my specific question. I'm married and my wife is a full-time nurse with around 20k of student loan debt herself. I have 20k from masters and then have been taking out the full COA from my state school (58k year). All our loans are federal and interest rates are very close if not the same.

I don't necessarily need to take out the full COA from my school every year with her income as we could survive on less. That said, she doesn't make enough to where I wouldn't have to take out any living expense money. We are probably looking at anywhere from 4-8k/year I could take out less for living expenses. Now she's in about year 4 of a 10 year repayment plan but we've recently been paying that down more aggressively with the goal to have it paid off at the end of school (including the tax refunds we've gotten its doable).

Now my question is am I being stupid because I'm essentially paying off debt with debt? Which is what I've always heard not to do. I could take out less and we would pay down her debt less. But my thought is theoretically ANY money we put towards her loans is paying off debt with debt assuming I am taking out any money for living expenses. My other thought is even though I'm taking out more loans than I need, my refinance options as a physician in the future should be better than what she has now? So by paying off her loans quickly then I would be able to refinance mine with a lower interest rate in the future. I'm just not well versed with the way interest accumulates or capitalizes and what strategy would save me the most money over the longer term.


I think that whichever way you choose to go would be just fine. You're right taking out debt to pay off debt is not a smart thing to do in most cases. However, if you tell me that you plan on doing family practice in rural Alaska, then that might change things. Some specialties and locations are more likely to help you pay down your student debt. I know when I was looking for jobs, I could have moved to rural no where and had a job pay down my student loans if I stayed there for X amount of years. These jobs are willing to help pay down your debt, but not your significant others debts. If you plan on entering a career where student loan repayment may be common in your location with contracts, then I would say take out the debt and let her pay down the debt. If not then this becomes a matter of personal choice. You might come out ahead one way over another with origination fees on loans, but if choosing one method helps you sleep at night, well that's the right method.

I hope this helps.
 
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