The Wall Street Journal, Lisa Ward wrote today of a doctor earning $200,000 with over $200,000 in medical school loans–one third of his after-tax income goes to servicing his student loans. Some suggestions for budgeting, from the article:
- Purchase disability and life insurance because there will not be enough saved if you are unable to work;
- Try to refinance the debt at a lower rate through a bank or private firm–there could be thousands of dollars of savings per year;
- When purchasing a home, consider a large mortgage which, unlike student loans, offers a tax deduction;
- Avoid risks in investments by having a diversified, low cost portfolio in equity funds or index funds.
We have worked with many people who are paying back student loans over years. This is a consideration, whether negotiating a divorce and looking at cash flow for family budget as parties separate, or negotiating a prenuptial agreement where one party may have high earning potential but also significant student debt.