Which debt should i choose?

swimcatsmom
Sun, 30 Mar 2008 16:29:24 +0000

Do you have any choices that would not leave you with such horrendous debt? Both are very high.

Finaid.org has a loan calculator that will give you an idea of your monthly payments based on the debt and the interest rate and the salary recommended to support such a debt. Run some numbers through them And remember that while your starting salary sounds good the debt will last a lot more than a couple of years and such debt will restrict your options for several years to come. If those is no cheaper option I would definitely go for the lower of the 2. Think of the 10-20 years after you graduate school and the things you would like to do - houses, cars, nice vacations, family - when you are deciding whether to burden yourself with the extra debt fo the ‘experience’ (it does sound like you have already realized this).

Here is the calculator
[FinAid | Calculators | Loan Calculator](http://www.finaid.org/calculators/loanpayments.phtml)

For a starting debt of $80,000 with 6.8% interest rate and paid over 10 years the monthly payment would be @ $900 and the recommended income to support the payment $110,000. For a starting debt of 140,000 the payments would be $1600 with a recommended income of $193,000.

I have run some numbers (which I realised afterwards I have probably used some incorrect assumptions for - such as 4 years - pharmacy school is maybe longer?) But just to give you some food for thought.

And are you planning to pay the interest each year while you are in college? If you cannot pay the interest each year you will have to capitalize it so your debt will have grown massively by the time you graduate.

For 80,000 at 6.8%
Year 1 borrow 20,000 x 6.8% = interest 1360. if you capitalize it
Year2 borrow another 20,000+1st 20,000 +1360 = 41360 x 6.8% = 2812. If you capitalize it
Year 3 - borrow another 20,000 +41360+2812=64172 x 6.8% =4363. If you capitalize it
Year 4 - borrow another 20,000 + 64172 + 4363 = 88535. x 6.8% = $6020
So your debt at graduation has already grown to 94,555 for which the loan calculator gives a monthly payment of 1088 and a recommended income of $130,000.

At the upper end of your loans of 140,000 so borrowing 35,000 a year
Year 1 borrow 35,000 x 6.8% = interest 2380. if you capitalize it
Year2 borrow another 35,000+1st 35,000 +2380 = 72380 x 6.8% = 4922. If you capitalize it
Year 3 - borrow another 35,000 +72380+4922=112302 x 6.8% =7636. If you capitalize it
Year 4 - borrow another 35,000 + 112302 + 7636 = 154938 x 6.8% = $10536 interest.
So by the time you graduate your debt will be $165474 which the loan calculator gives a monthly payment of $1900 and a recommended income of over $220,000. (or for a 20 year payment - 1251 a month - but you would be in your mid 40s before you pay it off).

Good luck with your choices. Be really realistic when making them.