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Loan payments

By Terry Savage on August 24, 2020 | College Savings / Student Loans

Hello Terry
I’m 57 years old , and my kids are all raised and through college. I have 11 years left on my mortgage (about 190k), I owe about 26k on an equity line, and I have app 60k in outstanding college loan debt that is in my kids names in government loans. I’m trying to figure out the best way to pay this all down before I turn 65. Between my wife and I, we pull in around185k per year. My current interest rate on my mortgage is a just over 3%. Is refinancing and consolidating everything a good option or am I better off leaving all the student loans in my kids names and tackle them one at a time? I would appreciate Your thoughts and expertise.

Thank You

Terry Says

This is tricky. Your intentions are good — but those student loans belong to your children. Your retirement belongs to YOU! And your goal should be to pay down your mortgage and personal and home equity debt before you retire. I’m guessing you have no idea how much it will cost you and your wife to live during retirement. But as a “for example” Fidelity just estimated that a couple retiring at 65 can expect to spend $285,000 in uncovered healthcare costs over their retirement!

You need to reconsider your perspective. Your children have student loans. Those come with obligations and some benefits. The rates are high, but they can pay as they earn, more each year. But this is THEIR responsibility, not yours! Now is the time to make that clear to them.

Yes, refi your house and put your home equity loan into the balance – and don’t take out a loan longer than 15 years. With a bit of luck and extra money you can pay it down early. And then, you might want to gift your children some money each year if you keep working, to pay down some of the principal on their loans.

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