My wife (37F) and I (36F) are trying to figure out the best way to address her student loans.
She has:
~$160k in federal loans, currently on a IBR plan that will increase to $1,000/month in August, she expects to pay these until 2038 when they would ideally be forgiven, but would owe taxes on forgiven amount
~$24k in private loans with about 5 years left on the term and a ~3% interest rate
~$40k in savings
About a year ago I received $250k from my grandfather when he passed away. I have mostly kept it in a HYSA. I also have about $65k in savings also in the HYSA.
I have no student loans or debt other than our mortgage. We are 1.5 years into a 30 year mortgage with ~$530k remaining.
I think we should pay off the federal loans using the cash I inherited. She can continue paying her private loan and we both think it is reasonable that she try to save aggressively (basically saving what she would have been paying in loans) to get back to $160k in savings as soon as possible but without the burden of federal loan interest and the uncertainty of how forgiveness might actually play out + the tax bill.
If we do this, we would have over a year of emergency funds remaining in savings. We do expect to have significant medical expenses in the next year ($20k minimum) for IUI/IVF. And then ideally an increase of monthly expenses with a child!
It seems crazy not to just pay the federal loan off. Am I missing anything?