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Hello all,

I am a Ph.D. candidate in a humanities field who will soon be completing his dissertation, graduating, and, hopefully, have a job teaching at a college or university within the next year or two.

I currently have a debt of $130,000 in student loans with the U.S. Department of Education from my eleven years of study in college and graduate school, consolidated at 4.75% before applicable discounts. Beyond these loans I have no other debt. I also have a modest amount of money in a well-balanced portfolio of mutual funds, whose returns have averaged 9 percent over the past five years. My income will not be stratospheric, as I am in the humanities, but anticipate a starting salary between $50-60,000 and rising as I move through the tenure and promotion process.

My question is twofold:

1. Is it more beneficial to take a long-term approach to paying off student loans, making smaller payments on the loans (i.e. graduated or income-contingent payment plans, which go as long as 30 years) and investing extra income in mutual funds, stocks, or bonds given the difference between the low interest rate of the loan and investment potential, or:

2. Is it most beneficial to use all available income (and possibly engaging in part-time and summer employment) to eliminate student loan debt as quickly as humanly possible without saving much, if any.

Complicating matters, Congress recently passed a new loan forgiveness plan for public service, which includes most employment in higher education. The remaining amount of my loans would be forgiven after ten years of service, though as the law currently stands the forgiven amount would be taxable (resulting in a massive tax bill for that year, though this particular part of the law may change).

As far as investment goals, I do not want children, and I would not consider buying a home until a significant amount of the debt was paid down. I am more than willing to live like a student for another 5 years to save on costs.

The loans must, obviously, be paid, sooner or later, but which strategy will put me in the most secure financial position? If there are any insights or those who have had personal experience with student loans, I would appreciate your take on my situation.

With much gratitude from a first-time poster,
-Narn Ceredir
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