EvilCapitalist said:Your school debt is at ridiculously low fixed rates. It is not very likely that you will be able to easily borrow money at rates lower than that in future.
Make the minimum payments find better place to put the money to work for you.

He is worried about his wife's rates though that are at 4.75 and 6.8% which are both pretty high, especially compared to his 2.9% HELOC, but I am assuming that the HELOC is tied to prime rate which obviously isn't fixed.

Since your HELOC is at a variable rate I would strongly advise against using it to pay down your wife's debt. Pay off her higher interest loan as quickly as possible but don't fret about it too much. A medical degree is one thing that's worth going into debt for, and once she finishes her residency the two of you will have a huge combined income and paying the loans off quickly will not be a problem.

He is worried about his wife's rates though that are at 4.75 and 6.8% which are both pretty high, especially compared to his 2.9% HELOC, but I am assuming that the HELOC is tied to prime rate which obviously isn't fixed.

Correct. HELOC is at 2.49% actually and is not fixed. There is always an option to fix it though. I had to fix a $40K loan about 2 years ago and the locked rate was around $7%. If Fed keeps interest rates at around 0 for the next year or two, I could be in good shape. But I may be screwed if they dramatically increase interest rates over a short period of time. I am concerned because of articles like this:

http://finance.yahoo.com/news/Fed-to-hold-rates-at-apf-3021192662.html?x=0

another thing to consider is that the HELOC interest is most likely tax deductible, whereas the student loan interest is capped at a $2500 deduction which phases out relatively low on the income scale

Yes, thanks for pointing that out.

Some lenders will put the loan into forbearance if you can demonstrate financial hardship, which you obviously can, so I say you give that a try.

Not if the AMA has anything to say about it

This is off topic, but AMA is weak (worthless?) organization. It has no political power and less than 20% of US doctors belong to it (I do not).

rjdoc74 said:And, btw, there going to be no such thing as rich doctors anymore. TRUST me on that one .

Oh come on, your household income is around $300k/year and it is going to increase significantly once your wife finishes her residency. That sounds pretty rich to me.

BTW, I realize that physician's incomes aren't what they used to be and some doctors (primary care physicians and general surgeons come to mind) are really getting screwed over. I also don't begrudge doctors their money, anyone who gets excellent grades in college and then goes through four years of medical school and several years of residency/indentured servitude deserves to make a good living. Your claim that rich doctors are a thing of the past is a little obnoxious though.

rjdoc74 said:Any ideas? Which strategy would you choose?At a minimum, I would use the HELOC to pay off her $44K 6.8% loan. Prime rates would have to rise pretty dramatically for your after-tax interest rate on the HELOC to greatly exceed 6.8% (which is not tax deductible in your case, since you are over the income threshold). Even if the prime rate rises very quickly, by the time it reaches 10% or so (which would be the rough equivalent of the non tax-deductible 6.8% that you are paying now), you will have the money to quickly pay it off.

As for the $33K loan at 4.75%, that's a much closer call that depends on the rest of your financial situation. With the 4.75% loan, there isn't necessarily a right or a wrong decision, as the loan amount is relatively small and your interest rate arbitrage opportunity is fairly limited.

ppatin said:Your claim that rich doctors are a thing of the past is a little obnoxious though.Those things always depend on your perspective. When you consider the amount of time, dedication and effort that's required to get to a point of actually making real money as an MD and compare it to many other professions that offer similar or much greater compensation with a lot less effort, it's very easy to come to the same realization as the OP.

In the interests of full disclosure, my wife is a resident and we are surrounded by doctors, both residents/fellows as well as attendings.