Student loan payments: get advice and actual numbers here

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LazyLASA

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Re: Student loan payments: get advice and actual numbers here

Postby LazyLASA » Sat Feb 03, 2018 11:39 am

You can still see the rates...Click on the "2" after 1.95%. They went up for everything that wasn't the 5 year loan.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Mon Feb 12, 2018 7:08 pm

I posted in this thread two years ago - near the beginning of my repayment journey. May 2015 graduate with $83k total. I just finished paying them off. I never refinanced because I didn’t feel the rate reduction was worth the risk of losing the federal loan protections. Best of luck to all of you in your repayment journey - you can do it!

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Tue Feb 13, 2018 4:30 am

Anonymous User wrote:I posted in this thread two years ago - near the beginning of my repayment journey. May 2015 graduate with $83k total. I just finished paying them off. I never refinanced because I didn’t feel the rate reduction was worth the risk of losing the federal loan protections. Best of luck to all of you in your repayment journey - you can do it!


+1. Almost the same situation except I graduated with 101k.

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Johann

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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Tue Feb 13, 2018 9:31 am

while im sure it feels good to be done paying loans, you missed out on about 40-50k of stock market gains (each). something to always keep in mind in being smart about diversification.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Tue Feb 13, 2018 10:16 am

Class of 2016

CommonBond Hybrid - first 5 years is a fixed 3.83% and then its variable after that
Debt: about $235,000
Payments: payment plan is $2,350 (I pay 3k -3.5k a month
Income: 190k
Plan: Standard
I plan to throw all bonuses at this and anticipate having it paid off in five years (six years from graduation). I still manage to max out 401k, HSA, and put a little in my brokerage account and savings account every month. Still, it hurts seeing so much of my take home pay going to the loan monster every month... Once bitcoin goes to 25k, I'll be a millionaire though so who cares anyways, amirite!?

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Tue Feb 13, 2018 11:48 am

So I have been unable to (quickly) find this info online so I am hoping y'all can help. I recently received a biglaw offer to begin following my clerkship. I just recertified by IBR last month and it was based on my clerk salary. Do I have an obligation to update my salary info when I start the gig or do I wait until I recertify next year?

ETA: this Q&A at pp. 13-14 seems to suggest no.
https://studentaid.ed.gov/sa/sites/default/files/income-driven-repayment-q-and-a.pdf

ETA (again): further reading the above Q&A leads me to:
46.What happens if my income changes significantly before the annual date when I’m
required to recertify my income?
If your income has significantly decreased or increased, you may (but are not required to) ask your
servicer to recalculate your current monthly payment amount at any time. You can do this by submitting a
new Income-Driven Repayment Plan Request and checking the box to indicate that you are requesting a
recalculation due to a change in your circumstances. You will be required to provide documentation of
your current income.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Tue Feb 20, 2018 12:54 am

Hoping to get some advice from some of the great advisors in here tailored to my situation.

Debt at Graduation (2015): $270K
Debt Now: $250K
Refi: 20-year/5.35% Fixed/$1700 per mo
Income: $210k per year

I live in Bay Area/NYC and work in biglaw. I imagine staying in biglaw for another year but hopefully not much more. Currently looking at in-house positions. I expect to take a pay cut then. SO makes about $130K working for a middle-stage startup. We have about $80K in savings and another $125K in 401ks. Recently started investing with $10K in Betterment/Wealthfront. Hoping to increase that somewhat.

I have been very risk adverse, having as much debt as I do, and hoping to eventually buy a house, likely in a high COL area. I like having the flexibility of a low monthly payment and paying excess so I can continue saving for a down payment.

Considering refi-ing now and had been pretty set on it but am getting a bit spooked thinking about losing IBR/PAYE opportunities down the road. Any idea on what I should do? I'm also considering FRB, which would presumably have better rates.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Tue Feb 20, 2018 4:16 am

Johann wrote:while im sure it feels good to be done paying loans, you missed out on about 40-50k of stock market gains (each). something to always keep in mind in being smart about diversification.


Along those lines, I'm a 2013 grad who diversified (not particularly carefully/thoughtfully). I have a medium amount of loans remaining, refi-ed at around 4% avg interest that I'm on track to pay off a couple years ahead of schedule.

My annualized return on my cash/bonds/stocks non-retirement savings has been about 8%. My annualized return on my downpayment in my home (measured in equity gained through principal payments + home appreciation) has been about 50%.

I don't think I timed any of my investments particularly well (and have been conservative, in part, because my cash/bonds/stocks savings include my e-fund)--but obviously did ok in both still, in part because the past ~5 years have been pretty good years for investing in either stock/bonds or real estate.

Judge as you will. I suspect that had I focused on just paying off my loans, the opportunity cost would have been buying my home (easily my best investment for both pecuniary and non-pecuniary reasons). No matter how you spin it, though, paying off my loans ahead of schedule has been, by a significant margin, my worst "investment."

It's also my only guaranteed "rate of return," so I don't have any regrets. I see my loans as, effectively, being a guaranteed medium-term investment with no accompanying liquidity advantage--which is partially why I still have loans left (but less than had I just paid the minimum). As I see it, paying off a 10-year loan @ 4% interest early is, effectively, like buying a 10-year CD that does not allow you to cash out early (or a [x]-year CD if you have [x] years left on your loan). That's a way better interest rate than any CDs I currently have access to -- but I'm also not generally looking to load my portfolio with zero-liquidity medium-term CDs.

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Re: Student loan payments: get advice and actual numbers here

Postby MouseHouse » Thu Feb 22, 2018 11:43 am

Hi all - hoping to get a bit of advice:

Graduated 2015 and have been working at market in NYC.

Debt: $240,000 (weighted average rate of 6.54%)
Refi Options (both fixed):

1. 7year 3.9% $3230 monthly
2. 10year 4.35% $2440.41 monthly

EDIT: First Republic is estimating 2.55% for 7y and 3.55% for 10y??? Is there any downside to FRB?

Income: $210k per year (current)
Rent: ~$2400 per month

I live in NYC and work in biglaw. I enjoy my current firm and have relative job security. I may get stir crazy in the next few years and want to move back to the West Coast, but also think I could make the switch at my current firm (a good amount of my work comes from West Coast partners).

I have about $50K in investments/savings and have been maxing the 401k since beginning work. Planning to start investing another $500 per paycheck.

I worked the IBR/PAYE/REPAYE for the first two years to get a bit of savings (the SO and I also enjoyed a couple years of traveling and living well in NYC).

I am now considering refinancing to lower the rate (also because I think I could live with the status quo for the foreseeable future).

If I did the 10year, I would plan to take the difference (in addition to the $500 per paycheck) and invest with that. The other reason I am leaning toward the 10year is that it give a bit of flexibility should life get more complicated than it currently is.

Any thoughts would be much appreciated.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Fri Feb 23, 2018 2:23 am

Those who have their loans serviced through mygreatlakes, do you just pay over the minimum and set the excess to the "automatic" allocation?

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Fri Feb 23, 2018 12:29 pm

My stats:
3rd yr associate in biglaw in secondary market. Had $15k total scholarship at T6. For my first year, I kept my federal loans, which were around 6.5-9%. Then once I realized I wasn't getting fired anytime soon, I refinanced with SoFi for a 5yr fixed rate of 3.865%. My monthly payment is $3,700, but I pay $4,300, then put a good chunk of my bonus towards them. Hoping to pay them off in another 2.5 years.

February 2016: $223k
February 2017: $199k
February 2018: $157.5k

Investments:
Maxed out 401k each year
~$11k in Wealthfront at 9.0 risk. Contribute $500 a month.
~$9k in a rainy day fun. Contribute $100/m (my first year I contributed around $600/m). Admittedly, I consider wealthfront to be my very rainy day fund, at least while the market is good.
~$10k in crypto (I sold enough to recoup my initial investment so this is more play money. Not used to calculate net worth/what mortgage i could afford/or to be actually relied on etc.)

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Fri Feb 23, 2018 1:41 pm

Anonymous User wrote:My stats:
3rd yr associate in biglaw in secondary market. Had $15k total scholarship at T6. For my first year, I kept my federal loans, which were around 6.5-9%. Then once I realized I wasn't getting fired anytime soon, I refinanced with SoFi for a 5yr fixed rate of 3.865%. My monthly payment is $3,700, but I pay $4,300, then put a good chunk of my bonus towards them. Hoping to pay them off in another 2.5 years.

February 2016: $223k
February 2017: $199k
February 2018: $157.5k

Investments:
Maxed out 401k each year
~$11k in Wealthfront at 9.0 risk. Contribute $500 a month.
~$9k in a rainy day fun. Contribute $100/m (my first year I contributed around $600/m). Admittedly, I consider wealthfront to be my very rainy day fund, at least while the market is good.
~$10k in crypto (I sold enough to recoup my initial investment so this is more play money. Not used to calculate net worth/what mortgage i could afford/or to be actually relied on etc.)


You put $10k into crypto, or you have $10k in after pulling initial money? How did you get a 3.865% rate? I am also a third year in a secondary market. Started with about $210k in loans. 7 year refi at 4.5% (payment about 3k/month). Loans down to $160k.

$30k 401K (didn't start maxing until year 2)
$50k in "other investments" ("high apy" savings account, small real estate investment)
$30k in cash
$50k in crypto (also took out initial investment, $50k is about what my "portfolio" is worth - pure gamble money at this point)

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Fri Feb 23, 2018 3:01 pm

Anonymous User wrote:
Anonymous User wrote:My stats:
3rd yr associate in biglaw in secondary market. Had $15k total scholarship at T6. For my first year, I kept my federal loans, which were around 6.5-9%. Then once I realized I wasn't getting fired anytime soon, I refinanced with SoFi for a 5yr fixed rate of 3.865%. My monthly payment is $3,700, but I pay $4,300, then put a good chunk of my bonus towards them. Hoping to pay them off in another 2.5 years.

February 2016: $223k
February 2017: $199k
February 2018: $157.5k

Investments:
Maxed out 401k each year
~$11k in Wealthfront at 9.0 risk. Contribute $500 a month.
~$9k in a rainy day fun. Contribute $100/m (my first year I contributed around $600/m). Admittedly, I consider wealthfront to be my very rainy day fund, at least while the market is good.
~$10k in crypto (I sold enough to recoup my initial investment so this is more play money. Not used to calculate net worth/what mortgage i could afford/or to be actually relied on etc.)


You put $10k into crypto, or you have $10k in after pulling initial money? How did you get a 3.865% rate? I am also a third year in a secondary market. Started with about $210k in loans. 7 year refi at 4.5% (payment about 3k/month). Loans down to $160k.

$30k 401K (didn't start maxing until year 2)
$50k in "other investments" ("high apy" savings account, small real estate investment)
$30k in cash
$50k in crypto (also took out initial investment, $50k is about what my "portfolio" is worth - pure gamble money at this point)



I have $10k after pulling initial money. My practice area deals with crypto so I wanted to mess around with it, but I don't think I've ever had more than $4,000 USD invested in it. More of a vacation slush fund than anything serious. As for the rate, I have no idea. Good credit and a five year term?

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Feb 27, 2018 6:43 pm

Anonymous User wrote:Debt at graduation in 2015: 145k (147k capitalized on repayment in Oct 2015)
Interest rates: 6.7% (blended rate)

Debt at DRB refinance in 05/2015: 145k (DRB let me refi while I was still finishing 3L without making payments until Oct)
Payment and VARIABLE interest rate: ~2600/mo at 2.48% that gradually increased to 2.84% - 5yr term
Interest paid in 2015: 2.4k (incl capitalized interest)
Interest paid in 2016: 2.7k (Jan - Sep)

Debt at First Republic refinance in 09/2016: $119k
Payment and FIXED interest rate: ~2080/mo at 1.95% - 5yr term
Interest paid in 2016: $617 (Oct - Dec)

Total Interest Paid in 2016: $3.3k
Current Balance: $111k

Planning to pay off the First Republic refi 13 months early (possibly earlier) to collect the incentive interest rebate. Using Excel IRR function, my effective interest rate from 05/2015 - 08/2020 will be 1.7% (calculation includes the rebate).


An update 13 months on:

NYC @ a bit above market
Debt at graduation (5/2015): $145k
Current balance (2/2018): $86k
Payments (FRB 5yr @ 1.95%): $2080

$70k in 401k (max out + match)
$36k in Roth (backdoor every year)
$50k in checking/savings
$102k in brokerage (contribute $3k-$5k each month, plus bonus)
$145k in 401k (from before law school)

Maybe buy a house soon. Still plan to pay off the FRB balance in Aug 2020 for the interest rebate. Maybe earlier but probably not.

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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Tue Feb 27, 2018 10:17 pm

Anonymous User wrote:Hoping to get some advice from some of the great advisors in here tailored to my situation.

Debt at Graduation (2015): $270K
Debt Now: $250K
Refi: 20-year/5.35% Fixed/$1700 per mo
Income: $210k per year

I live in Bay Area/NYC and work in biglaw. I imagine staying in biglaw for another year but hopefully not much more. Currently looking at in-house positions. I expect to take a pay cut then. SO makes about $130K working for a middle-stage startup. We have about $80K in savings and another $125K in 401ks. Recently started investing with $10K in Betterment/Wealthfront. Hoping to increase that somewhat.

I have been very risk adverse, having as much debt as I do, and hoping to eventually buy a house, likely in a high COL area. I like having the flexibility of a low monthly payment and paying excess so I can continue saving for a down payment.

Considering refi-ing now and had been pretty set on it but am getting a bit spooked thinking about losing IBR/PAYE opportunities down the road. Any idea on what I should do? I'm also considering FRB, which would presumably have better rates.

I would PAYE and view it as a 8% tax for 20 years. 5.35% is hardly better than your current rates. At least kick the can down the road a couple more years until you know what job you end up in for a long term career.

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Re: Student loan payments: get advice and actual numbers here

Postby SowhatsNU » Tue Mar 06, 2018 2:55 pm

LazyLASA wrote:You can still see the rates...Click on the "2" after 1.95%. They went up for everything that wasn't the 5 year loan.


They raised their rate- not sure what 5 year is but 10 year is now 3.35%, which is a .75% hike- is this still far and away the best option tho?

2017 Grad: 190k debt
Biglaw NYC: 180k
Rent: 3200

Should I refinance or just do REPAYE? If it matters I plan on going in-house in a low COL state so my income would prob go down considerably later on in life.

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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Tue Mar 06, 2018 11:13 pm

i would REPAYE. a 10 year refi with 3200/month in rent is gonna be tight. 10 year 3.35 compared to 25 year 4.35% or whatever your effective rate on REPAYE are both pretty consistent with market. which means neither is that compelling over the other. so yeah, id stay with the one then that has debt forgiveness and tons of protections attached, which is not market. i.e., REPAYE is the better deal.

fwiw, this is my new philosophy. i think all new lawyers who are approaching or>200k in debt regardless of outcome (i.e., even those in biglaw), should do one of these plans for at least 2 years.

Do you have govt loans and not refinancing, you should follow one of these plans:
(1) PAYE: max cash flow, invest in SP500 index, max401k and HSA to lower payments, ride out 20 years of forgiveness and maybe tax bomb. (If you want to make some options on tax bomb, we can prolly make a deal in 5 years once I have more money).
(2) do you want to eventually pay down your loan and are throwing tons of cash but don’t want to lose fed gov protections in case you get biglaw canned? REPAYE: file for repaye with stub year income. Your monthly payment should be like $350ish (I think, ballpark). HALF of Your monthly interest accrued above your payment (350) will be paid by the fed gov. Eg you accrue 1k interest per month on 200k of debt (6%), that means 650 of accrued interest is not paid. Gov knocks your interest down 325. You make a payment beyond your loan requirement to whatever your hearts desire in addition. Over the course of the year, your 12k in interest (6%) has been subsidized by the fed gov to the tune of $3900 (1.95%) making your effective interest rate (4.05%). Now what does FRB really have on you?!?!

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Fri Mar 09, 2018 2:34 pm

I graduated from a T14 in May 2016. I passed a bar and started work in a litigation firm in August 2016, where I still am. My current salary is $120k with $5-10k bonus.

I want to move out of litigation and into a career with less and more consistent working hours (I plan on starting a family soon). I also value stability. Therefore, I am looking at federal jobs. I don't have the years or type of experience that most federal openings require. The only job I've gotten a callback for is a GS 11 position. Taking a GS 11 position would be quite a pay cut (although the step would matter greatly).

My current loan balance is ~118k @ 6%. I am currently making $1,300/mo payments and have about 8.5 years left on the standard repayment plan.

The questions I am asking myself are:
- Can I suck it up for 8-9 more years until I get this paid off? But by then, will I have too much experience in my niche field to land a federal job?
- If I take the GS 11 job, will I have enough money to live off of and save securely? GS 11 + $1,300/mo in loan payments is very tough. My take home net would be slim.
- If I take the GS 11 job, would it make sense to switch to REPAYE and pursue PSLF? On one hand, it would alleviate the immediate financial stress and I would pay less over time. But, I run the risk of PSLF being cancelled, or losing my job, etc etc and having a large loan balance waiting. I would have to pay taxes on a significant sum of money. Which means that I would have to start a side-fund for that, which is essentially an additional monthly loan payment. Additionally, it would take 10 years. So instead of 8.5 years remaining (currently), it would add about 2 more years to my debt life.

I'm looking for general thoughts and would appreciate any input. Thank you.

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Re: Student loan payments: get advice and actual numbers here

Postby boredtodeath » Fri Mar 09, 2018 3:39 pm

Anonymous User wrote:I graduated from a T14 in May 2016. I passed a bar and started work in a litigation firm in August 2016, where I still am. My current salary is $120k with $5-10k bonus.

I want to move out of litigation and into a career with less and more consistent working hours (I plan on starting a family soon). I also value stability. Therefore, I am looking at federal jobs. I don't have the years or type of experience that most federal openings require. The only job I've gotten a callback for is a GS 11 position. Taking a GS 11 position would be quite a pay cut (although the step would matter greatly).

My current loan balance is ~118k @ 6%. I am currently making $1,300/mo payments and have about 8.5 years left on the standard repayment plan.

The questions I am asking myself are:
- Can I suck it up for 8-9 more years until I get this paid off? But by then, will I have too much experience in my niche field to land a federal job?
- If I take the GS 11 job, will I have enough money to live off of and save securely? GS 11 + $1,300/mo in loan payments is very tough. My take home net would be slim.
- If I take the GS 11 job, would it make sense to switch to REPAYE and pursue PSLF? On one hand, it would alleviate the immediate financial stress and I would pay less over time. But, I run the risk of PSLF being cancelled, or losing my job, etc etc and having a large loan balance waiting. I would have to pay taxes on a significant sum of money. Which means that I would have to start a side-fund for that, which is essentially an additional monthly loan payment. Additionally, it would take 10 years. So instead of 8.5 years remaining (currently), it would add about 2 more years to my debt life.

I'm looking for general thoughts and would appreciate any input. Thank you.


If you land the Federal govt job you should absolutely switch to PAYE/REPAYE. They can't retroactively cancel PSLF. If you lose the Federal govt job (which I've heard is very hard to do), you just need to get any other government job to continue to qualify for PSLF (you can even go back to the private sector for a short time until you find a government job again. It's just 10 years of repayment while working in govt, not 10 CONSECUTIVE years). The forgiveness under PSLF is NOT taxable.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Fri Mar 09, 2018 3:43 pm

boredtodeath wrote:
Anonymous User wrote:I graduated from a T14 in May 2016. I passed a bar and started work in a litigation firm in August 2016, where I still am. My current salary is $120k with $5-10k bonus.

I want to move out of litigation and into a career with less and more consistent working hours (I plan on starting a family soon). I also value stability. Therefore, I am looking at federal jobs. I don't have the years or type of experience that most federal openings require. The only job I've gotten a callback for is a GS 11 position. Taking a GS 11 position would be quite a pay cut (although the step would matter greatly).

My current loan balance is ~118k @ 6%. I am currently making $1,300/mo payments and have about 8.5 years left on the standard repayment plan.

The questions I am asking myself are:
- Can I suck it up for 8-9 more years until I get this paid off? But by then, will I have too much experience in my niche field to land a federal job?
- If I take the GS 11 job, will I have enough money to live off of and save securely? GS 11 + $1,300/mo in loan payments is very tough. My take home net would be slim.
- If I take the GS 11 job, would it make sense to switch to REPAYE and pursue PSLF? On one hand, it would alleviate the immediate financial stress and I would pay less over time. But, I run the risk of PSLF being cancelled, or losing my job, etc etc and having a large loan balance waiting. I would have to pay taxes on a significant sum of money. Which means that I would have to start a side-fund for that, which is essentially an additional monthly loan payment. Additionally, it would take 10 years. So instead of 8.5 years remaining (currently), it would add about 2 more years to my debt life.

I'm looking for general thoughts and would appreciate any input. Thank you.


If you land the Federal govt job you should absolutely switch to PAYE/REPAYE. They can't retroactively cancel PSLF. If you lose the Federal govt job (which I've heard is very hard to do), you just need to get any other government job to continue to qualify for PSLF (you can even go back to the private sector for a short time until you find a government job again. It's just 10 years of repayment while working in govt, not 10 CONSECUTIVE years). The forgiveness under PSLF is NOT taxable.


Interesting. The bolded is contrary to what I've read. I'll have to do some more research. Do you have sources for that? As far as I understood, it had to be 10 consecutive years of payments while working a federal job. And I was informed by someone that PSLF IS taxable. Hmm.

Under what you're saying, it could go something like this? (year/qualifying year)
1/1 - Fed
2/2 - Fed
3/3 - Fed
4/4 - Fed
5/- - Private
6/- - Private
7/5 - Fed
8/6 - Fed
9/7 - Fed
10/8 - Fed
11/9 - Fed
12/10 - Fed (payments end)

?

EDIT: You are correct! Excellent!

re loan amounts forgiven under PSLF considered taxable by the IRS?
No. According to the Internal Revenue Service (IRS), student loan amounts forgiven under PSLF are not considered income for tax purposes. For more information, check with the IRS or a tax advisor.

Do I need to make consecutive payments to qualify for PSLF?
No. The 120 payments do not have to be consecutive payments. For example, if you have a period of employment with a nonqualifying employer, you won’t lose credit for prior qualifying payments you made. However, a payment can be counted only if you are employed full-time by a qualifying employer at the time you make the payment.

https://studentaid.ed.gov/sa/repay-loan ... g-payments

My main concern, then, is that my loan balance would grow outrageously large and somehow I couldn't get or keep a federal job for 120 payments. And the chance that the program is changed without grandfathering. Well, I think those are acceptable risks. I think I will take the job, consolidate, and enter PSLF.

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Re: Student loan payments: get advice and actual numbers here

Postby boredtodeath » Fri Mar 09, 2018 3:51 pm

Anonymous User wrote:
boredtodeath wrote:
Anonymous User wrote:I graduated from a T14 in May 2016. I passed a bar and started work in a litigation firm in August 2016, where I still am. My current salary is $120k with $5-10k bonus.

I want to move out of litigation and into a career with less and more consistent working hours (I plan on starting a family soon). I also value stability. Therefore, I am looking at federal jobs. I don't have the years or type of experience that most federal openings require. The only job I've gotten a callback for is a GS 11 position. Taking a GS 11 position would be quite a pay cut (although the step would matter greatly).

My current loan balance is ~118k @ 6%. I am currently making $1,300/mo payments and have about 8.5 years left on the standard repayment plan.

The questions I am asking myself are:
- Can I suck it up for 8-9 more years until I get this paid off? But by then, will I have too much experience in my niche field to land a federal job?
- If I take the GS 11 job, will I have enough money to live off of and save securely? GS 11 + $1,300/mo in loan payments is very tough. My take home net would be slim.
- If I take the GS 11 job, would it make sense to switch to REPAYE and pursue PSLF? On one hand, it would alleviate the immediate financial stress and I would pay less over time. But, I run the risk of PSLF being cancelled, or losing my job, etc etc and having a large loan balance waiting. I would have to pay taxes on a significant sum of money. Which means that I would have to start a side-fund for that, which is essentially an additional monthly loan payment. Additionally, it would take 10 years. So instead of 8.5 years remaining (currently), it would add about 2 more years to my debt life.

I'm looking for general thoughts and would appreciate any input. Thank you.


If you land the Federal govt job you should absolutely switch to PAYE/REPAYE. They can't retroactively cancel PSLF. If you lose the Federal govt job (which I've heard is very hard to do), you just need to get any other government job to continue to qualify for PSLF (you can even go back to the private sector for a short time until you find a government job again. It's just 10 years of repayment while working in govt, not 10 CONSECUTIVE years). The forgiveness under PSLF is NOT taxable.


Interesting. The bolded is contrary to what I've read. I'll have to do some more research. Do you have sources for that? As far as I understood, it had to be 10 consecutive years of payments while working a federal job. And I was informed by someone that PSLF IS taxable. Hmm.

Under what you're saying, it could go something like this? (year/qualifying year)
1/1 - Fed
2/2 - Fed
3/3 - Fed
4/4 - Fed
5/- - Private
6/- - Private
7/5 - Fed
8/6 - Fed
9/7 - Fed
10/8 - Fed
11/9 - Fed
12/10 - Fed (payments end)

?


Yup, exactly. I saw your post in the other thread so I see you've been to the IRS website. I actually had the same misconception about the forgiveness being taxable (I thought it was the same as PAYE) but it's not. Which is a wild deal for anyone with a large loan balance and any interest in working for govt.

User avatar
BruceWayne

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Posts: 2034
Joined: Sat Aug 14, 2010 9:36 pm

Re: Student loan payments: get advice and actual numbers here

Postby BruceWayne » Fri Mar 09, 2018 3:58 pm

Anonymous User wrote:
boredtodeath wrote:
Anonymous User wrote:I graduated from a T14 in May 2016. I passed a bar and started work in a litigation firm in August 2016, where I still am. My current salary is $120k with $5-10k bonus.

I want to move out of litigation and into a career with less and more consistent working hours (I plan on starting a family soon). I also value stability. Therefore, I am looking at federal jobs. I don't have the years or type of experience that most federal openings require. The only job I've gotten a callback for is a GS 11 position. Taking a GS 11 position would be quite a pay cut (although the step would matter greatly).

My current loan balance is ~118k @ 6%. I am currently making $1,300/mo payments and have about 8.5 years left on the standard repayment plan.

The questions I am asking myself are:
- Can I suck it up for 8-9 more years until I get this paid off? But by then, will I have too much experience in my niche field to land a federal job?
- If I take the GS 11 job, will I have enough money to live off of and save securely? GS 11 + $1,300/mo in loan payments is very tough. My take home net would be slim.
- If I take the GS 11 job, would it make sense to switch to REPAYE and pursue PSLF? On one hand, it would alleviate the immediate financial stress and I would pay less over time. But, I run the risk of PSLF being cancelled, or losing my job, etc etc and having a large loan balance waiting. I would have to pay taxes on a significant sum of money. Which means that I would have to start a side-fund for that, which is essentially an additional monthly loan payment. Additionally, it would take 10 years. So instead of 8.5 years remaining (currently), it would add about 2 more years to my debt life.

I'm looking for general thoughts and would appreciate any input. Thank you.


If you land the Federal govt job you should absolutely switch to PAYE/REPAYE. They can't retroactively cancel PSLF. If you lose the Federal govt job (which I've heard is very hard to do), you just need to get any other government job to continue to qualify for PSLF (you can even go back to the private sector for a short time until you find a government job again. It's just 10 years of repayment while working in govt, not 10 CONSECUTIVE years). The forgiveness under PSLF is NOT taxable.


Interesting. The bolded is contrary to what I've read. I'll have to do some more research. Do you have sources for that? As far as I understood, it had to be 10 consecutive years of payments while working a federal job. And I was informed by someone that PSLF IS taxable. Hmm.

Under what you're saying, it could go something like this? (year/qualifying year)
1/1 - Fed
2/2 - Fed
3/3 - Fed
4/4 - Fed
5/- - Private
6/- - Private
7/5 - Fed
8/6 - Fed
9/7 - Fed
10/8 - Fed
11/9 - Fed
12/10 - Fed (payments end)

?

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service/questions

"Are loan amounts forgiven under PSLF considered taxable by the IRS?
No
. According to the Internal Revenue Service (IRS), student loan amounts forgiven under PSLF are not considered income for tax purposes. For more information, check with the IRS or a tax advisor."

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service/questions
Do I need to make consecutive payments to qualify for PSLF?
No.
The 120 payments do not have to be consecutive payments. For example, if you have a period of employment with a nonqualifying employer, you won’t lose credit for prior qualifying payments you made. However, a payment can be counted only if you are employed full-time by a qualifying employer at the time you make the payment.

Anonymous User
Posts: 326556
Joined: Tue Aug 11, 2009 9:32 am

Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Sat Mar 17, 2018 12:01 pm

Would appreciate thoughts on the following:
Debt: 190k
Income: 180k + bonus
Monthly payment on standard plan: ~2150. Loans are all federal, so range between 5-7%

Would it make sense to pick a plan with the lowest monthly payments possible (so longest term), and then plow in my extra cash to the highest interest loans?

whsy

Bronze
Posts: 145
Joined: Mon Nov 05, 2012 4:23 pm

Re: Student loan payments: get advice and actual numbers here

Postby whsy » Sat Mar 17, 2018 1:42 pm

SmokeytheBear wrote:Just plugged in the numbers into HRBlock only to find out I’m getting hit with the AMT. FML


Why not refinance?

Anonymous User
Posts: 326556
Joined: Tue Aug 11, 2009 9:32 am

Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Sat Mar 17, 2018 4:47 pm

whsy wrote:
SmokeytheBear wrote:Just plugged in the numbers into HRBlock only to find out I’m getting hit with the AMT. FML


Why not refinance?


Federal loans have better protections.



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