Student loan payments: Actual numbers

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Mon Apr 03, 2017 3:06 pm

I know the OP skewed the answers by not mentioning PAYE (not that r/pf would have gone for it), but here is the general r/pf take on biglawyers with bigdebt: https://www.reddit.com/r/personalfinanc ... nd_making/

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Mon Apr 03, 2017 4:23 pm

bk1 wrote:I know the OP skewed the answers by not mentioning PAYE (not that r/pf would have gone for it), but here is the general r/pf take on biglawyers with bigdebt: https://www.reddit.com/r/personalfinanc ... nd_making/

Haven't read it all but I don't understand comments like this:

The peace of mind and liquidity that paying off loans that cannot be discharged in bankruptcy can't be overrated.


given that getting to meaningful liquidity after paying off 300k would take many years.

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swampthang
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Re: Student loan payments: Actual numbers

Postby swampthang » Mon Apr 03, 2017 4:35 pm

Tiago Splitter wrote:
bk1 wrote:I know the OP skewed the answers by not mentioning PAYE (not that r/pf would have gone for it), but here is the general r/pf take on biglawyers with bigdebt: https://www.reddit.com/r/personalfinanc ... nd_making/

Haven't read it all but I don't understand comments like this:

The peace of mind and liquidity that paying off loans that cannot be discharged in bankruptcy can't be overrated.


given that getting to meaningful liquidity after paying off 300k would take many years.


Yeah, wouldn't liquidity be 1) refinancing to a low rate, 2) making those minimum payments while maxing your 401(k), etc., and 3) stockpiling cash, i.e., liquidity? A paid off loan is effectively an illiquid asset. Debt paid off and $0 cash is less liquid than $100k debt and $50k cash.

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Mon Apr 03, 2017 9:12 pm

Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Apr 04, 2017 9:36 am

Anonymous User wrote:Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?


I'll start off with a disclaimer that I'm not the not the expert that many in here are so if people correct me they are likely right, not me.

Firstly, how is your soon-to-be spouse PLSF eligible if they are going to be earning 175K? That's a hell of a gig.

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Tue Apr 04, 2017 11:42 am

Anonymous User wrote:I'll start off with a disclaimer that I'm not the not the expert that many in here are so if people correct me they are likely right, not me.

Firstly, how is your soon-to-be spouse PLSF eligible if they are going to be earning 175K? That's a hell of a gig.

I think they meant she is currently making PSLF-eligible payments. But your question does raise the point that you'd be hard-pressed to find any PSLF-eligible position with a salary of $175k.

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Tue Apr 04, 2017 11:49 am

Anonymous User wrote:Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?

I don't really know what anyone here can say to help you, but since I have free time and access to Google, here is some basic information for you.

As it stands, to pay off $278k in 10 years you're going to be looking at a $3200/month standard repayment.

On PAYE, with a married combined income of $120k, your repayment obligation is $800/month. Under PAYE, you're likely to pay less overall than if you paid it off under the standard repayment. (800*12*20)

On PAYE, with a married combined income of $245k, your repayment obligation is $1850/month. Under PAYE, you're likely to pay more overall than if you paid it off under the standard repayment. (1850*12*20)

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XxSpyKEx
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Re: Student loan payments: Actual numbers

Postby XxSpyKEx » Tue Apr 04, 2017 12:30 pm

Nebby wrote:
Anonymous User wrote:Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?

I don't really know what anyone here can say to help you, but since I have free time and access to Google, here is some basic information for you.

As it stands, to pay off $278k in 10 years you're going to be looking at a $3200/month standard repayment.

On PAYE, with a married combined income of $120k, your repayment obligation is $800/month. Under PAYE, you're likely to pay less overall than if you paid it off under the standard repayment. (800*12*20)

On PAYE, with a married combined income of $245k, your repayment obligation is $1850/month. Under PAYE, you're likely to pay more overall than if you paid it off under the standard repayment. (1850*12*20)


You're ignoring the tax bomb at year 20...

RaceJudicata
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Re: Student loan payments: Actual numbers

Postby RaceJudicata » Tue Apr 04, 2017 12:37 pm

XxSpyKEx wrote:
Nebby wrote:
Anonymous User wrote:Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?

I don't really know what anyone here can say to help you, but since I have free time and access to Google, here is some basic information for you.

As it stands, to pay off $278k in 10 years you're going to be looking at a $3200/month standard repayment.

On PAYE, with a married combined income of $120k, your repayment obligation is $800/month. Under PAYE, you're likely to pay less overall than if you paid it off under the standard repayment. (800*12*20)

On PAYE, with a married combined income of $245k, your repayment obligation is $1850/month. Under PAYE, you're likely to pay more overall than if you paid it off under the standard repayment. (1850*12*20)


You're ignoring the tax bomb at year 20...


Yeah, but it seems pretty unlikely that OP can afford the standard repayment based on his/his wife's salary... so...

ETA: At least as it currently stands ... the salary bump over the next 5 years seems pretty speculative.

ballouttacontrol
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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Tue Apr 04, 2017 1:25 pm

XxSpyKEx wrote:
Nebby wrote:
Anonymous User wrote:Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?

I don't really know what anyone here can say to help you, but since I have free time and access to Google, here is some basic information for you.

As it stands, to pay off $278k in 10 years you're going to be looking at a $3200/month standard repayment.

On PAYE, with a married combined income of $120k, your repayment obligation is $800/month. Under PAYE, you're likely to pay less overall than if you paid it off under the standard repayment. (800*12*20)

On PAYE, with a married combined income of $245k, your repayment obligation is $1850/month. Under PAYE, you're likely to pay more overall than if you paid it off under the standard repayment. (1850*12*20)


You're ignoring the tax bomb at year 20...


Also ignoring NPV of $. A $1850 payment in 20 yrs under PAYE isn't in equal dollars to a payment of $3200 in yrs 0-9.

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Tue Apr 04, 2017 1:38 pm

Yeah this is all proof of why I said there's not much we can do it help with the information provided

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XxSpyKEx
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Re: Student loan payments: Actual numbers

Postby XxSpyKEx » Tue Apr 04, 2017 2:19 pm

ballouttacontrol wrote:
XxSpyKEx wrote:
Nebby wrote:
Anonymous User wrote:Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?

I don't really know what anyone here can say to help you, but since I have free time and access to Google, here is some basic information for you.

As it stands, to pay off $278k in 10 years you're going to be looking at a $3200/month standard repayment.

On PAYE, with a married combined income of $120k, your repayment obligation is $800/month. Under PAYE, you're likely to pay less overall than if you paid it off under the standard repayment. (800*12*20)

On PAYE, with a married combined income of $245k, your repayment obligation is $1850/month. Under PAYE, you're likely to pay more overall than if you paid it off under the standard repayment. (1850*12*20)


You're ignoring the tax bomb at year 20...


Also ignoring NPV of $. A $1850 payment in 20 yrs under PAYE isn't in equal dollars to a payment of $3200 in yrs 0-9.


Yup (to both of your posts).

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Tue Apr 04, 2017 4:11 pm

Nebby wrote:Yeah this is all proof of why I said there's not much we can do it help with the information provided

You can calculate NPV of both options with the information provided. I'm too lazy to, but it's definitely possible.

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Tue Apr 04, 2017 4:17 pm

Danger Zone wrote:
Nebby wrote:Yeah this is all proof of why I said there's not much we can do it help with the information provided

You can calculate NPV of both options with the information provided. I'm too lazy to, but it's definitely possible.

Maybe someone with more will than us can do it

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Tue Apr 04, 2017 4:19 pm

Just plug in my personal discount rate of 17% and you'll be down with PAYE every time.

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Mlk&Ckies
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Re: Student loan payments: Actual numbers

Postby Mlk&Ckies » Wed Apr 05, 2017 8:00 am

Tiago Splitter wrote:Just plug in my personal discount rate of 17% and you'll be down with PAYE every time.

:lol:

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Sat Apr 08, 2017 5:17 pm

3L here, looking for financial advice.

$130,000 in debt upon graduation at like 5.7% interest combined (all federal loans from UG/LS)
Should have zero credit card debt
Clerking twice (think Charlotte/Tampa/St Louis and then DC/NY/San Fran)
Going to DC biglaw after that

My main priority is staying at or under $130k debt between graduation and returning to biglaw, as I figure I could dump like ~$40k in clerkship bonus money post-tax (fingers crossed) into my loans and come in under 100k. I'm aiming to pay everything off.

What should I do? Ideally, I'd like to make payments for two years that will (a) not increase the principal and (b) maybe decrease the principal by a tiny bit, though I'm much less concerned with the latter. Idk which plan I should be learning more about/utilitizing in that case: REPAYE/PAYE (what is the difference)/IBR/ICR (?)/Standard...etc

studentloans.gov is a p shitty website. Thanks in advance!

(note: financially illiterate)

ballouttacontrol
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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Sun Apr 09, 2017 11:34 pm

REPAYE because it pays 50% of your unpaid interest. Once u start making fat stacks of cash in biglaw refinance

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Johann
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Re: Student loan payments: Actual numbers

Postby Johann » Sun Apr 09, 2017 11:45 pm

Tiago Splitter wrote:
bk1 wrote:I know the OP skewed the answers by not mentioning PAYE (not that r/pf would have gone for it), but here is the general r/pf take on biglawyers with bigdebt: https://www.reddit.com/r/personalfinanc ... nd_making/

Haven't read it all but I don't understand comments like this:

The peace of mind and liquidity that paying off loans that cannot be discharged in bankruptcy can't be overrated.


given that getting to meaningful liquidity after paying off 300k would take many years.

also dumb because they can be discharged in other ways

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Johann
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Re: Student loan payments: Actual numbers

Postby Johann » Sun Apr 09, 2017 11:51 pm

Anonymous User wrote:Some advice would be helpful here:

Debt - 198K
Income - 70K

Not PSLF eligible. I am getting married next year, and my spouse has about 80K debt and makes about 50K, but she is PSLF eligible. What's the best way to go about it paying off some of the debt?

Background: I am finishing my LL.M. next month, and will start working in September.

Also want to add, my soon to be spouse's salary should increase to about 175K in the next 5 years (going to graduate school and landing a much better job) how will this impact a PAYE plan, or am I able to change my plan type later on?


if you get married there will be pretty big consequences of her having to cover your debt payments. might want to look into a civil union rather than marriage if youre that concerned.

but mainly, shes not gonna hit pslf forgiveness after 5 years and then her salary increase will mean shes paying all of her debt down or very close to it. then shell be responsible for your debt if youre married or youll haveto file separately assuming doing inocme based repayment plan.

you can change your PAYE plan if that time comes. if yall are doing lots of school right now, best thing maybe just using some deferments and just moving the loan payments to next to nothing since it sounds like salary will be going up a lot later. otherwise, id just ride PAYE and file separately taxes at a minimum (but id probably consider civil union and no marriage).

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Johann
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Re: Student loan payments: Actual numbers

Postby Johann » Sun Apr 09, 2017 11:55 pm

Tiago Splitter wrote:Just plug in my personal discount rate of 17% and you'll be down with PAYE every time.


the only way the market doesnt hit 17% returns is with bernie as president which means debt forgiveness. basically been my reasoning so far.

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Johann
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Re: Student loan payments: Actual numbers

Postby Johann » Sun Apr 09, 2017 11:57 pm

ballouttacontrol wrote:REPAYE because it pays 50% of your unpaid interest. Once u start making fat stacks of cash in biglaw refinance

Anonymous User wrote:3L here, looking for financial advice.

$130,000 in debt upon graduation at like 5.7% interest combined (all federal loans from UG/LS)
Should have zero credit card debt
Clerking twice (think Charlotte/Tampa/St Louis and then DC/NY/San Fran)
Going to DC biglaw after that

My main priority is staying at or under $130k debt between graduation and returning to biglaw, as I figure I could dump like ~$40k in clerkship bonus money post-tax (fingers crossed) into my loans and come in under 100k. I'm aiming to pay everything off.

What should I do? Ideally, I'd like to make payments for two years that will (a) not increase the principal and (b) maybe decrease the principal by a tiny bit, though I'm much less concerned with the latter. Idk which plan I should be learning more about/utilitizing in that case: REPAYE/PAYE (what is the difference)/IBR/ICR (?)/Standard...etc

studentloans.gov is a p shitty website. Thanks in advance!

(note: financially illiterate)

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

Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Apr 12, 2017 12:31 pm

Alright, spouse and I some life and job changes in circumstance and am hoping someone might be able to help us navigate.

Me: biglaw --> now public interest, no loans left (aggressively paid them down), ~60k salary
Spouse: PSLF-eligible job making $40k the next few years, then bumps up to $90k (still PSLF-eligible). He's got about $75k left on his loans.

Complicating factors: we are in a high COL area and have a daycare-aged kid. Joint income is thus around $100k and with rent and daycare, we are trying to figure out how we can make his PSLF payments as low as possible while we make it work the next couple years. We filed jointly this year, and I've heard varying opinions on whether married filing separately would help/hurt/not affect our situation.

Alternatively, don't even know if it's proper to ask this so please ignore if that's the case, but are there companies/consultants (?) that will look at all your numbers for you and determine which plan/strategy is the best? With PAYE, REPAYE, IBR I am pretty lost...

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Apr 12, 2017 12:42 pm

Hey y'all. Trying to start figuring out the best approach to paying off loans as soon as the grace period ends. Married, no kids (but ideally 5 years from now we want to start trying), high COL area, small emergency fund but not assets, leased car, both have debt due to grad programs. Any advice/info would be greatly appreciated.

Me: roughly 115k all grad loans, biglaw market paying
SO: roughly 100k (22 UG, 78 grad), will be teacher making about 60K (but wants to be stay-at-home for first few years when kids happen so filing separately to get PSLF probably won't work)

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Wed Apr 12, 2017 12:57 pm

Anonymous User wrote:Hey y'all. Trying to start figuring out the best approach to paying off loans as soon as the grace period ends. Married, no kids (but ideally 5 years from now we want to start trying), high COL area, small emergency fund but not assets, leased car, both have debt due to grad programs. Any advice/info would be greatly appreciated.

Me: roughly 115k all grad loans, biglaw market paying
SO: roughly 100k (22 UG, 78 grad), will be teacher making about 60K (but wants to be stay-at-home for first few years when kids happen so filing separately to get PSLF probably won't work)

You could probably pay it all off in 5 years if you contributed ~$4k a month and she contributed ~$800 a month. Pay down the highest interest rates first




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