Student loan payments: Actual numbers

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Fri Mar 10, 2017 10:50 am

Lol dude

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Fri Mar 10, 2017 10:57 am

No point in piling on to him now that it's done and nothing can change.

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Fri Mar 10, 2017 2:13 pm

Whatever. One more horror story to add ITT in about three years

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Fri Mar 10, 2017 2:32 pm

The thing is 0ls don't get it. I was the same, just eager to go to top schools for any $$$ because until repayment debt doesnt seem real. Fast forward three years and with six figures in debt and in biglaw.... now, too late, I get why practicing lawyers urge 0ls to take the money and never look back. Sigh

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Mon Mar 13, 2017 2:54 pm

Uhhhh so yeah I am exactly that dude except 3 years later. It sucks. Here's where I'm at:

Debt: $255,000.00
Payments: $1,817.50 on the 30-year payment plan (I switched to 30-year when I was paying down CC debt). It's $3,000.00 on the 10-year. Not sure which plan I should be doing now that my CC debt is paid off (see below).
Income: $180,000.00. Probably won't hit hours, but too early to say on the bonus.
Plan: Currently the 30-year, but I'm not sure how hard I should be hitting this debt.

I'm maxing out my 401k and HSA like I learned in the other thread. I otherwise currently have about $8,000.00 invested (4.5k in an old retirement account; 3.5k in individual stocks in an e-trade account that's now locked down since I started BigLaw and can't sell without filling out forms). Recently paid off about 20,000.00 of CC debt and am now paying off the balance every month.

I don't know how long I'll survive in BigLaw. Does anyone have any recommendations on how I should approach the debt?

To that 0L, having this much debt is fucking terrible. I thought the same way you did 4 years ago. Don't do it. Go to Cornell or something for cheap.

albanach
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Re: Student loan payments: Actual numbers

Postby albanach » Mon Mar 13, 2017 3:30 pm

Npret wrote:I guess my thought was the people paying $4000 were paying at a much higher rate to be finished with their loans. I didn't think of people paying that much for 10 years.


Perhaps, but they're also getting lockstep increases so long as they stay in BigLaw.

If you can manage $48k in your first year, and live like that through five years (and not be fired) then you'd have an extra $100k ish after taxes on top of your five years @ 48k.

albanach
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Re: Student loan payments: Actual numbers

Postby albanach » Mon Mar 13, 2017 3:31 pm

Npret wrote:I guess my thought was the people paying $4000 were paying at a much higher rate to be finished with their loans. I didn't think of people paying that much for 10 years.


Perhaps, but they're also getting lockstep increases so long as they stay in BigLaw.

If you can manage $48k in your first year, and live like that through five years (and not be fired) then you'd have an extra $100k ish after taxes on top of your five years @ 48k.

That still leaves you your bonuses so you should have a net increase any year bonuses are paid out.

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Mon Mar 13, 2017 3:52 pm

Anonymous User wrote:Uhhhh so yeah I am exactly that dude except 3 years later. It sucks. Here's where I'm at:

Debt: $255,000.00
Payments: $1,817.50 on the 30-year payment plan (I switched to 30-year when I was paying down CC debt). It's $3,000.00 on the 10-year. Not sure which plan I should be doing now that my CC debt is paid off (see below).
Income: $180,000.00. Probably won't hit hours, but too early to say on the bonus.
Plan: Currently the 30-year, but I'm not sure how hard I should be hitting this debt.

I'm maxing out my 401k and HSA like I learned in the other thread. I otherwise currently have about $8,000.00 invested (4.5k in an old retirement account; 3.5k in individual stocks in an e-trade account that's now locked down since I started BigLaw and can't sell without filling out forms). Recently paid off about 20,000.00 of CC debt and am now paying off the balance every month.

I don't know how long I'll survive in BigLaw. Does anyone have any recommendations on how I should approach the debt?

To that 0L, having this much debt is fucking terrible. I thought the same way you did 4 years ago. Don't do it. Go to Cornell or something for cheap.

There's really three options here (for an extended discussion of the risks/benefits of these, see the discussion starting here: viewtopic.php?f=10&t=183509&start=2000#p9837215):

  • Refinance - get on private loans with a low interest rate.
  • Fed Loans - stay on fed loans, do 10 year or so plan.
  • PAYE/IBR/etc - (1) reduce your AGI as much as you can, (2) don't pay more than required, (3) save/invest any money you otherwise would have paid towards loans, and (4) hope the tax bomb goes away or use the invested money to pay it off.

The benefit of fed loans is that if you lose/quit your high paying job, you can reduce payments via PAYE/IBR/etc. PAYE/IBR/etc may give you the highest return on your money. Refinancing is the riskiest in the near term (because it's harder to deal with losing your job), but it has the benefit of getting rid of your loans sooner. You'll pay less refinancing than just a regular fed loan plan, but potentially more than PAYE/IBR/etc.

It really comes down to what are your preferences and what risks are you okay with. Fed loans via regular repayment may be the safest plan, but it's also the most expensive. PAYE/IBR/etc may give you the best return, but it requires loans hanging over your head for 20-25 years. Refinancing may get rid of loans the fastest, but you risk losing your job before your balance becomes manageable.

Relatedly, I'd say the most important thing for you (which it seems like you've already done) is making sure you've fixed whatever issue in budgeting was causing you to take out CC debt.

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Johann
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Re: Student loan payments: Actual numbers

Postby Johann » Mon Mar 13, 2017 8:51 pm

Anonymous User wrote:Uhhhh so yeah I am exactly that dude except 3 years later. It sucks. Here's where I'm at:

Debt: $255,000.00
Payments: $1,817.50 on the 30-year payment plan (I switched to 30-year when I was paying down CC debt). It's $3,000.00 on the 10-year. Not sure which plan I should be doing now that my CC debt is paid off (see below).
Income: $180,000.00. Probably won't hit hours, but too early to say on the bonus.
Plan: Currently the 30-year, but I'm not sure how hard I should be hitting this debt.

I'm maxing out my 401k and HSA like I learned in the other thread. I otherwise currently have about $8,000.00 invested (4.5k in an old retirement account; 3.5k in individual stocks in an e-trade account that's now locked down since I started BigLaw and can't sell without filling out forms). Recently paid off about 20,000.00 of CC debt and am now paying off the balance every month.

I don't know how long I'll survive in BigLaw. Does anyone have any recommendations on how I should approach the debt?

To that 0L, having this much debt is fucking terrible. I thought the same way you did 4 years ago. Don't do it. Go to Cornell or something for cheap.


PAYE; case closed

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El Pollito
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Re: Student loan payments: Actual numbers

Postby El Pollito » Mon Mar 13, 2017 11:04 pm

lol my credit karma score was off by 62 points so not so sure about that refi action anymore

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Mon Mar 13, 2017 11:17 pm

El Pollito wrote:lol my credit karma score was off by 62 points so not so sure about that refi action anymore

You mean it took a hit following refi? Mine did too but bounced back in 3 to 4 months

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El Pollito
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Re: Student loan payments: Actual numbers

Postby El Pollito » Tue Mar 14, 2017 12:51 am

Nebby wrote:
El Pollito wrote:lol my credit karma score was off by 62 points so not so sure about that refi action anymore

You mean it took a hit following refi? Mine did too but bounced back in 3 to 4 months

no i mean it was totally wrong and now it may not be high enough to refi

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El Pollito
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Re: Student loan payments: Actual numbers

Postby El Pollito » Tue Mar 14, 2017 3:02 pm

they approved it notwithstanding my apparently 708 credit score .... gooo first republic

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Tue Mar 14, 2017 3:34 pm

noice!

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swampthang
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Re: Student loan payments: Actual numbers

Postby swampthang » Tue Mar 14, 2017 4:31 pm

bk1 wrote:I'd also add that, if you get a rate of 3.4%, it may not be the best financial move to put the 40k into your loan. The risk-adjusted return of the market generally beats that (even more so if you are using a tax-advantaged account such as a 401k or IRA). That said, if you just want your student loans gone at the expense of not maximizing your return on capital, that's not entirely unreasonable.


+1. Debt can be mentally draining, but you should always pursue the best return. If you've got your student loans parked a looow rate, much better to put extra money toward something that will either avoid a higher interest rate (e.g., a mortgage or, God forbid, CC debt) or earn you a higher return (stocks, bonds, etc.).

bk1 wrote:
Anonymous User wrote:Another thing I was wondering, have heard on the news about the fed interest rate hike coming in march. Does this impact my decision to refinance my loans in anyway? for example, should I get this done before the rate hike? this is probably a stupid question....
I suspect most lenders have already priced the anticipated rate hikes into the rates they are offering, but it is probably safer to refi sooner rather than later. I know at least some lenders rates have been rising (e.g., First Republic).


A colleague and i debate about this frequently. Lenders like Sofi and Earnest explicitly tie their variable rates to 1-month LIBOR which seems to have creeped up about 14 bps (instead of the full 25 of a rate hike), so I guess the answer would be lenders have probably partially priced this in, but not fully (especially when you consider securities markets are treating a hike as a fait accompli).

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Tue Mar 14, 2017 4:49 pm

swampthang wrote:A colleague and i debate about this frequently. Lenders like Sofi and Earnest explicitly tie their variable rates to 1-month LIBOR which seems to have creeped up about 14 bps (instead of the full 25 of a rate hike), so I guess the answer would be lenders have probably partially priced this in, but not fully (especially when you consider securities markets are treating a hike as a fait accompli).

I think that's right.

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Re: Student loan payments: Actual numbers

Postby zot1 » Fri Mar 17, 2017 7:01 pm


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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Sat Mar 18, 2017 10:34 am


I think this administration feeds off of spite

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swampthang
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Re: Student loan payments: Actual numbers

Postby swampthang » Sat Mar 18, 2017 2:05 pm

With more than 40% of student borrowers not making loan payments (as of April 2016-- updated stats appreciated!), when's this $1.2 TRILLION bubble going to burst?

RaceJudicata
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Re: Student loan payments: Actual numbers

Postby RaceJudicata » Sat Mar 18, 2017 4:12 pm

swampthang wrote:With more than 40% of student borrowers not making loan payments (as of April 2016-- updated stats appreciated!), when's this $1.2 TRILLION bubble going to burst?


Is there an effective way to short the loan bubble?

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zot1
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Re: Student loan payments: Actual numbers

Postby zot1 » Sat Mar 18, 2017 7:51 pm

Nebby wrote:

I think this administration feeds off of spite


Pell Grants budget to be reduced.

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swampthang
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Re: Student loan payments: Actual numbers

Postby swampthang » Mon Mar 20, 2017 11:04 am

RaceJudicata wrote:
swampthang wrote:With more than 40% of student borrowers not making loan payments (as of April 2016-- updated stats appreciated!), when's this $1.2 TRILLION bubble going to burst?


Is there an effective way to short the loan bubble?


I ask myself that about investing ITE all the time, but can never come up with a good answer. Everything just seems to be up all the time; even the Mexican market has rebounded from its post-Trump fall. I guess could you short any publicly traded loan servicers? Are there any? Or are they just going to get bailed out?

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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Tue Mar 21, 2017 12:43 am

Nebby wrote:
Anonymous User wrote:Pretty basic question, but I'm starting to look into my repayment options following graduation in May. What is the difference/pros and cons of PAYE and REPAYE?

A little background:
Loan Balance: $250k
Income: $63k
I am PSLF eligible
Single right now but will be getting married in the next few years

It looks like I'm eligible for PAYE and REPAYE and when I do a repayment estimator on on the FSA website, the payments are calculated to be the same. Is there any significant advantage to choosing one plan over the other?

REPAYE is only for people with federal student loans before 2008. If that doesn't apply to you, then you'll do PAYE. They are calculated the same because they are the same in that regard.



just wanted to point out, this reply is completely wrong in every way.

everyone is eligible for REPAYE, repaye has a longer repayment period to loan forgiveness, on repaye you pay a lower $ amt per month, and under repaye the govt will pay 50% of your excess interest every month that it exceeds your monthly payment

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A. Nony Mouse
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Re: Student loan payments: Actual numbers

Postby A. Nony Mouse » Tue Mar 21, 2017 6:31 am

ballouttacontrol wrote:everyone is eligible for REPAYE, repaye has a longer repayment period to loan forgiveness, on repaye you pay a lower $ amt per month, and under repaye the govt will pay 50% of your excess interest every month that it exceeds your monthly payment

both are 10% of discretionary income, but paye is capped at the amount of your 10-year standard repayment amount (so in theory on repaye you could pay more, although if your income is high enough that 10% is higher than your 10-year-standard repayment amount, you probably don't really need to rely on an income-based plan).

Also, on repaye your spouse's income (if any) counts toward your repayment, even if you file taxes separately, whereas under paye you can exclude your spouse's income by doing so.

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Tue Mar 21, 2017 7:06 am

ballouttacontrol wrote:
Nebby wrote:
Anonymous User wrote:Pretty basic question, but I'm starting to look into my repayment options following graduation in May. What is the difference/pros and cons of PAYE and REPAYE?

A little background:
Loan Balance: $250k
Income: $63k
I am PSLF eligible
Single right now but will be getting married in the next few years

It looks like I'm eligible for PAYE and REPAYE and when I do a repayment estimator on on the FSA website, the payments are calculated to be the same. Is there any significant advantage to choosing one plan over the other?

REPAYE is only for people with federal student loans before 2008. If that doesn't apply to you, then you'll do PAYE. They are calculated the same because they are the same in that regard.



just wanted to point out, this reply is completely wrong in every way.

everyone is eligible for REPAYE, repaye has a longer repayment period to loan forgiveness, on repaye you pay a lower $ amt per month, and under repaye the govt will pay 50% of your excess interest every month that it exceeds your monthly payment

Uh both are calculated at 10 percent, and I said REPAYE and PAYE are both "calculated the same in that regard." Nice try

Also, on this subject, REPAYE is garbage for most people and that's why I said it's only for those with loans before 2008 (actually 2007 after checking myself).




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