Student loan payments: get advice and actual numbers here Forum

[A. Nony Mouse]

It's possible to put some fed direct loans on PAYE and keep others at the standard 10 year repayment, right? I don't see why not, but I just want to make sure

i dont think so. this isnt a mix and match policy grab bag. PAYE is for people that cant afford payments and standard repayments are not.

however, you can juts lock in PAYE and make the standard payment yourself on loans you choose above and beyond the regular repayment schedule.

Yeah, I think this is correct. You're either on an income-based repayment plan, or you're not; you can't divvy up the loans that way. (You may be thinking of how some people will refinance some of their loans and leave others on the government repayment plan?)

[Nebby]

It's possible to put some fed direct loans on PAYE and keep others at the standard 10 year repayment, right? I don't see why not, but I just want to make sure

i dont think so. this isnt a mix and match policy grab bag. PAYE is for people that cant afford payments and standard repayments are not.

however, you can juts lock in PAYE and make the standard payment yourself on loans you choose above and beyond the regular repayment schedule.

Yeah, I think this is correct. You're either on an income-based repayment plan, or you're not; you can't divvy up the loans that way. (You may be thinking of how some people will refinance some of their loans and leave others on the government repayment plan?)

Okay. So Columbia's LRAP's benefit to me is the annual repayment amount of my law school loans calculated on a standard repayment plan of 10 years. Therefore my benefit is about $22k/year. I also have fed undergrad loans. I wanted to put my undergrad loans on PAYE and keep my grad plus loans on the standard 10 year repayment so after 10 years in the LRAP they are all paid off.

If every loan is a separate transaction independent of the others, why is it not possible to put some on PAYE and keep some on standard repayment?

[Nebby]

[call in

call in

call in

call in

You're all doing PSLF, right? Every single fed loan I have is with Great Lakes. I was looking at their site, and read this:

Public Service Loan Forgiveness
If you get a job at a government or not-for-profit organization and repay your loans based on your income, you may qualify for forgiveness of your Direct Loans after 10 years of payments and employment. See StudentAid.gov/publicservice for more information and for a form you can fill out when you start working to receive confirmation that your employment qualifies for the program.

Note: Servicing for this program is managed by another federal student loan servicer. If you enroll in Public Service Loan Forgiveness, your eligible loans will be transferred from Great Lakes to that servicer.

So if I want to do PSLF, my loan servicer will change? Or will Great Lakes still be my main servicer, and the other servicer will be who I send my annual employment certification to and other related PSLF documents?

[A. Nony Mouse]

Yeah, your servicer will change to MyFedLoan. (See Tanicius's recent thread on PSLF and IBR woes.) Someone was pointing out in that thread that you don't have to certify your employer as PSLF-eligible until the end of the payment period and if you don't, you should stay with your current servicer.

Also wrt your UG v grad loans, I don't know if it will make a difference if they're not consolidated. But you don't enroll in the payment plan by loan; it's by the individual. For one thing, they calculate qualifying financial hardship and what you pay based on your total income and total loans. You would just arrange to pay more on the LRAP funded ones (no idea how that would work though).

But I only have grad loans so there may be something I'm missing.

[Nebby]

Yeah, your servicer will change to MyFedLoan. (See Tanicius's recent thread on PSLF and IBR woes.) Someone was pointing out in that thread that you don't have to certify your employer as PSLF-eligible until the end of the payment period and if you don't, you should stay with your current servicer.

Also wrt your UG v grad loans, I don't know if it will make a difference if they're not consolidated. But you don't enroll in the payment plan by loan; it's by the individual. For one thing, they calculate qualifying financial hardship and what you pay based on your total income and total loans. You would just arrange to pay more on the LRAP funded ones (no idea how that would work though).

But I only have grad loans so there may be something I'm missing.

Thanks. I am going to certify every year because I don't want to worry about something fucking me up 10 years down the road.

Did you consolidate your grad loans or did you keep them separate? What I mean by separate is: if you took out a grad plus loan for three years of law school, then that means prior to any consolidation you have three different grad plus loans. Thus three separate loans.

[A. Nony Mouse]

Yeah, I haven't consolidated anything, mine are all separate (so I have like 12 or something). No idea if there's any benefit to consolidating.

[Nebby]

Since the economy is in the uptick, do y'all think over the next 10 years we could see interest rates increase enough to where it would be beneficial for me to opt for the fixed rate when I consolidate about $66k of private student loans? I'm getting quotes for a rate of about 5% fixed, 4% variable, but if rates go up over the next 10 years I could end up saving money with fixed. Thoughts?

[Danger Zone]

Rates have been historically low for years now. They're bound to go up eventually. Anyone who tells you they can predict when though is just bullshitting. No one can answer that.

[anonnymouse]

Rates have been historically low for years now. They're bound to go up eventually. Anyone who tells you they can predict when though is just bullshitting. No one can answer that.

Rates could also go down with a return to ZIRP or further to NIRP. DZ is right, no one can say. I took variable with approximately the same spread to fixed but that's because I chose the 5 year plan and the delta between fixed and worst case variable was I think around $10k, so not a huge deal. It's worked out for me so far and rates would have to skyrocket pretty quickly (libor to 500+ bps in 2 years) to lose the benefit I've gained from it but hindsight doesn't really help you here...

If you are evaluating 10 yr repayments or longer, I think it would be folly to choose variable.

[Calvin Murphy]

What is the added benefit of paying interest before it capitalizes? For instance, say the weighted average of my loans is 10%, and the amount of interest is $10,000 (the real weighted average is around 6.8, and I'm looking to refinance at least part of them in the next 2-6 months...but these numbers are simpler), would I essentially save $1,000 per year due to a lower principal while the loans are in repayment? My understanding is that interest capitalizes when you enter repayment, but then it's just simple interest after that...is that somewhat correct (ignoring technical situations in which interest may capitalize, such as default)?

[bdubs]

What is the added benefit of paying interest before it capitalizes? For instance, say the weighted average of my loans is 10%, and the amount of interest is $10,000 (the real weighted average is around 6.8, and I'm looking to refinance at least part of them in the next 2-6 months...but these numbers are simpler), would I essentially save $1,000 per year due to a lower principal while the loans are in repayment? My understanding is that interest capitalizes when you enter repayment, but then it's just simple interest after that...is that somewhat correct (ignoring technical situations in which interest may capitalize, such as default)?

I tried to figure this out once and came to the conclusion that it doesn't matter. Non-capitalized interest is really just a benefit of the lender that is given to you during school to minimize the effects of compounding. Once you enter repayment it doesn't matter if you pay the accumulated interest before it capitalizes or after it becomes part of the loan balance.

[jess]

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[Anonymous User]

2015 grad, $280k in debt, REPAYE, monthly payment is $286, law school lrap is covering all of that, PI for ten years, then pivoting to farming

[jess]

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[Anonymous User]

Debt: $195k (me); $130k (spouse)
Jobs: Year 1 ($62k - clerking; $60k - spouse); Year 2 ($170k - biglaw; $60k - spouse)

Standard repayment plan is about $2,300/month for me and about $1,500/month for my spouse. That seems undoable while clerking.

What should I do? Can I just do REPAYE and then once in biglaw make payments as if I was on the standard plan?

[JenDarby]

Debt: $195k (me); $130k (spouse)
Jobs: Year 1 ($62k - clerking; $60k - spouse); Year 2 ($170k - biglaw; $60k - spouse)

Standard repayment plan is about $2,300/month for me and about $1,500/month for my spouse. That seems undoable while clerking.

What should I do? Can I just do REPAYE and then once in biglaw make payments as if I was on the standard plan?

You should absolutely do repaye and pay the absolutely minimum until you are done clerking and have been in biglaw long enough to know if you will even stick around. You'll have 1 of 10 years down for qualifying for forgiveness, and after a year of clerking who knows if you will or won't be able to tolerate biglaw long enough to make aggressive repayment even potentially advisable.

basically pay as little as possible until you hit a point where you are overly confident and comfortable with the idea that you will absolutely be rapaying all of your loans with no reasonable chance of forgiveness

[Anonymous User]

Debt: $130k once interest capitalizes (At least $20k more than planned. 0Ls, beware.)
Income: $160k in non-NYC market.

Spoke to an old boss in city/state government work and it looks like I'll have a very good shot at finding a job in government whenever I choose. Trying to survive biglaw for 2-4 years then gtfo to government work. Thinking I should do PAYE/REPAYE and save up as much cash from salary and bonus as possible until I can get on that sweet PSLF/LRAP plan.

Help me think through this plan. Is it dumb to make minimum payments on my loans? The only risk I see is should I want to do in-house work or some non-PI exit opportunity I would be leaving myself with a large amount of debt. Is there a compromise plan? Or should I just bite the bullet and work towards paying off my loans?

[Nebby]

Debt: $130k once interest capitalizes (At least $20k more than planned. 0Ls, beware.)
Income: $160k in non-NYC market.

Spoke to an old boss in city/state government work and it looks like I'll have a very good shot at finding a job in government whenever I choose. Trying to survive biglaw for 2-4 years then gtfo to government work. Thinking I should do PAYE/REPAYE and save up as much cash from salary and bonus as possible until I can get on that sweet PSLF/LRAP plan.

Help me think through this plan. Is it dumb to make minimum payments on my loans? The only risk I see is should I want to do in-house work or some non-PI exit opportunity I would be leaving myself with a large amount of debt. Is there a compromise plan? Or should I just bite the bullet and work towards paying off my loans?

You can pay off that debt in 3 years of biglaw. $45k first year, $50k second year, $55k third year.

[Tiago Splitter]

Debt: $130k once interest capitalizes (At least $20k more than planned. 0Ls, beware.)
Income: $160k in non-NYC market.

Spoke to an old boss in city/state government work and it looks like I'll have a very good shot at finding a job in government whenever I choose. Trying to survive biglaw for 2-4 years then gtfo to government work. Thinking I should do PAYE/REPAYE and save up as much cash from salary and bonus as possible until I can get on that sweet PSLF/LRAP plan.

Help me think through this plan. Is it dumb to make minimum payments on my loans? The only risk I see is should I want to do in-house work or some non-PI exit opportunity I would be leaving myself with a large amount of debt. Is there a compromise plan? Or should I just bite the bullet and work towards paying off my loans?

You can pay off that debt in 3 years of biglaw. $45k first year, $50k second year, $55k third year.

You can but if you are seriously thinking about a transition to government go ahead and just save the money and shoot for PSLF. If the government dream doesn't materialize you can just turn around and pay off the loans.

[JenDarby]

Debt: $130k once interest capitalizes (At least $20k more than planned. 0Ls, beware.)
Income: $160k in non-NYC market.

Spoke to an old boss in city/state government work and it looks like I'll have a very good shot at finding a job in government whenever I choose. Trying to survive biglaw for 2-4 years then gtfo to government work. Thinking I should do PAYE/REPAYE and save up as much cash from salary and bonus as possible until I can get on that sweet PSLF/LRAP plan.

Help me think through this plan. Is it dumb to make minimum payments on my loans? The only risk I see is should I want to do in-house work or some non-PI exit opportunity I would be leaving myself with a large amount of debt. Is there a compromise plan? Or should I just bite the bullet and work towards paying off my loans?

You can pay off that debt in 3 years of biglaw. $45k first year, $50k second year, $55k third year.

You can but if you are seriously thinking about a transition to government go ahead and just save the money and shoot for PSLF. If the government dream doesn't materialize you can just turn around and pay off the loans.

Yea with intention to go into Gov work and no knowledge of whether you can even last 2+ years in biglaw, I would not refinance or aggressively pay off your debt. A few years lag won't be that big of a difference if you be sure to save the money you would otherwise have used to pay down loans.

[Anonymous User]

Yeah I certainly don't plan to aggressively pay down my debt right away. I was just trying to see whether my save money -> paye/pslf plan passes the smell test of the thread. I'm not super confident about biglaw plans either but if I can hack it for a few years and save up quite a bit that would be pretty cool.

[JenDarby]

Yeah I certainly don't plan to aggressively pay down my debt right away. I was just trying to see whether my save money -> paye/pslf plan passes the smell test of the thread. I'm not super confident about biglaw plans either but if I can hack it for a few years and save up quite a bit that would be pretty cool.

Your plan sounds like the best option.

[Tiago Splitter]

Yeah I certainly don't plan to aggressively pay down my debt right away. I was just trying to see whether my save money -> paye/pslf plan passes the smell test of the thread. I'm not super confident about biglaw plans either but if I can hack it for a few years and save up quite a bit that would be pretty cool.

The main downside is that you miss out on the ability to refinance, which means if you actually do end up paying it off yourself you'll pay a bunch of extra interest (in addition to the extra interest you incurred while waiting). But that risk is obviously worth it if there's a good chance the government might just forgive the whole thing ten years out. That said, be honest with yourself about your plans as you go through things and if it turns out private practice is more likely go ahead and refi if rates are still low.

[Anonymous User]

I'm looking at roughly $170k in debt at graduation. I think I'm going to take private loans to cover what I need above stafford (about $40k). Looking at rates it seems like I should get around 4% variable, and more importantly no upfront fees. Assuming I get a biglaw offer at the end of the summer, there's no real downside here, right? I figure i can aggressively pay the private loans off and paye/repaye the fed loans for the first two years just to be safe.

[Nebby]

I'm looking at roughly $170k in debt at graduation. I think I'm going to take private loans to cover what I need above stafford (about $40k). Looking at rates it seems like I should get around 4% variable, and more importantly no upfront fees. Assuming I get a biglaw offer at the end of the summer, there's no real downside here, right? I figure i can aggressively pay the private loans off and paye/repaye the fed loans for the first two years just to be safe.

How do you get a rate that low as an unemployed student?