Student loan payments: Actual numbers

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Fri Dec 18, 2015 2:07 pm

ballouttacontrol wrote:
lacrossebrother wrote:What the hell are you talking about


how file bankruptcy on forgiveness taxbomb without losing anything except hurting ur credit score. which part was confusing?

you think you'd be insolvent with zero liabilities and a house?

ballouttacontrol
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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Fri Dec 18, 2015 2:23 pm

lacrossebrother wrote:
ballouttacontrol wrote:
lacrossebrother wrote:What the hell are you talking about


how file bankruptcy on forgiveness taxbomb without losing anything except hurting ur credit score. which part was confusing?

you think you'd be insolvent with zero liabilities and a house?


That would literally be the purpose of bankruptcy...smh

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Fri Dec 18, 2015 3:15 pm

What are you talking about? You're suggesting a scheme to keep a house. If you do that, how exactly do you show insolvency immediately prior to cancelling your debts? fmv of house - zero = not insolvent.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Fri Dec 18, 2015 7:12 pm

Off topic, but curious to get feedback on this...

Current 3L, trying to decide what to do with part of the 15k my firm will give me as a salary advance in a few months. I'd like to put 40-50% of it away to be able to being using approximately 6 months later once I start work. I figure 5-7k + other income sources will get me through the summer, so I'd like to do something with the remaining cash. tc

Considered putting some in a CD, but that seems too risk adverse and I would like the opportunity for a larger upside. Also considered a index mutual find, but not overly optimistic about the direction of the market next year specifically. Any other thoughts? Am I missing some specific considerations?

I'll have 45K in student loans so I'll start paying those off next summer too, but it seems like a waste to put all my extra cash towards loan payments, plus, I'd like to be able to access the cash in the fall if I need it.

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Fri Dec 18, 2015 7:29 pm

Anonymous User wrote:Off topic, but curious to get feedback on this...

Current 3L, trying to decide what to do with part of the 15k my firm will give me as a salary advance in a few months. I'd like to put 40-50% of it away to be able to being using approximately 6 months later once I start work. I figure 5-7k + other income sources will get me through the summer, so I'd like to do something with the remaining cash. tc

Considered putting some in a CD, but that seems too risk adverse and I would like the opportunity for a larger upside. Also considered a index mutual find, but not overly optimistic about the direction of the market next year specifically. Any other thoughts? Am I missing some specific considerations?

I'll have 45K in student loans so I'll start paying those off next summer too, but it seems like a waste to put all my extra cash towards loan payments, plus, I'd like to be able to access the cash in the fall if I need it.

If you want to have access to the cash leave it as cash. At most you can invest it in a money market fund or some other cash equivalent, but a CD will tie up the money in a way that seems unnecessary. If you want a quick return you need a longer time horizon or else you might as well just take it to the casino.

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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Fri Dec 18, 2015 7:41 pm

lacrossebrother wrote:What are you talking about? You're suggesting a scheme to keep a house. If you do that, how exactly do you show insolvency immediately prior to cancelling your debts? fmv of house - zero = not insolvent.


wtf are you talking about? Houses have something called a mortgage, and homestead exemption covers any equity you have, up to a value of anywhere from like $60k to $150k to unlimited depending on state

Literally everyone that files a chapter 7 keeps their house and any other secured property. And discharges all of their unsecured debts (except student loans, child support, money judgment involving alcohol, etc). Because that's what bankruptcy does.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Sat Dec 19, 2015 12:16 pm

Anonymous User wrote:Off topic, but curious to get feedback on this...

Current 3L, trying to decide what to do with part of the 15k my firm will give me as a salary advance in a few months. I'd like to put 40-50% of it away to be able to being using approximately 6 months later once I start work. I figure 5-7k + other income sources will get me through the summer, so I'd like to do something with the remaining cash. tc

Considered putting some in a CD, but that seems too risk adverse and I would like the opportunity for a larger upside. Also considered a index mutual find, but not overly optimistic about the direction of the market next year specifically. Any other thoughts? Am I missing some specific considerations?

I'll have 45K in student loans so I'll start paying those off next summer too, but it seems like a waste to put all my extra cash towards loan payments, plus, I'd like to be able to access the cash in the fall if I need it.


1. Are you sure it's $15k net? My firm gave us $15k stipend (not an advance, basically a signing bonus) and it had all the usual deductions for fed, state, local taxes plus FICA and Medicare for a net of about $8100. I'm not sure if it works differently for advances though.

2. If you want to use the money to live off of either over the summer or in the first few months of work (this is what I did), it would be kinda dumb to take on any risk for 6-9 months.

3. If you want a guaranteed higher yield on the money, pay down your loans. No investment on the planet will give you dollar-denominated guaranteed post-tax returns of 6+% like paying down your loans will.

4. If you really don't want to pay down loans, use the cash to position yourself so that you can boost tax advantages account contributions. My firm has a really nice 401k with a safe harbor match and if I had budgeted a bit better I probably could have gotten my AGI into the sweet spot range for relevant deduction and tax credit eligibility (somewhere between $55k-$75k).

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Sat Dec 19, 2015 12:59 pm

Dude fuck that. Take the money and go to Europe for a few weeks. It's your last chance.

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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Sat Dec 19, 2015 1:56 pm

Danger Zone wrote:Dude fuck that. Take the money and go to Europe for a few weeks. It's your last chance.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Sat Dec 19, 2015 2:19 pm

Any opinions on the first republic fixed 2.75% 10-year vs. 3.5% 15-year loans? For someone intent on dragging out payments the entire term while investing savings, does that delta in the interest rate matter, especially in the environment of hopefully rising interest rates?

And what's the loan balance where it makes sense to refinance early in big law vs. sitting on PAYE while evaluating options?

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Re: Student loan payments: Actual numbers

Postby WhirledWorld » Mon Dec 21, 2015 6:57 pm

If you have cash that you want to put away but eventually access in the next year or two, just put it in a high-yield savings account. These are all fine: https://www.nerdwallet.com/rates/savings-account/

You can get about 1%, which obviously isn't much, but CD rates are only marginally higher and your money is illiquid (plus there's a minimum balance requirement).

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Dec 23, 2015 1:13 am

Just got offered from Common Bond 5.24% fixed rate for 10 years for around 81K of debt (salary 150K). I'm pretty sure I'm going to accept - any glaring reasons not to?

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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Wed Dec 23, 2015 1:18 am

Anonymous User wrote:Just got offered from Common Bond 5.24% fixed rate for 10 years for around 81K of debt (salary 150K). I'm pretty sure I'm going to accept - any glaring reasons not to?


seems like a shit offer to me. REPAYE probably brings you out ahead here with the govt picking up half your interest tab and gives you a lower monthly payment.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Dec 23, 2015 1:28 am

JohannDeMann wrote:
Anonymous User wrote:Just got offered from Common Bond 5.24% fixed rate for 10 years for around 81K of debt (salary 150K). I'm pretty sure I'm going to accept - any glaring reasons not to?


seems like a shit offer to me. REPAYE probably brings you out ahead here with the govt picking up half your interest tab and gives you a lower monthly payment.

OP - Maybe I should have said this in my original post. I plan on maybe paying 50% of the loan this year and riding out the balance for maybe 5 years (although if I keep disliking big law I may pay it all ASAP since I have about 25K in savings).

Does that change your analysis. Honest, I do not know a lot about REPAYE.

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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Wed Dec 23, 2015 1:37 am

Easier to pay 50% of the loan with the govt subsidizing the interest while you make no payments and save the money up. REPAYE supposedly has government covering 50% interest that you don't pay.

if you could get a better rate than 5% id maybe be convinced but 5% is shit for that amount and salary. its free money to the place basically.

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emkay625
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Re: Student loan payments: Actual numbers

Postby emkay625 » Wed Dec 23, 2015 1:41 am

Can anyone recommend a good financial planning book that addresses the situation many of us in this thread find ourselves in? (large amounts of student loan debt but very high income). Trying to find a good place to start my personal finance education but everything seems to be targeted at middle-aged folks, or if it is a book focused on millennials, it assumes high amounts of debt but low incomes.

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Re: Student loan payments: Actual numbers

Postby JenDarby » Wed Dec 23, 2015 1:44 am

Anonymous User wrote:Just got offered from Common Bond 5.24% fixed rate for 10 years for around 81K of debt (salary 150K). I'm pretty sure I'm going to accept - any glaring reasons not to?

You're loan balance is so low and your income so high that you will repay this money. It's stupid to do government repayment if you plan on paying it off soon, which you should and will.

I would look into the other lenders if you haven't already, that interest rate seems too high. If you have enough money to pay a lot down then I would save that and go with a fixed or variable 5 year term, and ride out (ideally for a fairly better rate) variable until they maybe raise it then dump your saved money into it if it makes sense.

You shouldn't pay anything in extra interest though with a higher interest rate since 81k will be cake to pay off even if you only stayed at that salary for a couple years. If I couldn't find something better I would take it.

Caveat: I know nothing about repaye so that might be something to seriously look into.

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Re: Student loan payments: Actual numbers

Postby bk1 » Wed Dec 23, 2015 1:51 am

JohannDeMann wrote:Easier to pay 50% of the loan with the govt subsidizing the interest while you make no payments and save the money up. REPAYE supposedly has government covering 50% interest that you don't pay.

if you could get a better rate than 5% id maybe be convinced but 5% is shit for that amount and salary. its free money to the place basically.

REPAYE only subsidizes the unpaid interest. With a salary of 150k and debt of 81k, OP will easily cover interest. REPAYE does not make sense for OP.
Anonymous User wrote:Just got offered from Common Bond 5.24% fixed rate for 10 years for around 81K of debt (salary 150K). I'm pretty sure I'm going to accept - any glaring reasons not to?

Anonymous User wrote:OP - Maybe I should have said this in my original post. I plan on maybe paying 50% of the loan this year and riding out the balance for maybe 5 years (although if I keep disliking big law I may pay it all ASAP since I have about 25K in savings).

Does that change your analysis. Honest, I do not know a lot about REPAYE.

I probably wouldn't refinance. Presumably your federal loans currently have a weighted average around 6.5-7%. The Common Bond offer is going to save you ~1.5%. The difference between 6.75% and 5.25% on a 40k loan (assumes you pay 1/2 this year) over 10 years is around $4,000. There's just no way that I see that amount of money as being worth losing federal protections on your loans (e.g., if shit hits the fan and you are in a huge emergency, you can pay very low minimums on your fed loans).

I also agree w/ JD that the rate seems crappy compared to what other people have gotten, especially considering the low amount financed.

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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Wed Dec 23, 2015 1:53 am

bk1 wrote:
JohannDeMann wrote:Easier to pay 50% of the loan with the govt subsidizing the interest while you make no payments and save the money up. REPAYE supposedly has government covering 50% interest that you don't pay.

if you could get a better rate than 5% id maybe be convinced but 5% is shit for that amount and salary. its free money to the place basically.

REPAYE only subsidizes the unpaid interest. With a salary of 150k and debt of 81k, OP will easily cover interest. REPAYE does not make sense for OP.
Anonymous User wrote:Just got offered from Common Bond 5.24% fixed rate for 10 years for around 81K of debt (salary 150K). I'm pretty sure I'm going to accept - any glaring reasons not to?

Anonymous User wrote:OP - Maybe I should have said this in my original post. I plan on maybe paying 50% of the loan this year and riding out the balance for maybe 5 years (although if I keep disliking big law I may pay it all ASAP since I have about 25K in savings).

Does that change your analysis. Honest, I do not know a lot about REPAYE.

I probably wouldn't refinance. Presumably your federal loans currently have a weighted average around 6.5-7%. The Common Bond offer is going to save you ~1.5%. The difference between 6.75% and 5.25% on a 40k loan (assumes you pay 1/2 this year) over 10 years is around $4,000. There's just no way that I see that amount of money as being worth losing federal protections on your loans (e.g., if shit hits the fan and you are in a huge emergency, you can pay very low minimums on your fed loans).


based on last years tax returns. if your first year payment in biglaw isnt under $300 you are doing something wrong. should be like $100 tops.

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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Wed Dec 23, 2015 1:54 am

emkay625 wrote:Can anyone recommend a good financial planning book that addresses the situation many of us in this thread find ourselves in? (large amounts of student loan debt but very high income). Trying to find a good place to start my personal finance education but everything seems to be targeted at middle-aged folks, or if it is a book focused on millennials, it assumes high amounts of debt but low incomes.


this thread and use your brain. the shit people write in those books is usually dumb as hell.

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Wed Dec 23, 2015 1:55 am

JohannDeMann wrote:based on last years tax returns. if your first year payment in biglaw isnt under $300 you are doing something wrong. should be like $100 tops.

But that's pointless if OP is going to actually pay the loan in full. Making low payments the first year would just mean paying more money in the long run, unless OP was going to get forgiveness (which is highly unlikely).

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Wed Dec 23, 2015 1:59 am

emkay625 wrote:Can anyone recommend a good financial planning book that addresses the situation many of us in this thread find ourselves in? (large amounts of student loan debt but very high income). Trying to find a good place to start my personal finance education but everything seems to be targeted at middle-aged folks, or if it is a book focused on millennials, it assumes high amounts of debt but low incomes.

The r/pf wiki is a good place to start on basic personal finance stuff: https://www.reddit.com/r/personalfinance/wiki/index

What are you unsure about? I think the big questions are: (1) how do you want to pay down your debt (income-based vs refinance; aggressive or not), (2) what other things do you want to save money for (e.g., retirement, house down payment, etc), (3) what is your risk tolerance. I don't think the high income/high debt really changes all that much except making the repayment a bit more complex when considering income-based vs refinance.

I think one of the big things to watch out for with people in our situation is not to get hit by lifestyle inflation.

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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Wed Dec 23, 2015 2:07 am

JenDarby wrote:
Anonymous User wrote:Just got offered from Common Bond 5.24% fixed rate for 10 years for around 81K of debt (salary 150K). I'm pretty sure I'm going to accept - any glaring reasons not to?

You're loan balance is so low and your income so high that you will repay this money. It's stupid to do government repayment if you plan on paying it off soon, which you should and will.

I would look into the other lenders if you haven't already, that interest rate seems too high. If you have enough money to pay a lot down then I would save that and go with a fixed or variable 5 year term, and ride out (ideally for a fairly better rate) variable until they maybe raise it then dump your saved money into it if it makes sense.

You shouldn't pay anything in extra interest though with a higher interest rate since 81k will be cake to pay off even if you only stayed at that salary for a couple years. If I couldn't find something better I would take it.

Caveat: I know nothing about repaye so that might be something to seriously look into.


this has to be some fucking joke between people like you and DZ - lets make johann blow a gasket saying dumb shit we havent even researched.

All govt subsidized loans do not accrue interest for the first 3 years of repayment. THe interest is only tacked on if you switch govt payment plans or consolidate/refi with the govt. EDIT - this is true for PAYE and REPAYE. not sure about the rest.
Under REPAYE, the govt pays 50% of accrued interest on unsubsidized loans that your payments dont cover.

Lets play this out:

assuming you have about $25k of Fed subs and $55k of unsub (I think you can take 15k a year of sub, so the implications will be even better for you the more subsidiized govt debt you have)

$81k at 5% interest on one year is $4k of interest accrued under the refi.
$81k at 8% govt interest on a $100 REPAYE plan using last years summer pay tax means $0 interest on $25k subsidized debt and $4.2k of interest. But then you pay $1.2k, so 3k of interest which you and the govt split. You accrue $1.5k interest and pay$1.2k interest for an effetive interest rate around 3.4%. This doesnt even begin to analyze the benfits of maxing cash flow.

I dont have time to do this for every person you wrongly advise, but just know you are wrong 90% of the time.

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Wed Dec 23, 2015 2:10 am

johann you haven't been able to get subsidized loans for law school since I started in 2012, so if this guy is class of 2015 he doesn't have any subsidized loans unless some of that 81k is from undergrad.

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emkay625
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Re: Student loan payments: Actual numbers

Postby emkay625 » Wed Dec 23, 2015 2:14 am

bk1 wrote:
emkay625 wrote:Can anyone recommend a good financial planning book that addresses the situation many of us in this thread find ourselves in? (large amounts of student loan debt but very high income). Trying to find a good place to start my personal finance education but everything seems to be targeted at middle-aged folks, or if it is a book focused on millennials, it assumes high amounts of debt but low incomes.

The r/pf wiki is a good place to start on basic personal finance stuff: https://www.reddit.com/r/personalfinance/wiki/index

What are you unsure about? I think the big questions are: (1) how do you want to pay down your debt (income-based vs refinance; aggressive or not), (2) what other things do you want to save money for (e.g., retirement, house down payment, etc), (3) what is your risk tolerance. I don't think the high income/high debt really changes all that much except making the repayment a bit more complex when considering income-based vs refinance.

I think one of the big things to watch out for with people in our situation is not to get hit by lifestyle inflation.


Generally unsure about pretty much everything. Know nothing about finance. No idea how to go about refinancing my loans and honestly don't REALLY 100% understand what that means. Know I want to retire early but no idea how to even start. Thinking about hiring a financial advisor, but want to educate myself first so that 1) I know how to choose one and 2) I actually understand what they're saying.




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