Student loan payments: Actual numbers

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Sat Feb 20, 2016 2:54 pm

JohannDeMann wrote:
JenDarby wrote:
Anonymous User wrote:I refinanced all of my student loans with SOFI last year (~$61k). I've received 1098-Es from my old lenders indicating that I paid a lot in student loan interest last year. In reality, SOFI paid off these old loans, so I didn't pay these old lenders out of pocket. Still, as far as the paperwork is concerned, it looks like I have a lot of student loan interest payments to deduct. I just finished my biglaw stub year, so my income in 2015 was low enough to take the max $2500 student loan interest deduction.

Has anybody here been in a similar situation? Can I take this deduction, even though I didn't actually pay +$2500 in student loan interest last year?

yes of course. you did pay it, you just borrowed money from sofi to do it.



Holy crap, that's great. I made payments last year but I don't think I came close to $2500 in interest payments. So it looks like the fact that I refinanced during my biglaw stub year is going to save me a few hundred bucks in taxes. Yet another reason to think about refinancing, folks (YMMV).

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Desert Fox
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Re: Student loan payments: Actual numbers

Postby Desert Fox » Sat Feb 20, 2016 2:55 pm

JohannDeMann wrote:
KM2016 wrote:
JohannDeMann wrote:I just think of the loan balance the way same way I did in law school - Monopoly money. Me and fiancé are over 500k in debt and I don't give a fuck. Combined we pay like 375 a month and take in about 200k. Pretty good life if you ask me.


Tell me your secrets. Wife and I are about $400k in the hole, and between my standard payments and her PAYE we pay around $3000/month.


Don't be on standard payments. I'm using a 2014 tax return from my stub year tax return that is pretty distorted now but within paye rules.


tbf, its really not within paye rules. You are supposed to update your income with them if your previous tax return isn't representative of your income.

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JohannDeMann
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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Sat Feb 20, 2016 3:41 pm

Desert Fox wrote:
JohannDeMann wrote:
KM2016 wrote:
JohannDeMann wrote:I just think of the loan balance the way same way I did in law school - Monopoly money. Me and fiancé are over 500k in debt and I don't give a fuck. Combined we pay like 375 a month and take in about 200k. Pretty good life if you ask me.


Tell me your secrets. Wife and I are about $400k in the hole, and between my standard payments and her PAYE we pay around $3000/month.


Don't be on standard payments. I'm using a 2014 tax return from my stub year tax return that is pretty distorted now but within paye rules.


tbf, its really not within paye rules. You are supposed to update your income with them if your previous tax return isn't representative of your income.


it is within PAYE rules. your previous tax return is representative of your income if you have the same job. also, a tax return as a stub is still the same income as a first year, so your income hasn't "substantially" changed. there's no obligation to recertify PAYE if you remain in the same job.

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jessuf
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Re: Student loan payments: Actual numbers

Postby jessuf » Mon Feb 22, 2016 2:37 pm

JohannDeMann wrote:
Desert Fox wrote:
JohannDeMann wrote:
KM2016 wrote:
JohannDeMann wrote:I just think of the loan balance the way same way I did in law school - Monopoly money. Me and fiancé are over 500k in debt and I don't give a fuck. Combined we pay like 375 a month and take in about 200k. Pretty good life if you ask me.


Tell me your secrets. Wife and I are about $400k in the hole, and between my standard payments and her PAYE we pay around $3000/month.


Don't be on standard payments. I'm using a 2014 tax return from my stub year tax return that is pretty distorted now but within paye rules.


tbf, its really not within paye rules. You are supposed to update your income with them if your previous tax return isn't representative of your income.


it is within PAYE rules. your previous tax return is representative of your income if you have the same job. also, a tax return as a stub is still the same income as a first year, so your income hasn't "substantially" changed. there's no obligation to recertify PAYE if you remain in the same job.

I asked my loan servicer (fed loans) whether I had a substantial change in income from stub year to the following year and was told no (even though it was pretty drastic) and to just submit my tax return with the stub year income. Loan servicer just said my payments would eventually catch up to my income.

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Mon Feb 22, 2016 3:11 pm

I really hope we are all around in some form when some of us have paid off our loans and some are only halfway through repayment. It's difficult to really gauge options without thos end results to compare.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Feb 24, 2016 12:45 pm

wow commonbond took me with not great credit at 5% fixed

exciting.

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gk101
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Re: Student loan payments: Actual numbers

Postby gk101 » Wed Feb 24, 2016 1:12 pm

Anonymous User wrote:wow commonbond took me with not great credit at 5% fixed

exciting.

out of curiosity, how much do you owe and what was the interest rates before? A ~2% reduction in interest rate (assuming an aggregate of 7% on your government loans) doesn't seem worth it to give up the IBR/PAYE safety net

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Feb 24, 2016 1:55 pm

gk101 wrote:
Anonymous User wrote:wow commonbond took me with not great credit at 5% fixed

exciting.

out of curiosity, how much do you owe and what was the interest rates before? A ~2% reduction in interest rate (assuming an aggregate of 7% on your government loans) doesn't seem worth it to give up the IBR/PAYE safety net

I refied 105K of loans with average interest rates around 7.8%. I haven't signed the documents yet, but I feel like losing the safety net is better than getting gaped. Feel free to talk me out of it though.

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JohannDeMann
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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Wed Feb 24, 2016 2:02 pm

yeah at 105k i think you should just take the 5% fixed.

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Wed Feb 24, 2016 2:03 pm

Anonymous User wrote:
gk101 wrote:
Anonymous User wrote:wow commonbond took me with not great credit at 5% fixed

exciting.

out of curiosity, how much do you owe and what was the interest rates before? A ~2% reduction in interest rate (assuming an aggregate of 7% on your government loans) doesn't seem worth it to give up the IBR/PAYE safety net

I refied 105K of loans with average interest rates around 7.8%. I haven't signed the documents yet, but I feel like losing the safety net is better than getting gaped. Feel free to talk me out of it though.

That's not a terrible deal but did you get any variable offers? Might make sense to go variable if you have the income to pay it off in the next couple of years.

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gk101
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Re: Student loan payments: Actual numbers

Postby gk101 » Wed Feb 24, 2016 2:05 pm

Anonymous User wrote:
gk101 wrote:
Anonymous User wrote:wow commonbond took me with not great credit at 5% fixed

exciting.

out of curiosity, how much do you owe and what was the interest rates before? A ~2% reduction in interest rate (assuming an aggregate of 7% on your government loans) doesn't seem worth it to give up the IBR/PAYE safety net

I refied 105K of loans with average interest rates around 7.8%. I haven't signed the documents yet, but I feel like losing the safety net is better than getting gaped. Feel free to talk me out of it though.

makes a lot more sense at 105k and 3% less interest. might be worth looking into variable rates or shorter payout term if you have decided to pay it off asap. if the job situation changes, you can always refi again for a longer fixed rate

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Wed Feb 24, 2016 2:12 pm

Anonymous User wrote:
gk101 wrote:
Anonymous User wrote:wow commonbond took me with not great credit at 5% fixed

exciting.

out of curiosity, how much do you owe and what was the interest rates before? A ~2% reduction in interest rate (assuming an aggregate of 7% on your government loans) doesn't seem worth it to give up the IBR/PAYE safety net

I refied 105K of loans with average interest rates around 7.8%. I haven't signed the documents yet, but I feel like losing the safety net is better than getting gaped. Feel free to talk me out of it though.

Assuming 10 year terms for both the original loan and the refi, it's a difference the between ~46.5k in interest and ~28.5k in interest. That's around 125/month.

I have no idea what kind of job you have, but I think the question is whether you could afford the refi payments on a significantly reduced salary or have an emergency fund that would cover you if you lost your job and couldn't find another one for a significant period of time. If the answer to either of those is no, I'd lean against the refinancing at this point because the safety net will cover you in those scenarios. If the answer to both of them is yes, I think it's perfectly reasonable to refi.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Feb 24, 2016 2:16 pm

Variable scares the shit out of me. Is it worth doing if I plan to pay them in 3 - 4 years?

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Feb 24, 2016 2:17 pm

bk1 wrote:
Anonymous User wrote:
gk101 wrote:
Anonymous User wrote:wow commonbond took me with not great credit at 5% fixed

exciting.

out of curiosity, how much do you owe and what was the interest rates before? A ~2% reduction in interest rate (assuming an aggregate of 7% on your government loans) doesn't seem worth it to give up the IBR/PAYE safety net

I refied 105K of loans with average interest rates around 7.8%. I haven't signed the documents yet, but I feel like losing the safety net is better than getting gaped. Feel free to talk me out of it though.

Assuming 10 year terms for both the original loan and the refi, it's a difference the between ~46.5k in interest and ~28.5k in interest. That's around 125/month.

I have no idea what kind of job you have, but I think the question is whether you could afford the refi payments on a significantly reduced salary or have an emergency fund that would cover you if you lost your job and couldn't find another one for a significant period of time. If the answer to either of those is no, I'd lean against the refinancing at this point because the safety net will cover you in those scenarios. If the answer to both of them is yes, I think it's perfectly reasonable to refi.

Biglaw.

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Wed Feb 24, 2016 2:26 pm

Anonymous User wrote:Biglaw.

Anonymous User wrote:Variable scares the shit out of me. Is it worth doing if I plan to pay them in 3 - 4 years?

What's the term on the refi?

If you're planning on paying them off in 3-4 years, then refinancing is a lot less attractive. You're talking about ~5-6k difference over 3-4 years on a large salary. It will save you money, but not all that much. I'm not sure that is worth losing federal protections over.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Thu Feb 25, 2016 9:36 am

So I'm a recent grad, have roughly $160k in debt (6.5%) and am making 150k in high CoL area. My SO and I have pretty significant savings/stocks (something like 30/70k and IRAs/other retirement stuff).

I'm thinking about doing a re-fi on my two highest interest loans (7.2 and 6.8%) which would take the remaining 100k down to about 6.2%. I guess my question is, does this re-fi make sense? Should I be looking at variable or fixed? Right now I'm paying about $2,500/mo and could bump that up if I wanted to stop contributing to savings (or contribute less). I feel like I've kinda committed to repaying as quickly as possible, but I'm not sure what my best options are (and I don't know that I want to take the plunge and re-fi everything).

Thanks.

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2014
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Re: Student loan payments: Actual numbers

Postby 2014 » Thu Feb 25, 2016 1:53 pm

Anonymous User wrote:So I'm a recent grad, have roughly $160k in debt (6.5%) and am making 150k in high CoL area. My SO and I have pretty significant savings/stocks (something like 30/70k and IRAs/other retirement stuff).

I'm thinking about doing a re-fi on my two highest interest loans (7.2 and 6.8%) which would take the remaining 100k down to about 6.2%. I guess my question is, does this re-fi make sense? Should I be looking at variable or fixed? Right now I'm paying about $2,500/mo and could bump that up if I wanted to stop contributing to savings (or contribute less). I feel like I've kinda committed to repaying as quickly as possible, but I'm not sure what my best options are (and I don't know that I want to take the plunge and re-fi everything).

Thanks.

This is almost exactly what I did - taking my 7.X%s and throwing them into Sofi. I personally opted for a 10 year variable to diversify the federal loans I'm keeping and because I don't anticipate the variable rate catching the fixed rate they offered me for at least 2 years (frankly longer if the market stays like it is now) and I plan to have it paid off in 5ish.

That being said - this thread is all aboard the leave them in Fed, do PAYE and pay the minimum so the above approach will likely be criticized, but I'm happy with the decision.

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gk101
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Re: Student loan payments: Actual numbers

Postby gk101 » Thu Feb 25, 2016 2:15 pm

2014 wrote:
Anonymous User wrote:So I'm a recent grad, have roughly $160k in debt (6.5%) and am making 150k in high CoL area. My SO and I have pretty significant savings/stocks (something like 30/70k and IRAs/other retirement stuff).

I'm thinking about doing a re-fi on my two highest interest loans (7.2 and 6.8%) which would take the remaining 100k down to about 6.2%. I guess my question is, does this re-fi make sense? Should I be looking at variable or fixed? Right now I'm paying about $2,500/mo and could bump that up if I wanted to stop contributing to savings (or contribute less). I feel like I've kinda committed to repaying as quickly as possible, but I'm not sure what my best options are (and I don't know that I want to take the plunge and re-fi everything).

Thanks.

This is almost exactly what I did - taking my 7.X%s and throwing them into Sofi. I personally opted for a 10 year variable to diversify the federal loans I'm keeping and because I don't anticipate the variable rate catching the fixed rate they offered me for at least 2 years (frankly longer if the market stays like it is now) and I plan to have it paid off in 5ish.

That being said - this thread is all aboard the leave them in Fed, do PAYE and pay the minimum so the above approach will likely be criticized, but I'm happy with the decision.

160k is not THAT big of a debt load and it probably makes sense to pay it off. just stagger your refi amounts so you can take advantage of fed gov protection on the low interest rates while try to aggressively pay off the refi'd high interest loans

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Thu Feb 25, 2016 2:21 pm

gk101 wrote:160k is not THAT big of a debt load

lol?

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gk101
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Re: Student loan payments: Actual numbers

Postby gk101 » Thu Feb 25, 2016 2:23 pm

Danger Zone wrote:
gk101 wrote:160k is not THAT big of a debt load

lol?

relatively speaking. when I ran the numbers a couple of years ago, 165k and above was about the line where it made to sense to go IBR/PAYE

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duck
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Re: Student loan payments: Actual numbers

Postby duck » Thu Feb 25, 2016 3:58 pm

three hundo or bust

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Thu Feb 25, 2016 9:16 pm

here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)

KM2016
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Re: Student loan payments: Actual numbers

Postby KM2016 » Thu Feb 25, 2016 9:18 pm

Anonymous User wrote:here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)


Such a romantic. She's a lucky lady :roll:

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JohannDeMann
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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Thu Feb 25, 2016 9:24 pm

Anonymous User wrote:here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)


what kind of job do you have?

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Thu Feb 25, 2016 9:54 pm

JohannDeMann wrote:
Anonymous User wrote:here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)


what kind of job do you have?


soon biglaw 160 (190K?) plus market




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