Anonymous User wrote:What I am curious about is mainly whether it's best for our situation if I pay my loans super aggressively, super passively, or somewhere in between? I assume refinancing makes sense? Even if one of us lost his or her job, we could still afford to live/make loan repayments for a while. If paying super aggressively is the best strategy, should I/we start now if it's possible? I have some money in the bank from my 2L summer and between that and my gf's salary we could begin paying down the debt or at least the interest today if we wanted. At the same time, given that we like to have disposable income, might it be best to just pay whatever the minimum is knowing that we will pay a bunch of extra interest over the life of the loan but don't have to live exceptionally frugally for a year or two? The ultimate goal is to own a house or a multi-bedroom apt. somewhere in NYC metro, if it is ever possible. We know it could realistically take a very long time. We are both from NY and intend to stay here for the long-term.
If I do re-finance, when is the soonest I can do it? Also, what is the deal with capitalization of the interest on my loans? Should I pay off the interest before I graduate at the very least? Any other obvious basic advice you'd recommend to me as a financial illiterate?
1. Likely the most financially optimal plan would be to refinance them to a low rate and a long term (e.g., ~3-4% at 10-15 years) because you can likely beat that 3-4% through investing over that period.
2. That said, it's a small-ish amount and some people might prefer it just being gone (personally, I would). If that's the case, then pay aggressively. If you pay aggressively, it may not be worth the hassle of refinancing. Refinancing would still save you money, but because you can wipe out the debt in under a year you would likely be saving less than $1000.
3. Don't burn your cash reserves just to pay it down now. Keep at least an emergency fund at all times (3ish months of expenses).
4. You only have to "live frugally" for less than a year. I put that it quotes because you'd be living off 50k-ish after taxes (it'll cost you about 50k to pay down the debt within a year), and that's not even counting your GF's income or that you're only paying 750 in "rent."
5. You can refinance whenever a lender is willing to approve you. They probably won't do it until you actually have income. Note that once you refi, you will have to start paying 30 days later.
6. Generally entering repayment will capitalize the unpaid interest. No it isn't really worth it to pay it off before you graduate because the capitalized interest won't start accruing its own interest until it actually capitalizes (thus it's practically irrelevant whether you pay off the unpaid interest or make the same payment to principal) and it also isn't going to generate that much interest on its own.
7. Read the basics from r/personalfinance to get a good foundation for personal finance literacy.
8. Relationship advice: no matter how solid the relationship, don't treat the equity in your SO's property as shared. It's hers until/unless you actually marry/commingle your assets.