Student loan payments: Actual numbers

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Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Sun Oct 26, 2014 10:45 am

Debt: $220,000 (small scholarship from a t-14)
Payments: ?
Income: clerk, so high 50s
Plan: IBR?
Important info: Heading to NYC big law after this year


Should I refinance with SoFi?

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Elston Gunn
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Re: Student loan payments: Actual numbers

Postby Elston Gunn » Sun Oct 26, 2014 6:55 pm

Anonymous User wrote:Debt: $220,000 (small scholarship from a t-14)
Payments: ?
Income: clerk, so high 50s
Plan: IBR?
Important info: Heading to NYC big law after this year


Should I refinance with SoFi?

I'm curious to see what other people think (going to be in virtually the same situation), but I'm pretty sure you should wait until you are making $170K to refinance.

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Anastasia Dee Dualla
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Re: Student loan payments: Actual numbers

Postby Anastasia Dee Dualla » Sun Oct 26, 2014 7:46 pm

JenDarby wrote:I finally submitted my Sofi application today.

How long did you guys wait to hear back regarding rates?


Heard back "official" rate two days after submitting paperwork.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Sun Oct 26, 2014 8:10 pm

Anonymous User wrote:Debt: $220,000 (small scholarship from a t-14)
Payments: ?
Income: clerk, so high 50s
Plan: IBR?
Important info: Heading to NYC big law after this year


Should I refinance with SoFi?

I'm in this situation now, and a friend of mine was recently in this situation.

My friend refinanced to a 10 year SoFi when they started clerking and refinanced to a 5 year SoFi when they started biglaw. Keep in mind that you might need a cosigner to refinance while clerking (SoFi said that I would because my clerk salary is too low compared to my debt). A 10 year SoFi would net me an interest rate probably somewhere just shy of 6% (compared to the ~7% range on my loans currently). With a sticker debt load, that would be a savings of ~$3000 in interest. While that seems nice and maybe I'm just being foolish, I'm not convinced it's worth the hassle of refinancing twice, having my parents cosign, and losing the flexibility afforded by federal loans is worth saving a few thousand dollars by refinancing while clerking, especially when I will likely pay upwards of 300k to fully pay off my loans.

I've seen some people suggest doing PAYE while clerking before switching to a regular repayment plan which I think does serve a small benefit. Under PAYE, my loan payments would be ~$400. The gov will pay the unpaid interest on my Direct Subsidized Loans, but this is mostly meaningless because only $8500 worth of my sticker price loans are subsidized (after 2011, graduate students were no longer eligible for Direct Subsidized Loans). The overall unpaid interest will not capitalize until you no longer have a partial financial hardship or leave PAYE (with sticker or near sticker loans, you will still have a PFH until approximately your loans are lower than your salary).

My loans accrue about ~$1400 in interest per month. If I did not to do PAYE and only made $400 payments each month, I would have to pay more in the long run since the unpaid $1000 would capitalize and I would start owing interest on it. If I paid off the $1400 in interest each month on a regular repayment plan I would have less money to use each month. PAYE essentially allows me to defer the payment of $1000/month until I begin biglaw without incurring the penalty of having to pay more interest. In the end I do essentially pay $17k in interest during my clerk year and my loan balance stays the same, but I am able to live comfortably. I would have to live like a monk to actually reduce my loan balance while clerking since I'm in a somewhat high CoL area. If you were planning on making payments greater than your interest accrual, then PAYE isn't going to be beneficial if you're merely going to leave PAYE once you start biglaw. Whether you can make payments greater than your interest accrual depends on the CoL where you're clerking as well as the standard of living you choose to have while clerking.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Mon Oct 27, 2014 9:11 am

Anonymous User wrote:
Anonymous User wrote:Debt: $220,000 (small scholarship from a t-14)
Payments: ?
Income: clerk, so high 50s
Plan: IBR?
Important info: Heading to NYC big law after this year


Should I refinance with SoFi?

I'm in this situation now, and a friend of mine was recently in this situation.

My friend refinanced to a 10 year SoFi when they started clerking and refinanced to a 5 year SoFi when they started biglaw. Keep in mind that you might need a cosigner to refinance while clerking (SoFi said that I would because my clerk salary is too low compared to my debt). A 10 year SoFi would net me an interest rate probably somewhere just shy of 6% (compared to the ~7% range on my loans currently). With a sticker debt load, that would be a savings of ~$3000 in interest. While that seems nice and maybe I'm just being foolish, I'm not convinced it's worth the hassle of refinancing twice, having my parents cosign, and losing the flexibility afforded by federal loans is worth saving a few thousand dollars by refinancing while clerking, especially when I will likely pay upwards of 300k to fully pay off my loans.

I've seen some people suggest doing PAYE while clerking before switching to a regular repayment plan which I think does serve a small benefit. Under PAYE, my loan payments would be ~$400. The gov will pay the unpaid interest on my Direct Subsidized Loans, but this is mostly meaningless because only $8500 worth of my sticker price loans are subsidized (after 2011, graduate students were no longer eligible for Direct Subsidized Loans). The overall unpaid interest will not capitalize until you no longer have a partial financial hardship or leave PAYE (with sticker or near sticker loans, you will still have a PFH until approximately your loans are lower than your salary).

My loans accrue about ~$1400 in interest per month. If I did not to do PAYE and only made $400 payments each month, I would have to pay more in the long run since the unpaid $1000 would capitalize and I would start owing interest on it. If I paid off the $1400 in interest each month on a regular repayment plan I would have less money to use each month. PAYE essentially allows me to defer the payment of $1000/month until I begin biglaw without incurring the penalty of having to pay more interest. In the end I do essentially pay $17k in interest during my clerk year and my loan balance stays the same, but I am able to live comfortably. I would have to live like a monk to actually reduce my loan balance while clerking since I'm in a somewhat high CoL area. If you were planning on making payments greater than your interest accrual, then PAYE isn't going to be beneficial if you're merely going to leave PAYE once you start biglaw. Whether you can make payments greater than your interest accrual depends on the CoL where you're clerking as well as the standard of living you choose to have while clerking.


I'll address the "should i refinance with Sofi" question since you did a good job answering the "should i refinance with Sofi NOW" question.

I was in a very similar position. You will save a lot in interest if you refinance but you will lose the federal protections associated with your loans now (PAYE, IBR). You probably know this already but you really have to think about what that means.

I'm not sure your situation in life (family, kids, etc.) but if you are working NYC biglaw and you are really frugal you might be able to pay $5k per month on your loans. Obviously if you have a dual-income home or kids or something like that it will change things but let's just assume 5k for now. That's a very aggressive payment schedule. 220k at 4% (assuming this is the rate you'll get) throwing 5k/mo. on the loans will take you 4 years. Do you plan on staying NYC biglaw for 4 years? Can you imagine living very very frugally for 4 entire years? Do you plan on having kids or a family or paying for a wedding during that time? If you pay 4k/mo it will take you 5 years to pay it off.

Another way to approach it is to think how long until the loans are serviceable by a non-biglaw salary? That depends on the salary but as a point of reference it will take you a little over 2 years to get your debt to 100k using the 5k/mo. method. It will take closer to 3 years to hit 100k paying 4k/mo.

A lot of folks in biglaw leave in the 3-5 year range so I think its very conceivable that can pay off the debt before you leave biglaw. However, you have to figure out if you can sustain the lifestyle necessary to make those huge monthly payments. I'd recommend making a fake budget. You are leaving your clerkship soon so you might have some real numbers to play with. It's hard to get a sense of what it actually feels like to be in biglaw and making these payments but do your best to figure out how much money you'll have to spend on various things and whether you are OK with that for the next few years. Keep in mind you will be in a different place in 2, 3, 4 years from now. You might want to spend money on dates trying to find a mate. You might want to have a kid. You have to think about things like this when you lock yourself into paying back a non-dischargeable mortgage for a piece of paper with minimal protections (Sofi does say you get a year of forbearance).

I am happy I refinanced but I really don't think it is right for everyone. Think long and hard about this.

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Re: Student loan payments: Actual numbers

Postby XxSpyKEx » Mon Oct 27, 2014 12:51 pm

Anonymous User wrote:I'm not sure your situation in life (family, kids, etc.) but if you are working NYC biglaw and you are really frugal you might be able to pay $5k per month on your loans. Obviously if you have a dual-income home or kids or something like that it will change things but let's just assume 5k for now. That's a very aggressive payment schedule. 220k at 4% (assuming this is the rate you'll get) throwing 5k/mo. on the loans will take you 4 years. Do you plan on staying NYC biglaw for 4 years? Can you imagine living very very frugally for 4 entire years? Do you plan on having kids or a family or paying for a wedding during that time? If you pay 4k/mo it will take you 5 years to pay it off.

Another way to approach it is to think how long until the loans are serviceable by a non-biglaw salary? That depends on the salary but as a point of reference it will take you a little over 2 years to get your debt to 100k using the 5k/mo. method. It will take closer to 3 years to hit 100k paying 4k/mo.


Living frugally for 4 years while working in biglaw (out of the likely 3-5 year biglaw career), and only having repaid your student loans to show for it sucks so badly. It's crazy that this is the law school lottery's winning situation (i.e. with getting biglaw). 0Ls should be forced to read this thread before borrowing a quarter million dollars for law school, even if it's for a t14.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Mon Oct 27, 2014 5:47 pm

This thread has been awesome. Looking for a little insight here, if Zweitbester or BigShrimpin has some advice, I saw they had some good info a couple pages back.

I accepted a position in Texas, pays close to NYC (maybe slightly less as the years go on). I have something like 25k in stocks (many of which are those that follow the market ETFs/Index). I will have about 180k total in loans when I graduate (with some being UG loans).

always thought I would keep the 25k in the market just in case, and throw everything I can at loans till gone. Is this the best way? Would it be better to throw the 25k at the loans now?

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~

Postby KM2016 » Mon Oct 27, 2014 6:14 pm

Anonymous User wrote:This thread has been awesome. Looking for a little insight here, if Zweitbester or BigShrimpin has some advice, I saw they had some good info a couple pages back.

I accepted a position in Texas, pays close to NYC (maybe slightly less as the years go on). I have something like 25k in stocks (many of which are those that follow the market ETFs/Index). I will have about 180k total in loans when I graduate (with some being UG loans).

always thought I would keep the 25k in the market just in case, and throw everything I can at loans till gone. Is this the best way? Would it be better to throw the 25k at the loans now?


If your interest rates are higher than your average return rates on the $25k in the market, pull the money out and put it towards loans.

It's better to pay down loans with ~6%+ interest rather than have money only making ~3-5% return. That being said, if your money in the market is killing it, leave it there.

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Re: Student loan payments: Actual numbers

Postby indo » Mon Oct 27, 2014 6:46 pm

Anonymous User wrote:Debt: ~148k (DNCG with 42k scholarship) including capitalized interest
Split: $82k in 2 GradPlus loans at 7.9%, $66k in 2 Stafford loans at 6.55%
Plan: 10 year repayment
Minimum Payment: $1,758/month
Payment that I actually make: $2,500/month (extra goes to the Grad Plus)
Salary: $160k

Principal at end of year 1: $130,835.18


Thanks , Great info

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prezidentv8
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Re: ~

Postby prezidentv8 » Mon Oct 27, 2014 10:34 pm

KM2016 wrote:That being said, if your money in the market is killing it, leave it there.


On the other hand, past returns do not guarantee future performance.

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Re: Student loan payments: Actual numbers

Postby bdubs » Mon Oct 27, 2014 11:03 pm

I just went all in on my SoFi app since the rates are so damn low. If I get the "pre-approval" rate on the 10 year variable I will be very happy.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Mon Nov 03, 2014 9:09 pm

bdubs wrote:I just went all in on my SoFi app since the rates are so damn low. If I get the "pre-approval" rate on the 10 year variable I will be very happy.


Yep. also received an updated interest rate letter today (variable) and was about to panic, but the interest rate actually decreased. Ecstatic.

Edited for literacy.

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Re: Student loan payments: Actual numbers

Postby GOATlawman » Mon Nov 03, 2014 10:49 pm

Anonymous User wrote:
bdubs wrote:I just went all in on my SoFi app since the rates are so damn low. If I get the "pre-approval" rate on the 10 year variable I will be very happy.


Yep. also received an updated interest rate letter today (variable) and was about to panic, but the interest rate actually decreased. Ecstatic.

Edited for literacy.


Fed says it's going to keep interests stable for a little while longer now that QE is over. Expect them to steadily climb after not too long though

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Nov 04, 2014 12:04 am

GOATlawman wrote:
Anonymous User wrote:
bdubs wrote:I just went all in on my SoFi app since the rates are so damn low. If I get the "pre-approval" rate on the 10 year variable I will be very happy.


Yep. also received an updated interest rate letter today (variable) and was about to panic, but the interest rate actually decreased. Ecstatic.

Edited for literacy.


Fed says it's going to keep interests stable for a little while longer now that QE is over. Expect them to steadily climb after not too long though


I figured as much. Still going to aggressively pay down but 2.91 interest rate is still sitting pretty.

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Re: Student loan payments: Actual numbers

Postby r6_philly » Tue Nov 04, 2014 9:02 am

GOATlawman wrote:
Anonymous User wrote:
bdubs wrote:I just went all in on my SoFi app since the rates are so damn low. If I get the "pre-approval" rate on the 10 year variable I will be very happy.


Yep. also received an updated interest rate letter today (variable) and was about to panic, but the interest rate actually decreased. Ecstatic.

Edited for literacy.


Fed says it's going to keep interests stable for a little while longer now that QE is over. Expect them to steadily climb after not too long though


But cost of variable rate student loan debt will probably still be much lower than all other kind of debt, seeing 30 year mortgage is over 4% already.

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Re: Student loan payments: Actual numbers

Postby XxSpyKEx » Tue Nov 04, 2014 3:55 pm

r6_philly wrote:
GOATlawman wrote:
Anonymous User wrote:
bdubs wrote:I just went all in on my SoFi app since the rates are so damn low. If I get the "pre-approval" rate on the 10 year variable I will be very happy.


Yep. also received an updated interest rate letter today (variable) and was about to panic, but the interest rate actually decreased. Ecstatic.

Edited for literacy.


Fed says it's going to keep interests stable for a little while longer now that QE is over. Expect them to steadily climb after not too long though


But cost of variable rate student loan debt will probably still be much lower than all other kind of debt, seeing 30 year mortgage is over 4% already.


Yeah, but you're comparing a 30-year fixed rate mortgage to a 5-10 year variable rate student loan. The 4% rate is a lot lower in the long-term, seeing as how you can't get anywhere near a 4% fixed rate on your student loans (the max repayment if 15 years, and that's at closer to 7.5%).. These variable rate loans would basically be like the mortgage bubble in 2007 if these companies weren't as on the ball about who to refinance (and at what rate) as they are.

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Re: Student loan payments: Actual numbers

Postby r6_philly » Tue Nov 04, 2014 11:37 pm

My point is when variable rates go up so will fixed rate mortgage. So mortgage (that you originate then) wouldn't be 4% neither. Basically, with that kind of spread (<3%) it's going to be attractive debt as compared to other debts AT THAT TIME. Besides it's likely the variable has both a yearly cap and total cap on increases.

My mortgage from years ago was in the 10s, I know.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Nov 04, 2014 11:41 pm

S/o has around 50k in grad school debt and just got approved for PAYE (works at a school). I'm a 3L w/ around 70k in debt.

My question is, when I graduate, and if we get married, will my s/o PAYE take in to account my lawl salary? We would probably file separate tax returns, not sure if that matters.

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Re: Student loan payments: Actual numbers

Postby r6_philly » Tue Nov 04, 2014 11:44 pm

Anonymous User wrote:S/o has around 50k in grad school debt and just got approved for PAYE (works at a school). I'm a 3L w/ around 70k in debt.

My question is, when I graduate, and if we get married, will my s/o PAYE take in to account my lawl salary? We would probably file separate tax returns, not sure if that matters.


Yes but they can consider your debts together too, you wi probably still qualify. Why file separate you lose credits.

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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Tue Nov 04, 2014 11:49 pm

XxSpyKEx wrote: seeing as how you can't get anywhere near a 4% fixed rate on your student loans (the max repayment if 15 years, and that's at closer to 7.5%)


Flips88 wrote:Checking in.

Debt: $260k (sticker T14)
Salary: $160k
Payment plan: currently standard 10-year.

I'm looking at SoFi refinancing and the options they have and was wondering if anyone had input on what's the most advisable one to choose.

Current estimated payments: $3k/month. First month payment is only $2,200 for some reason?

SoFi estimates:
10-year fixed: $2.7k/month
15-year fixed: $2.1k/month
10-year variable: $2.5k/month
15-year variable: $1.8k/month


That 10 year fixed number corresponds to about a 5% interest rate, and I've seen lower.

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

Postby A. Nony Mouse » Tue Nov 04, 2014 11:52 pm

Anonymous User wrote:S/o has around 50k in grad school debt and just got approved for PAYE (works at a school). I'm a 3L w/ around 70k in debt.

My question is, when I graduate, and if we get married, will my s/o PAYE take in to account my lawl salary? We would probably file separate tax returns, not sure if that matters.

Currently, I'm pretty sure that if you file separate tax returns, her PAYE will only consider her salary. However, Obama's proposed 2015 budget is supposed to include a change where even if you file separately, the payment will be calculated based on household income, not individual income. I have no idea where that stands in terms of being implemented, though.

(Also, if you're in a community property state, this can fuck it all up, too, I think.)

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Re: Student loan payments: Actual numbers

Postby XxSpyKEx » Wed Nov 05, 2014 4:38 pm

A. Nony Mouse wrote:
Anonymous User wrote:S/o has around 50k in grad school debt and just got approved for PAYE (works at a school). I'm a 3L w/ around 70k in debt.

My question is, when I graduate, and if we get married, will my s/o PAYE take in to account my lawl salary? We would probably file separate tax returns, not sure if that matters.

Currently, I'm pretty sure that if you file separate tax returns, her PAYE will only consider her salary. However, Obama's proposed 2015 budget is supposed to include a change where even if you file separately, the payment will be calculated based on household income, not individual income. I have no idea where that stands in terms of being implemented, though.

(Also, if you're in a community property state, this can fuck it all up, too, I think.)


In other words, don't get married if you're going to be working in biglaw because you'll basically wind up repaying her student loans. You might also wind up paying more in taxes overall than you would being unmarried and filing as a single person (depending how much your s/o makes at the school).

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Nov 05, 2014 4:46 pm

Debt: $140,000

Payments: $0

Income: $48,000 (state-clerk)

Plan: PAYE

I passed the 6 month mark while working part time before my clerkship started so the gubbermint thinks I make $11k a year. I'm pretty sure this is legit. They haven't rechecked my income yet, anyway. Fed clerking again next year. I'm going to die alone and in debt.

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Wed Nov 05, 2014 6:16 pm

There is a forum called "Student Doctor Network" which has a Financial Aid sub forum.

There are some interesting and more developed opinions on PAYE and other repayment methods for people who will be servicing even higher debt loads.

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Re: Student loan payments: Actual numbers

Postby bk1 » Wed Nov 05, 2014 8:26 pm

JenDarby wrote:There is a forum called "Student Doctor Network" which has a Financial Aid sub forum.

There are some interesting and more developed opinions on PAYE and other repayment methods for people who will be servicing even higher debt loads.

Mind linking to those opinions?




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