Student loan payments: Actual numbers

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thewaterlanding
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Re: Student loan payments: Actual numbers

Postby thewaterlanding » Mon Feb 23, 2015 1:40 pm

When should you look into refinancing? I am a 3L and have a job, but didn't know if I should wait after a couple months of payments before looking into refinancing or if I could do it up front? Would my interest rate lower? I think my weighted average is 6.5%

Thanks guys for the help in advance.

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hous
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Re: Student loan payments: Actual numbers

Postby hous » Mon Feb 23, 2015 9:22 pm

thewaterlanding wrote:When should you look into refinancing? I am a 3L and have a job, but didn't know if I should wait after a couple months of payments before looking into refinancing or if I could do it up front? Would my interest rate lower? I think my weighted average is 6.5%

Thanks guys for the help in advance.


Sofi will consider you if you have proof of employment (letter from employer stating your salary and start date). If you decide to apply with Sofi, consider using my referral code (we'll each get $100 if you refinance with them). https://www.sofi.com/refer/5/11233

But you need to shop around with DBR and commonbond as well to see who gives you the best interest rates.

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Thu Mar 12, 2015 7:28 pm

When are you variable rate gamblers gonna lock something in?

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Thu Mar 12, 2015 7:42 pm

rate hike seems 50/50 in June. Not sure how fixed rate forecasting works--if they just put points on current prime rate or not. Like if yellen announced tomorrow "rates go up in June" does that affect sofi/drb's fixed quote to you?

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Old Gregg
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Re: Student loan payments: Actual numbers

Postby Old Gregg » Thu Mar 12, 2015 7:48 pm

lacrossebrother wrote:rate hike seems 50/50 in June. Not sure how fixed rate forecasting works--if they just put points on current prime rate or not. Like if yellen announced tomorrow "rates go up in June" does that affect sofi/drb's fixed quote to you?


rate hike won't be significant. itll be very gradual. odds are that itll take a couple years of significant, multi-point hikes for the variable rate to start having a huge impact on monthly payments.

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Old Gregg
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Re: Student loan payments: Actual numbers

Postby Old Gregg » Sat Mar 14, 2015 12:20 pm

havent done hte student loan borrowing game in a while because i graduated so many years ago. the GF just got into an MBA program and her tuition is covered, but she'll still need to take out loans to cover cost of living expenses and those random international party trips those people go on. should she do federal loans for what'll amount to maybe a grand total of $40k borrowed or just use a private lender (i looked at SoFi and the up front borrowing interest rates don't look great..)?

WhirledWorld
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Re: Student loan payments: Actual numbers

Postby WhirledWorld » Mon Mar 16, 2015 1:17 pm

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Last edited by WhirledWorld on Fri Sep 18, 2015 10:39 am, edited 1 time in total.

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Mon Mar 16, 2015 7:40 pm

2 Quick Questions:

I'll be graduating in May and am looking to refinance.

1) Are you able to pick and choose which loans are refinanced, or is it all or nothing? I have a few loans with low interest rates, and I imagine they'll have better rates than what I'm offered through refinancing. Am I able to only refinance my high interest rate loans? Along those lines, if I get an quote on all of my loans (just to see if perhaps they can beat my low interest ones), and if they don't, then take those out of the refinancing package?

2) How does refinancing affect the grace period? Will refinancers honor the 6 month grace period, or do you have to start paying right when you refinance? If they make you pay right away, I'm guessing it would be best to simply wait 5 months, then refinance?

Thanks.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Mar 17, 2015 3:15 pm

Anonymous User wrote:2 Quick Questions:

I'll be graduating in May and am looking to refinance.

1) Are you able to pick and choose which loans are refinanced, or is it all or nothing? I have a few loans with low interest rates, and I imagine they'll have better rates than what I'm offered through refinancing. Am I able to only refinance my high interest rate loans? Along those lines, if I get an quote on all of my loans (just to see if perhaps they can beat my low interest ones), and if they don't, then take those out of the refinancing package?

2) How does refinancing affect the grace period? Will refinancers honor the 6 month grace period, or do you have to start paying right when you refinance? If they make you pay right away, I'm guessing it would be best to simply wait 5 months, then refinance?

Thanks.


1. Yes, you can pick and choose. You also are not held to your quote.

2. No idea, sorry.

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Tue Mar 17, 2015 3:59 pm

Anonymous User wrote:
Anonymous User wrote:2 Quick Questions:

I'll be graduating in May and am looking to refinance.

1) Are you able to pick and choose which loans are refinanced, or is it all or nothing? I have a few loans with low interest rates, and I imagine they'll have better rates than what I'm offered through refinancing. Am I able to only refinance my high interest rate loans? Along those lines, if I get an quote on all of my loans (just to see if perhaps they can beat my low interest ones), and if they don't, then take those out of the refinancing package?

2) How does refinancing affect the grace period? Will refinancers honor the 6 month grace period, or do you have to start paying right when you refinance? If they make you pay right away, I'm guessing it would be best to simply wait 5 months, then refinance?

Thanks.


1. Yes, you can pick and choose. You also are not held to your quote.

2. No idea, sorry.

2. I believe the answer is no. I would not submit refiancing applications until you are prepared to pay. But, do consider that the entire refinancing process will take a few weeks and then you usually won't owe your first payment for around 4-6 weeks.

KM2016
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Re: Student loan payments: Actual numbers

Postby KM2016 » Tue Mar 17, 2015 5:19 pm

JenDarby wrote:
Anonymous User wrote:
Anonymous User wrote:2 Quick Questions:

I'll be graduating in May and am looking to refinance.

1) Are you able to pick and choose which loans are refinanced, or is it all or nothing? I have a few loans with low interest rates, and I imagine they'll have better rates than what I'm offered through refinancing. Am I able to only refinance my high interest rate loans? Along those lines, if I get an quote on all of my loans (just to see if perhaps they can beat my low interest ones), and if they don't, then take those out of the refinancing package?

2) How does refinancing affect the grace period? Will refinancers honor the 6 month grace period, or do you have to start paying right when you refinance? If they make you pay right away, I'm guessing it would be best to simply wait 5 months, then refinance?

Thanks.


1. Yes, you can pick and choose. You also are not held to your quote.

2. No idea, sorry.

2. I believe the answer is no. I would not submit refiancing applications until you are prepared to pay. But, do consider that the entire refinancing process will take a few weeks and then you usually won't owe your first payment for around 4-6 weeks.


Sofi - SoFi will honor any existing grace periods on the loans that you refinance with us.

CommonBond - A handful of lenders, including CommonBond, honor your grace period so that you can refinance to a better rate and still wait to begin repayment.

DRB - The repayment of any refinance and/or consolidation student loan will commence immediately after disbursement by DRB. However, such repayment will not commence until any grace or in-school deferment period, existing prior to refinancing and/or consolidation with DRB, has expired.

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Mar 25, 2015 12:29 pm

Does anyone know: are there any downsides to going with DRB (assuming they offer the most competitive rate)?

My sense is that their forbearance policy is similar to Sofi/common bond and the main difference with their variable rates is that they only change on the quarter (which is more favorable, right?--at least assuming you're predicting the variable rates to go up over the next ~5 years).

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Killingly
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Re: Student loan payments: Actual numbers

Postby Killingly » Wed Mar 25, 2015 1:10 pm

hous wrote:
thewaterlanding wrote:When should you look into refinancing? I am a 3L and have a job, but didn't know if I should wait after a couple months of payments before looking into refinancing or if I could do it up front? Would my interest rate lower? I think my weighted average is 6.5%

Thanks guys for the help in advance.


Sofi will consider you if you have proof of employment (letter from employer stating your salary and start date). If you decide to apply with Sofi, consider using my referral code (we'll each get $100 if you refinance with them). https://www.sofi.com/refer/5/11233

But you need to shop around with DBR and commonbond as well to see who gives you the best interest rates.


I'm also a 3L and it's looking like I can't refinance with Sofi until after I pass the bar, which is too bad because that will be, like, October.... Has that been everyone else's experience? They won't even give me a quote because I haven't graduated yet.

so ambivalent
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Re: Student loan payments: Actual numbers

Postby so ambivalent » Wed Mar 25, 2015 1:37 pm

Tax return just came in. It won't be enough to knock out any of my loans but it will but a decent dent in some of the higher interest ones (e.g. fed plus loan). My question is: is there any benefit to letting those loans accrue interest and investing it instead? No way that any investment could make more than the almost 8% interest rate on those fed plus loans, but is there any other rationale for investing it in say a home downpayment or something like that?
Just curious what bother people have done and their rationales.
I feel no pressure to pay my loans right now (am on income based) and have plenty of money left over each month but when a home and a baby come in the next few years I am not so sure about whether I will want less loans or more money for in my pocket. Anyone been there?

bdubs
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Re: Student loan payments: Actual numbers

Postby bdubs » Wed Mar 25, 2015 1:52 pm

so ambivalent wrote:Tax return just came in. It won't be enough to knock out any of my loans but it will but a decent dent in some of the higher interest ones (e.g. fed plus loan). My question is: is there any benefit to letting those loans accrue interest and investing it instead? No way that any investment could make more than the almost 8% interest rate on those fed plus loans, but is there any other rationale for investing it in say a home downpayment or something like that?
Just curious what bother people have done and their rationales.
I feel no pressure to pay my loans right now (am on income based) and have plenty of money left over each month but when a home and a baby come in the next few years I am not so sure about whether I will want less loans or more money for in my pocket. Anyone been there?



Refi if you can and then save some/all for investing/emergency. If refi is not a possibility you should pay down your highest rate loans.

Vertigo1980
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Re: Student loan payments: Actual numbers

Postby Vertigo1980 » Sat Mar 28, 2015 12:52 pm

. My question is: is there any benefit to letting those loans accrue interest and investing it instead? No way that any investment could make more than the almost 8% interest rate on those fed plus loans, but is there any other rationale for investing it in say a home downpayment or something like that?


IMHO:

Build an emergency fund, then payoff debt like it is a disease. It is highly unlikely that you will find a "no-risk" return that will return more than the cost of the interest you incur to service your debt. To put it another way, by holding onto your student loan you are in essence borrowing (e.g. 100k of non-dischargeable debt) to invest it somewhere else. Would you do that if you had 0 debt? I doubt it, unless you are a gambler. What happens if your investments turn south and you get stuck with the anchor of debt... then double whammy.

Icing on the cake: If you have zero/minimal debt, you will be in a much better place to deal with a stressful job, job loss, etc. Your whole outlook on life will change. Good luck.

v5junior
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Re: Student loan payments: Actual numbers

Postby v5junior » Sat Mar 28, 2015 2:49 pm

I feel like people ask the investment vs. loan repayment vs. emergency fund question as if they are looking for a right answer. It's all about personal preference. A brief summary of the trade-offs:

Invest:
- Likely your highest expected return if you've refinanced your loans (which you should do), 8% long term rate of return is probably conservative
- Medium liquidity (depending partially on whether you're investing in a retirement account or a mutual fund etc.)
- Peace of mind knowing you'll have a nice nest egg when you retire

Loan Repayment:
- Safest investment; guaranteed rate of return at whatever your student loan interest rate is, assuming 3-5% b/c refinance.
- Zero liquidity
- Peace of mind knowing you'll have flexibility to take a lower-paying job b/c you won't have to make loan payments of $3k/month anymore

Emergency Fund (assuming that you just have this money sitting in a checking/savings account):
- Effectively 0 rate of return
- Perfect liquidity
- Peace of mind knowing you can still pay the bills even if you're unemployed/job hunting for a few months

Obviously there are other nuances you could bicker over, but this is really the framework for the decision. And then everyone has personal circumstances which change the calculation. E.g.,

Parents with money who are willing to float you for a few months, and you don't have a problem w/ asking them for money? Emergency fund peace of mind isn't worth as much.

Only have 5 figure student loan debt? Your monthly payments aren't going to be that restrictive anyway, might as well focus on the 401(k).

Maxed out your 401(k) already? Now the rate of return advantage of saving over loan repayment isn't as high, might want to focus on the loans.

Know you're going to get PSLF? Don't bother with loan repayment.

And the list goes on. But even with these personal circumstances, the dispositive factor is going to be your tolerance for different types of risk. There is no "one size fits all" for this decision.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Sat Mar 28, 2015 2:52 pm

So what is the general consensus on trying to pay off $250k in loans in NYC? How should you do it assuming you are working in big law?

v5junior
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Re: Student loan payments: Actual numbers

Postby v5junior » Sat Mar 28, 2015 2:54 pm

Anonymous User wrote:So what is the general consensus on trying to pay off $250k in loans in NYC? How should you do it assuming you are working in big law?


Lol. Maybe I should have said there is no "general consensus" instead of saying there is no "right answer."

Edit: solid use of anon though, I bet having 250k loans in NYC is likely to out you. :roll:

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JohannDeMann
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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Sat Mar 28, 2015 3:00 pm

Anonymous User wrote:So what is the general consensus on trying to pay off $250k in loans in NYC? How should you do it assuming you are working in big law?


you should start on PAYE and save all the money not going to your loans. Ride that out for a year or 2 and if biglaw looks long term viable, refi. If it doesn't look viable, you'll be glad you haven't sold out your PAYE lifeline yet.

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Old Gregg
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Re: Student loan payments: Actual numbers

Postby Old Gregg » Sat Mar 28, 2015 5:02 pm

JohannDeMann wrote:
Anonymous User wrote:So what is the general consensus on trying to pay off $250k in loans in NYC? How should you do it assuming you are working in big law?


you should start on PAYE and save all the money not going to your loans. Ride that out for a year or 2 and if biglaw looks long term viable, refi. If it doesn't look viable, you'll be glad you haven't sold out your PAYE lifeline yet.


why on earth would you wait tons of interest to accrue over 2 years before deciding to refi? those 2 years of payments would be completely wasted. they're going to nothing.


this is the worst advice ive ever seen.

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Sat Mar 28, 2015 5:07 pm

Old Gregg wrote:
JohannDeMann wrote:
Anonymous User wrote:So what is the general consensus on trying to pay off $250k in loans in NYC? How should you do it assuming you are working in big law?


you should start on PAYE and save all the money not going to your loans. Ride that out for a year or 2 and if biglaw looks long term viable, refi. If it doesn't look viable, you'll be glad you haven't sold out your PAYE lifeline yet.


why on earth would you wait tons of interest to accrue over 2 years before deciding to refi? those 2 years of payments would be completely wasted. they're going to nothing.


this is the worst advice ive ever seen.

Ya Bc it's impossible to get a return on money

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Old Gregg
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Re: Student loan payments: Actual numbers

Postby Old Gregg » Sat Mar 28, 2015 5:25 pm

On PAYE your payments aren't even enough to cover he interest accruing on the loans (assuming a normal debt load). BTW, the interest rate on those loans is in the 7% range. Do you know an investment vehicle that can beat that over 2 years? Probably not.

If you're going to take the 2 year PAYE route above, at least make payments you would've made if not for PAYE. That way your money will have done some work by the time you refinance.

dudders
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Re: Student loan payments: Actual numbers

Postby dudders » Sat Mar 28, 2015 5:46 pm

Law-School/Undergrad Debt: $240k (principal was about $228k)
Income: $53,000
Monthly Payment: $276/month - Pay As You Earn / PSLF program
Graduated- 2013
Note: Single. My total debt would be higher from compounding interest but last year I got a $5k forgiveness grant.

v5junior
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Re: Student loan payments: Actual numbers

Postby v5junior » Sat Mar 28, 2015 5:47 pm

[Johann, prolific hater of all things big law]: Dude, totally plan as if you're going to leave biglaw after 1 year/not be able to find a job to service that amount of debt. Just do wait for the PAYE bomb in 25 years, because I'd rather have no savings by the time I'm 50 (or risk having all of my savings wiped out unless this do-nothing Congress passes a law to eliminate the current tax bomb) than work in big law!

[people who think they will be able to tolerate biglaw/make enough money to pay off 250k loans over their life]: DUDE if you do PAYE you'll NEVER BE ABLE TO PAY OFF YOUR LOANS!!!! [ignoring that this is the whole premise of Johann's strategy]. WORST STRATEGY EVER.

Oh, look, another argument that's going to go in circles b/c people have different preferences, surprise!!!!! I wonder if there is some generalizable framework for determining what to consider on a case-by-case basis...




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