Private vs Fed Loan
Posted: Fri May 29, 2015 6:19 pm
.
Law School Discussion Forums
https://www.top-law-schools.com/forums/
https://www.top-law-schools.com/forums/viewtopic.php?f=15&t=248546
No, it was clear. Just repeating for emphasishairbear7 wrote:Yeah that's what I meant. Not sure if I typed it in a strange manner.
is a good balance between safe and "cheap."hairbear7 wrote:Would it be a better idea to take out federal loans for the added security and then refinance once I have graduated and know for sure that I have a job?
Yeah that all makes sense, thanks!Philafaler wrote:OL here.
I think it's misleading to consider the monthly payments with the two options, since you'll always have the opportunity to re-finance when you graduate. You should really only be looking at the total debt at repayment. According to your calculations, it costs 14k at repayment (period 0) to take out federal loans rather than private ones. That's essentially the cost of the benefits that go along with the federal loans, which could be quite valuable if the economy tanks, decide you would rather flip burgers than work biglaw, whatever.
Then when you graduate, you can gauge whether you feel comfortable refinancing to the private loan. The rate might even be lower than what you could get now because you'll have a more favorable debt-to-income ratio if you've got a biglaw job. I would take the federal loans and refinance at the end, if I were you. 14k is real money, and that 4% origination fee is bullshit, but I think the security is worth it.
Another ancillary point: I'm pretty sure you can use your first partial year's earnings to qualify for PAYE with super low payments, which could allow you to more easily build up an emergency savings fund in your first few months at work while only simple interest accumulates.
I cosign this.Philafaler wrote:OL here.
I think it's misleading to consider the monthly payments with the two options, since you'll always have the opportunity to re-finance when you graduate. You should really only be looking at the total debt at repayment. According to your calculations, it costs 14k at repayment (period 0) to take out federal loans rather than private ones. That's essentially the cost of the benefits that go along with the federal loans, which could be quite valuable if the economy tanks, decide you would rather flip burgers than work biglaw, whatever.
Then when you graduate, you can gauge whether you feel comfortable refinancing to the private loan. The rate might even be lower than what you could get now because you'll have a more favorable debt-to-income ratio if you've got a biglaw job. I would take the federal loans and refinance at the end, if I were you. 14k is real money, and that 4% origination fee is bullshit, but I think the security is worth it.
Another ancillary point: I'm pretty sure you can use your first partial year's earnings to qualify for PAYE with super low payments, which could allow you to more easily build up an emergency savings fund in your first few months at work while only simple interest accumulates.