Student loan payments: get advice and actual numbers here Forum

[Johann]

You are pretty squarely in no man's land. You're not gonna be eligible for PAYE next year assuming you stay with the firm because your income will exceed your debt. So then you'll be on the 20 year min repayment anyways. But you are really only paying an extra $4,400 of dollars a year in accumulating interest every year at your current rate instead of refinancing. And you only pay this money if you end up staying private sector long term (so it's accumulating interest but you aren't actually paying it). I would ride minimum payments on PAYE for at least one more year and then reassess. What is your monthly payment under PAYE? What month do you have to renew your loan payment information/tax return?

Because of your possible kid, I would build the nest egg and stay PAYE and federal loans as long as you can if PSLF is a possibility.

[sweeteavodka]

You are pretty squarely in no man's land. You're not gonna be eligible for PAYE next year assuming you stay with the firm because your income will exceed your debt. So then you'll be on the 20 year min repayment anyways. But you are really only paying an extra $4,400 of dollars a year in accumulating interest every year at your current rate instead of refinancing. And you only pay this money if you end up staying private sector long term (so it's accumulating interest but you aren't actually paying it). I would ride minimum payments on PAYE for at least one more year and then reassess. What is your monthly payment under PAYE? What month do you have to renew your loan payment information/tax return?

Because of your possible kid, I would build the nest egg and stay PAYE and federal loans as long as you can if PSLF is a possibility.

Still in school now so paying nothing. I'll only have my SA income, so once I do enter repayment, PAYE would be super low for a year.

I agree that it doesn't make much sense to refi and give up potential PSLF forgiveness, but with my long-term uncertainty, not sure how much per month I should commit to debt service vs. saving/investing.

[Johann]

yeah then PAYE get your low payment and id only pay the minimum for a year and reassess. interest doesn't compound on PAYE so there is no real incentive to trying to pay down more aggressively than you have to.

[Doritos]

People overuse the term compound interest in here. You're not maximizing compound interest by investing early. You're getting a return on money vs. not. The way you guys write makes it seem like there's some exponential multiple applied so the rate of return is greater on $100 than $1 even with the same interest rates. The two different principals will follow a linear relationship.

10% of 100 = 10
10% of 1 = .1

10>.1?

time maximizes return if you reinvest your earnings, which most people do...

Exactly. Sorry if I wasn't clear. Maximize the effect of compounding interest through time.

[zot1]

Debt: $210K (dat sticker...)
Payments: $600/month under IBR, currently moving to PAYE for $400/month, Standard Payment Plan: $2,400/month (Um, nope, can't do that...)
Income: $90k (that's before taxes kiddos!), PSLF eligible job.
Plan: currently transfering from IBR to PAYE.

Misc info: Fed gov job (but not BIGFED), started trying to repay under the standard plan (almost $30k per year), decided that living like a hobo wasn't worth it, now I'm on the 10 year PSLF PAYE plan...

Just curious, what is considered "not BIGFED"? Is there like a difference in pay? Thanks.

[Anonymous User]

My S/O works at a school and is doing PAYE for her 50k of loans. I'm going big law. We will get married soon.

Question is - when we get married can she still do PAYE or will it take account my salary for the 10% threshold?

[Tiago Splitter]

My S/O works at a school and is doing PAYE for her 50k of loans. I'm going big law. We will get married soon.

Question is - when we get married can she still do PAYE or will it take account my salary for the 10% threshold?

It will take your income into account but will only require you two to pay 10% of the total disposable income. The amount will be allocated based on your respective loan balances. So if she has 50k of loans and you have 150k you'll be on the hook for 3/4 of the PAYE payment and she'll be on the hook for 1/4.

You could also file separately and deal with PAYE as if you were both single, but that may not make sense for you.

[Anonymous User]

delete

[Anonymous User]

My S/O works at a school and is doing PAYE for her 50k of loans. I'm going big law. We will get married soon.

Question is - when we get married can she still do PAYE or will it take account my salary for the 10% threshold?

It will take your income into account but will only require you two to pay 10% of the total disposable income. The amount will be allocated based on your respective loan balances. So if she has 50k of loans and you have 150k you'll be on the hook for 3/4 of the PAYE payment and she'll be on the hook for 1/4.

You could also file separately and deal with PAYE as if you were both single, but that may not make sense for you.

I will have 70k in loans. I was going to be aggressive and try and pay off within 2-3 years.

Should we still stick with her PAYE? Also the state gov pays around 6k because she is at a low income school.

[sinfiery]

A couple tax questions for some of you:


Is the stub year effective tax rate equal to making 40k because the income counted is only from September - December 31st?


For someone living in NYC, it seems like the standard deduction would never be taken because city+state taxes will eclipse that amount. What is the total deduction # some of you have if you are working and single + renting? (IE: Does biglaw/life in NYC lend itself to deducting anything else?)

[sener212]

Considering refinancing my already SOFI refinanced student loans with SOFI again.

My Refinanced SOFI Loan started at: $60,000 at 3.055% variable rate

I now have it down to $30,000.

Income of $160,000, and excellent credit score. I want to pay it off within 6-12 months.

Is it worth it to go through the hassle to refinance again? Sees to me with excellent credit, high income, and low principal, my interest rate should be lower..

[Anonymous User]

Considering refinancing my already SOFI refinanced student loans with SOFI again.

My Refinanced SOFI Loan started at: $60,000 at 3.055% variable rate

I now have it down to $30,000.

Income of $160,000, and excellent credit score. I want to pay it off within 6-12 months.

Is it worth it to go through the hassle to refinance again? Sees to me with excellent credit, high income, and low principal, my interest rate should be lower..

You can do the math yourself. My bet is that the amount of savings you'd gain from refinancing from a 3% variable rate to a 1.9% variable rate (the best case scenario IMO) is pretty minimal on $30,000 in loans--especially if this is only one year's worth of savings. Most likely, also, you're not going to refi to 1.9% variable: I'd bet that 2.5% is much more likely.

I actually just went through a refinance with a similar amount of loans and decided against variable for that reason--it would have saved me at most something like $500 over five years (which didn't seem worth the risk/stress of variable). If you could save $500 on a refinance, I'd say go for it--but I think your savings are going to be far less than that.

[Johann]

Considering refinancing my already SOFI refinanced student loans with SOFI again.

My Refinanced SOFI Loan started at: $60,000 at 3.055% variable rate

I now have it down to $30,000.

Income of $160,000, and excellent credit score. I want to pay it off within 6-12 months.

Is it worth it to go through the hassle to refinance again? Sees to me with excellent credit, high income, and low principal, my interest rate should be lower..

why do you want to pay off 3% loans immediately. people act like small amounts of debt are the plague. the s&p500 is like +8% in the last 6 months and 9% all in re dividend.

[sener212]

Considering refinancing my already SOFI refinanced student loans with SOFI again.

My Refinanced SOFI Loan started at: $60,000 at 3.055% variable rate

I now have it down to $30,000.

Income of $160,000, and excellent credit score. I want to pay it off within 6-12 months.

Is it worth it to go through the hassle to refinance again? Sees to me with excellent credit, high income, and low principal, my interest rate should be lower..

why do you want to pay off 3% loans immediately. people act like small amounts of debt are the plague. the s&p500 is like +8% in the last 6 months and 9% all in re dividend.

Mostly just wanna get rid of it and avoid the monthly payment. But true, financially I could make more than 3% elsewhere through investments.

Nevertheless, I guess the question is, is it reasonable to expect to get 1.5%-2.0% if I refinance again?

[Anonymous User]

Considering refinancing my already SOFI refinanced student loans with SOFI again.

My Refinanced SOFI Loan started at: $60,000 at 3.055% variable rate

I now have it down to $30,000.

Income of $160,000, and excellent credit score. I want to pay it off within 6-12 months.

Is it worth it to go through the hassle to refinance again? Sees to me with excellent credit, high income, and low principal, my interest rate should be lower..

why do you want to pay off 3% loans immediately. people act like small amounts of debt are the plague. the s&p500 is like +8% in the last 6 months and 9% all in re dividend.

Mostly just wanna get rid of it and avoid the monthly payment. But true, financially I could make more than 3% elsewhere through investments.

Nevertheless, I guess the question is, is it reasonable to expect to get 1.5%-2.0% if I refinance again?

I suspect not. What's changed? My sense is that you need more than a great credit score and strong DTI ratio to score a ~2% variable rate.

[JenDarby]

That refi rate is pretty high for those numbers compared to what other people ITT are getting lately.

[Johann]

Nobody's getting sub 2%. My point is saviing a percent for somethin you are paying off in 6 months is dumb as fuck and pointless. You're being cheap and trying to save $300 bucks when you are losing like multiple thousands by being financially stupid about your debt.

[sener212]

That refi rate is pretty high for those numbers compared to what other people ITT are getting lately.

Ya. That's what prompted me to ask about this. Obviously I'm not talking about any enormous savings, but Ive got no desire to pay any more in interest than is necessary. Anyways, just trying to get a feel for the possibility of a lower interest rate based on people's experiences.

[JenDarby]

That refi rate is pretty high for those numbers compared to what other people ITT are getting lately.

Ya. That's what prompted me to ask about this. Obviously I'm not talking about any enormous savings, but Ive got no desire to pay any more in interest than is necessary. Anyways, just trying to get a feel for the possibility of a lower interest rate based on people's experiences.

I think you have a solid chance at a lower refi rate. I would try, and having gone through it once you are familiar with the process so should be slightly less of a pain.

[sener212]

Nobody's getting sub 2%. My point is saviing a percent for somethin you are paying off in 6 months is dumb as fuck and pointless. You're being cheap and trying to save $300 bucks when you are losing like multiple thousands by being financially stupid about your debt.

Yea, I understood your point, but thanks for saying it once again - but this time in a meaner way.

[JenDarby]

Nobody's getting sub 2%. My point is saviing a percent for somethin you are paying off in 6 months is dumb as fuck and pointless. You're being cheap and trying to save $300 bucks when you are losing like multiple thousands by being financially stupid about your debt.

Sofi and CommonBond are both down to 1.90% as the bottom end which is lower than it was a few months ago. I know people who got sub 2.5% with closer to 100k of debt, so he could land close.

I also don't think some free time at work filling out a form is "dumb as fuck and pointless" even if it only saved $300. Then again, I walked 40 blocks to work today to save $2.50 though...

[Anonymous User]

Nobody's getting sub 2%. My point is saviing a percent for somethin you are paying off in 6 months is dumb as fuck and pointless. You're being cheap and trying to save $300 bucks when you are losing like multiple thousands by being financially stupid about your debt.

Sofi and CommonBond are both down to 1.90% as the bottom end which is lower than it was a few months ago. I know people who got sub 2.5% with closer to 100k of debt, so he could land close.

I also don't think some free time at work filling out a form is "dumb as fuck and pointless" even if it only saved $300. Then again, I walked 40 blocks to work today to save $2.50 though...

I have a >800 FICO score, a DTI <33%, a salary of over $125k, went to a T14 law school, have a pretty small rent check due every month, have additional savings/assets that exceed (albeit not by much) my loan burden, and have worked for several years--and yet SoFi and Common Bond both gave me >3% quotes on 5-year variable loans. I got something like 2.4% w/ DRB. (All quoted within the past couple weeks.) I suspect the 1.9% rates listed are not practically attainable--especially not for someone trying to refi within several years of law school.

On a $30,000 loan, the difference between a 3% rate and a 2.4% rate is about $8/month. That's <$100 over the course of the year. You've been through this before -- do you think it's worth spending the time necessary to put in an application (and take the accompanying credit hit) for a chance at $100 savings over the course of a year? Best case scenario is what, $180 in savings?

[Johann]

Nobody's getting sub 2%. My point is saviing a percent for somethin you are paying off in 6 months is dumb as fuck and pointless. You're being cheap and trying to save $300 bucks when you are losing like multiple thousands by being financially stupid about your debt.

Sofi and CommonBond are both down to 1.90% as the bottom end which is lower than it was a few months ago. I know people who got sub 2.5% with closer to 100k of debt, so he could land close.

I also don't think some free time at work filling out a form is "dumb as fuck and pointless" even if it only saved $300. Then again, I walked 40 blocks to work today to save $2.50 though...

If he wants to refi for a lower 5 year rate and payi t off over 5 years, that's a good plan. It's pointless though to refi for a lower rate and pay it off within 6 months. Just wanted to let someone know they were making a pretty dumb decision because of their bias and preference of being debt free. If anything else, it should be spelled out clearly so people in similar positions don't make this mistake. OP can piss away money if he wants.

[JenDarby]

He should consider investing, but if he doesn't want to then the refi process (especially the second time around and even more so with the same company) is really no big deal. I don't know why people make it out to be some massive pain, unless they have just never been through any actually admin heavy process in their life.

My credit score went down 5 points (stayed over 800) over a three month period after applying to all 3 of sofi, CommonBond and DRB.

I would re refi for a lower rate to save even a couple hundred dollars. Plus perhaps he would decide to pay over a longer period of time at some point post re refi after considering alternatives.

[sener212]

Nobody's getting sub 2%. My point is saviing a percent for somethin you are paying off in 6 months is dumb as fuck and pointless. You're being cheap and trying to save $300 bucks when you are losing like multiple thousands by being financially stupid about your debt.

Sofi and CommonBond are both down to 1.90% as the bottom end which is lower than it was a few months ago. I know people who got sub 2.5% with closer to 100k of debt, so he could land close.

I also don't think some free time at work filling out a form is "dumb as fuck and pointless" even if it only saved $300. Then again, I walked 40 blocks to work today to save $2.50 though...

If he wants to refi for a lower 5 year rate and payi t off over 5 years, that's a good plan. It's pointless though to refi for a lower rate and pay it off within 6 months. Just wanted to let someone know they were making a pretty dumb decision because of their bias and preference of being debt free. If anything else, it should be spelled out clearly so people in similar positions don't make this mistake. OP can piss away money if he wants.

1. It wouldn't be pointless - just wouldn't save that much money.

2. I really wouldn't be pissing away that much money. Think about it. How much money am I really losing by only failing to invest that money for 6 months? What if I begin investing as soon as im debt-free or near debt free? I'm only losing 6 months of opportunity to make invest. Granted I'm also losing the money I used to pay off the principal during that 6 months that I could have used to invest - but that has to be paid off eventually anyway. If I start tossing in $4000 a month into investments 6 months from now when I'm debt free I'm still going to make a lot of money, and I will have: (1) peace of mind over concern for getting laid off (2) generally more flexibility (switching jobs, buying a house, etc.). But it's true, and you're right, this is not the best way to maximize my chances of making money off of my money.