Student loan payments: get advice and actual numbers here Forum

[Johann]

here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)

what kind of job do you have?

soon biglaw 160 plus market

yeah just do whatever with the 2k. refi for the lowest variable rate you can get when you can.

[ballouttacontrol]

here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)

what kind of job do you have?

soon biglaw 160 (190K?) plus market

2k for an engagement ring when you make 6 figs? lmfaoooo. why not make it 1k and upgrade from mcdonald's to arby's to cater your wedding

[Anonymous User]

here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)

Unreal. This might be my favorite post of all time. Where did you attend law school?

[Anonymous User]

I also spent ~2k on an engagement ring. No regrets.

CCN-->Biglaw
(Of course, YMMV. I had to talk my fiancee up to $2,000. One of the many reasons I know I married the right person.)

[Anonymous User]

I also spent ~2k on an engagement ring. No regrets.

CCN-->Biglaw
(Of course, YMMV. I had to talk my fiancee up to $2,000. One of the many reasons I know I married the right person.)

Yeah, I actually think that's a good idea.

I was the one with loans (spouse didn't have any), but I would have been mad if spouse spent 10k on a ring and didn't give me cash for my loans. I ended up getting an heirloom ring from spouse's family instead.

[Anonymous User]

here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)

what kind of job do you have?

soon biglaw 160 (190K?) plus market

2k for an engagement ring when you make 6 figs? lmfaoooo. why not make it 1k and upgrade from mcdonald's to arby's to cater your wedding

I'm getting brown bags delivered to the wedding.

here's a new one: 80k debt, pay off 2k now or use it to buy an engagement ring (not paying more than 2k for a worthless ring)

Unreal. This might be my favorite post of all time. Where did you attend law school?

T14..... nice try

[duck]

dying at the "nice try"

[Mr. Peanutbutter]

LOOOOOOOOL

[Anonymous User]

I have been a long-term follower of this forum, and it has had a tangible impact on my law school journey and career-path. Im hoping to now get some insight from a financial perspective: I have just over 80k of debt (not including about 6k for a private bar loan). I have been clerking since graduation (1 year clerkship) and due to the modest paycheck, I’ve been on the pay as you earn plan.

Very fortunate to have accepted a public service loan forgiveness eligible position that will pay a comfortable amount (trying to stay as anon as possible here…the position pays between 80-100k). Do I: (1) continue on the PAYE plan, making minimal payments but aiming toward the goal of 9.5 more years on PAYE before the debt is wiped out; or (2) aggressively pay down the loans. Obviously, my ability to pay the loans aggressively will not compare to the ability of those making 160k and above. However, from what I have seen, 80k of debt seems to be below average, and given that my salary will be a bit higher than my debt load, I wonder if it makes sense to try and make a dent.

Background info: very excited about the position (my ideal legal career) and from what I understand if I do good work, low chance of suddenly losing the job (aka, better job security than biglaw). So, any thoughts, suggestions, or insight? What is the risk to being on PSLF and then leaving the job in a few years for some unknown reason, only to realize I never made a dent in the loans? On the other hand, is it foolish in my [lucky] situation to not take advantage of PSLF?

[JenDarby]

PSLF is basically a form of compensation in qualifying jobs.

UNDER NO CIRCUMSTANCES (unless maybe you leave a PSLF qualifying job for $$$) should you ever in the next 10 years pay more than the absolute minimum. You should actually be doing everything in your power to pay as little as possible.

[pigzorz]

I have been a long-term follower of this forum, and it has had a tangible impact on my law school journey and career-path. Im hoping to now get some insight from a financial perspective: I have just over 80k of debt (not including about 6k for a private bar loan). I have been clerking since graduation (1 year clerkship) and due to the modest paycheck, I’ve been on the pay as you earn plan.

Very fortunate to have accepted a public service loan forgiveness eligible position that will pay a comfortable amount (trying to stay as anon as possible here…the position pays between 80-100k). Do I: (1) continue on the PAYE plan, making minimal payments but aiming toward the goal of 9.5 more years on PAYE before the debt is wiped out; or (2) aggressively pay down the loans. Obviously, my ability to pay the loans aggressively will not compare to the ability of those making 160k and above. However, from what I have seen, 80k of debt seems to be below average, and given that my salary will be a bit higher than my debt load, I wonder if it makes sense to try and make a dent.

Background info: very excited about the position (my ideal legal career) and from what I understand if I do good work, low chance of suddenly losing the job (aka, better job security than biglaw). So, any thoughts, suggestions, or insight? What is the risk to being on PSLF and then leaving the job in a few years for some unknown reason, only to realize I never made a dent in the loans? On the other hand, is it foolish in my [lucky] situation to not take advantage of PSLF?

Sort of depends on whether you'll be married, which could change things if your spouse has a large salary. But, your latter suggestion is the right way of thinking unless that's the case (i.e. it is foolish not to take advantage of PSLF).

Even at 100k, by contributing a substantial amount to retirement savings, you can significantly reduce your AGI. You can contribute $18,000 a year to your 457(b) (401k equivalent) and another $5,500 to an IRA. At 100k/yr that would reduce your AGI under $80k. Subtract 150% of the FPL (which is $11,880x1.5=17,820) and your AGI is around 60k. So yearly payments of 6k is about 60k of payments over the next 10 years. Obviously at $80k/year, it makes even more sense.

If your loans average 6.5% interest, you'd pay $110k over the next 10 years on a standard repayment plan.

However, if you marry a high-earning person at some point in your repayment years, it could change the math. However, you can file separately still and the government won't count your spouse's income (although you sacrifice some meaningful tax credits). Interestingly, even if you file separately, you can still count your spouse (and any kids) as part of your household, thereby significantly increasing your federal poverty line reduction in determining your discretionary income.

[Tiago Splitter]

PSLF is basically a form of compensation in qualifying jobs.

UNDER NO CIRCUMSTANCES (unless maybe you leave a PSLF qualifying job for $$$) should you ever in the next 10 years pay more than the absolute minimum. You should actually be doing everything in your power to pay as little as possible.

While normally this is excellent advice someone making 100k might actually pay off the whole thing even under PAYE before anything can be forgiven. OP I would recommend maxing out your 401k/403b/TSP to get your AGI as low as possible so that your minimum payments remain fairly low. To the extent you do have extra money beyond your employer retirement plan stash it away somewhere safe and don't just throw it at the loans unless your circumstances change (i.e. you switch to a non-PSLF job or your income ends up too high for there to be anything to forgive after 10 years).

EDIT: Scooped. Good advice above. If you have access to both a 403b and a 457 you can max out both.

[pigzorz]

Do make sure, though, that you consider what your future compensation will be like. If you're taking a federal job, for example, you may move up the pay scale more rapidly than you realize. The math is pretty simple to figure out, but there comes a point where the savings may not be worth the risk that you lose your job/something happens to PSLF/forgiveness is capped and you're stuck footing a big bill that you built up trying to save a few hundred bucks.

[JenDarby]

I should caveat my advice as tentative to pay but so long as you aren't making 6 figures your payments should be well below paying off the entirety over 10 years, especially when you factor in the johann method for a couple years. I definitely would focus on savings in his position until and only IF his circumstance change.

[Anonymous User]

So I'm a recent grad, have roughly $160k in debt (6.5%) and am making 150k in high CoL area. My SO and I have pretty significant savings/stocks (something like 30/70k and IRAs/other retirement stuff).

I'm thinking about doing a re-fi on my two highest interest loans (7.2 and 6.8%) which would take the remaining 100k down to about 6.2%. I guess my question is, does this re-fi make sense? Should I be looking at variable or fixed? Right now I'm paying about $2,500/mo and could bump that up if I wanted to stop contributing to savings (or contribute less). I feel like I've kinda committed to repaying as quickly as possible, but I'm not sure what my best options are (and I don't know that I want to take the plunge and re-fi everything).

Thanks.

This is almost exactly what I did - taking my 7.X%s and throwing them into Sofi. I personally opted for a 10 year variable to diversify the federal loans I'm keeping and because I don't anticipate the variable rate catching the fixed rate they offered me for at least 2 years (frankly longer if the market stays like it is now) and I plan to have it paid off in 5ish.

That being said - this thread is all aboard the leave them in Fed, do PAYE and pay the minimum so the above approach will likely be criticized, but I'm happy with the decision.

160k is not THAT big of a debt load and it probably makes sense to pay it off. just stagger your refi amounts so you can take advantage of fed gov protection on the low interest rates while try to aggressively pay off the refi'd high interest loans

Thanks for the input - I'm probably a bit late for the PAY-E train in any event (and I thought the break-even point was pretty high too). My plan is to have the remainder of the loans paid off in five years as well, so I guess we'll see.

[Anonymous User]

I have been a long-term follower of this forum, and it has had a tangible impact on my law school journey and career-path. Im hoping to now get some insight from a financial perspective: I have just over 80k of debt (not including about 6k for a private bar loan). I have been clerking since graduation (1 year clerkship) and due to the modest paycheck, I’ve been on the pay as you earn plan.

Very fortunate to have accepted a public service loan forgiveness eligible position that will pay a comfortable amount (trying to stay as anon as possible here…the position pays between 80-100k). Do I: (1) continue on the PAYE plan, making minimal payments but aiming toward the goal of 9.5 more years on PAYE before the debt is wiped out; or (2) aggressively pay down the loans. Obviously, my ability to pay the loans aggressively will not compare to the ability of those making 160k and above. However, from what I have seen, 80k of debt seems to be below average, and given that my salary will be a bit higher than my debt load, I wonder if it makes sense to try and make a dent.

Background info: very excited about the position (my ideal legal career) and from what I understand if I do good work, low chance of suddenly losing the job (aka, better job security than biglaw). So, any thoughts, suggestions, or insight? What is the risk to being on PSLF and then leaving the job in a few years for some unknown reason, only to realize I never made a dent in the loans? On the other hand, is it foolish in my [lucky] situation to not take advantage of PSLF?

Sort of depends on whether you'll be married, which could change things if your spouse has a large salary. But, your latter suggestion is the right way of thinking unless that's the case (i.e. it is foolish not to take advantage of PSLF).

Even at 100k, by contributing a substantial amount to retirement savings, you can significantly reduce your AGI. You can contribute $18,000 a year to your 457(b) (401k equivalent) and another $5,500 to an IRA. At 100k/yr that would reduce your AGI under $80k. Subtract 150% of the FPL (which is $11,880x1.5=17,820) and your AGI is around 60k. So yearly payments of 6k is about 60k of payments over the next 10 years. Obviously at $80k/year, it makes even more sense.

If your loans average 6.5% interest, you'd pay $110k over the next 10 years on a standard repayment plan.

However, if you marry a high-earning person at some point in your repayment years, it could change the math. However, you can file separately still and the government won't count your spouse's income (although you sacrifice some meaningful tax credits). Interestingly, even if you file separately, you can still count your spouse (and any kids) as part of your household, thereby significantly increasing your federal poverty line reduction in determining your discretionary income.

OP here (PSLF+PAYE question a few posts above). Thank you for these responses. Not currently married--perhaps in a couple years, but my partner will likely be earning significantly less than me. My plan for now will be to max out the 457(b)+IRA+TSP...and attempt to get the full benefit of PSLF program.

[Leonardo DiCaprio]

how unrealistic is it to plan to use SA money to pay towards loans? read through some threads here and it seems like consensus is that most people blow their SA money long before they make any loan payments while in school.

[stretchedtoothin]

how unrealistic is it to plan to use SA money to pay towards loans? read through some threads here and it seems like consensus is that most people blow their SA money long before they make any loan payments while in school.

save as much SA money as you can and just take out less loans during 3L

It's not unrealistic and it's not that hard. Making loan payments is probably a dumb idea because you're getting fucked with origination fees, anyway. You're better off just taking out less loans

[Anonymous User]

how unrealistic is it to plan to use SA money to pay towards loans? read through some threads here and it seems like consensus is that most people blow their SA money long before they make any loan payments while in school.

save as much SA money as you can and just take out less loans during 3L

It's not unrealistic and it's not that hard. Making loan payments is probably a dumb idea because you're getting fucked with origination fees, anyway. You're better off just taking out less loans

i see. would it also be advisable to just save it? people who enter biglaw usually spend the first few months saving up an emergency fund. should i just save the SA money as that emergency fund so i can start throwing money into loans from my first paycheck of biglaw?

[Anonymous User]

how unrealistic is it to plan to use SA money to pay towards loans? read through some threads here and it seems like consensus is that most people blow their SA money long before they make any loan payments while in school.

save as much SA money as you can and just take out less loans during 3L

It's not unrealistic and it's not that hard. Making loan payments is probably a dumb idea because you're getting fucked with origination fees, anyway. You're better off just taking out less loans

i see. would it also be advisable to just save it? people who enter biglaw usually spend the first few months saving up an emergency fund. should i just save the SA money as that emergency fund so i can start throwing money into loans from my first paycheck of biglaw?

so you can start throwing money into a loan that you didnt need to take out in the first place, that has since increased in size due to capitalization + the 4% or whatever origination fee? i dont get how you don't get it: save a few k from your SA money if you want (i did), but you should probably use the bulk of it to just . . . not . . . take out as many 3L loans in the first place

[jess]

.

[anonnymouse]

I refi'd my student loans with SOFI about a year ago and had a great experience.

This week, I closed my first home purchase and used SOFI as the lender (they recently received approval for mortgages in my state). 30 year fixed, 10% down, no PMI, no origination fees, ~4.3% rate with no points. Very easy to work with and overall an excellent experience.

I am a satisfied customer.

yeah i was very close to using SoFi for my home but they had weird rules about new construction (as most lenders do). Congrats on the new home (and 10%, which is super hard to find IMO).

i used citi private bank and got 15% down, 3.2% interest and they didn't pull my credit.

Necroing this post from 40+ pages ago to ask OG and any others using Citi Private Bank what benefits having an account with them offers other than extra low mortgage rates?

[Anonymous User]

I refi'd my student loans with SOFI about a year ago and had a great experience.

This week, I closed my first home purchase and used SOFI as the lender (they recently received approval for mortgages in my state). 30 year fixed, 10% down, no PMI, no origination fees, ~4.3% rate with no points. Very easy to work with and overall an excellent experience.

I am a satisfied customer.

yeah i was very close to using SoFi for my home but they had weird rules about new construction (as most lenders do). Congrats on the new home (and 10%, which is super hard to find IMO).

i used citi private bank and got 15% down, 3.2% interest and they didn't pull my credit.

Necroing this post from 40+ pages ago to ask OG and any others using Citi Private Bank what benefits having an account with them offers other than extra low mortgage rates?

Do you have to pay to get an account with them? How does it work? 3.2% for a 30-year fixed with 15% down is outrageous.

[duck]

it is generally for high net worth individuals but they waive requirements for law firm clients

[Anonymous User]

it is generally for high net worth individuals but they waive requirements for law firm clients

Hm. So if my firm's not a client, I'm probably out of luck?