Student loan payments: get advice and actual numbers here Forum

[bk1]

NY to 180 means you'll have about $1k/mo extra to throw at loans (or add to the tax bomb insurance fund if you are JohanDumbass). Or 1 extra mottle or bauble per month.

Go for cheaper mottles and you can get more than 1.

[anonnymouse]

NY to 180 means you'll have about $1k/mo extra to throw at loans (or add to the tax bomb insurance fund if you are JohanDumbass). Or 1 extra mottle or bauble per month.

Go for cheaper mottles and you can get more than 1.

Yeah right, you can only get cheaper mottles if you go all the way out to Inwood, Jersey, or Queens.

[Anonymous User]

Just graduated, I was wondering if/when I should try to refinance (e.g. SoFi, etc.)

Debt (everything together) = $109,000 (@ average ~6.8% interest)
Job = Will make 160K / year upcoming Fall.
Renting in Boston (~$2200 / month)
No other significant expenditures.

I realize this isn't a financial advising forum, but I am also wondering how aggressive I should be in trying to pay it down (especially if I refinance to a lower interest rate) while building up savings.

[Desert Fox]

Just graduated, I was wondering if/when I should try to refinance (e.g. SoFi, etc.)

Debt (everything together) = $109,000 (@ average ~6.8% interest)
Job = Will make 160K / year upcoming Fall.
Renting in Boston (~$2200 / month)
No other significant expenditures.

I realize this isn't a financial advising forum, but I am also wondering how aggressive I should be in trying to pay it down (especially if I refinance to a lower interest rate) while building up savings.

I'd refi and then get some savings and max ur 401k.

[Anonymous User]

Just graduated, I was wondering if/when I should try to refinance (e.g. SoFi, etc.)

Debt (everything together) = $109,000 (@ average ~6.8% interest)
Job = Will make 160K / year upcoming Fall.
Renting in Boston (~$2200 / month)
No other significant expenditures.

I realize this isn't a financial advising forum, but I am also wondering how aggressive I should be in trying to pay it down (especially if I refinance to a lower interest rate) while building up savings.

I'm graduating with double that amount of debt, with $180k in a different market. My plan is to put away around $1k per month into savings, and use every other penny I don't spend to aggressively pay down debt. I'm hoping to be out from under everything in 4-5 years, but from talking to other associates, that doesn't actually happen very often.

For you, you can probably afford to put more into savings/a 401k because that debt load (comparatively) isn't as bad, especially refinanced.

[Johann]

108 should refi for sure. id still ride PAYE for a year or 2 with the 180k salary at 200k+.

[El Pollito]

wow repaye is slow as hell

my loans have been in forbearance forever. so hard to force myself to keep paying them.

[jess]

.

[ballouttacontrol]

when did you guys apply? I did my repaye app a few weeks ago, so jw...

[jess]

.

[ballouttacontrol]

when did you guys apply? I did my repaye app a few weeks ago, so jw...

april. i was put in forbearance and told to pay a $5 forbearance payment. i paid that, then a month later, was told i have to pay $5 again. i paid that again. my next payment is due 6/28, but my servicer shows as the standard payment amount, which is like $3500. i will call them tomorrow.

thx.. is paye processed by your servicer or some govt agency? So then some could be shittier than others..are you with FedLoan?

[tiymay]

Current loan amount: $80k (had scholarship that covered most tuition, but needed $ for other school costs, and living in expensive city)
Income: $55k (file separate from husband)
IBR: my payments will be about $220/mo. Based on this past year, they're $110/mo. (but I had a lower income, before a raise, and was on maternity leave for awhile- that payment amount is based on about $30k)

I'm making lowest payments I can, plan to get PSLF.

[bern victim]

when did you guys apply? I did my repaye app a few weeks ago, so jw...

april. i was put in forbearance and told to pay a $5 forbearance payment. i paid that, then a month later, was told i have to pay $5 again. i paid that again. my next payment is due 6/28, but my servicer shows as the standard payment amount, which is like $3500. i will call them tomorrow.

thx.. is paye processed by your servicer or some govt agency? So then some could be shittier than others..are you with FedLoan?

processed by whatever shitty servicer you get assigned to

[BrittaBot]

april. i was put in forbearance and told to pay a $5 forbearance payment. i paid that, then a month later, was told i have to pay $5 again. i paid that again. my next payment is due 6/28, but my servicer shows as the standard payment amount, which is like $3500. i will call them tomorrow.

I applied in March, I think. (Well, really January but they screwed shit up). My REPAYE amount finally got calculated starting with my July payment. The thing I don't get is that I paid a total of three $5 payment amounts. The last one was "due" June 12th. Somehow on Friday I checked and it said "current payment due $0". I just checked again and it says "current payment due $902" which is my standard amount. I had received a "bill" for that amount a month ago but when I called the supervisor said to just ignore that bill and I'd get another one for $5 which I did. But then why is it still showing up on my account FOR ONE DAY as $902 due? I believe her but it's still not fun to see that. I don't know whether to call again today or wait till tomorrow because I'm sure I'll see PAST DUE on the account starting tomorrow...

[imalreadyamember?]

Looked through a lot of posts and realized I might be better off just posting my situation and asking for advice or at least making sure we're doing it the right way. I'll pepper some questions in here.

Married to another lawyer/debt-slave (as of about 2 weeks ago). Both of us are currently clerking and making minimum payments. She's going for PSLF. We're filing taxes separately (see Question 3 below). We're moving to NY soon---I'm starting a biglaw job and she's starting a has-a-soul public service job. I am trying to pay off my debt because I will probably not be in govt/public service for the requisite 9 years (I am open to the possibility, but even if I burn out of biglaw I plan to either continue at another firm or only do govt for a shorter time than that). The numbers:

Her first; debt ~$114k, income will be $62k. Already consolidated (apparently they said she had to?) and doing PAYE. We're paying off as little as possible for PSLF of course.

Me: debt is 246k (yep---law school and UG). Income will start at 190k (fingers crossed) or 170k (if we don't match). I'll get a 50k clerkship bonus (Question 1: do I deposit and save the bonus until after the clawback date so that I don't have to scramble to pay it back if I leave?).

Breaking down my debt a bit:
Loan 1: Stafford, $95.4k at avg. 6.07%. PAYE.
Loan 2: Grad PLUS, 117.6k at avg. 7.21%. PAYE.
Loan 3: Perkins, 22.4k at 5.0%. Standard.
Loan 4: Sallie Mae bar loan, 10.6k at 8.75% variable. Standard obviously.
Our credit card debt is fairly healthy at least.

I basically have to refinance because these rates are ludicrous. The Sallie Mae one is on me, and that's what I get for clerking (and having lower credit when I applied) I guess. Our first priority is the small amt of CC debt plus the highest loans first. We also really want to save some money in a retirement fund, an emergency fund, and regular savings/investments (especially for if I leave biglaw, which I'd prefer not happen for maybe 4-5 years at least, but burnout is always a distinct possibility).

Question 2: When do I refinance, and does that include all my loans? I figure I should either refi when I start work, or I wait a few months to pay off the higher-interest loans and get my credit up some more. But if that isn't going to help me, maybe it's better to refi earlier? And I leave out the Sallie Mae loan because it's the highest one? I just want to make sure I'm not doing it too early and locking in a higher rate than I otherwise would have after having paid off a couple and raised my credit (which isn't bad---like 715 recently, about 50 pts lower a year ago). I thought they just took the average rate of loans but people seem to say they get a much lower rate than I thought was possible. Sorry if this is a simple question.

Question 3: is it true that although we are filing taxes separately, my wife can somehow put a household of 2 and have lower payments? Is that actually allowed or just a shady loophole/trick? Where/how do we take advantage of that (assuming it's legal)?

Question 4: General advice? I've seen people on here tell others just to save as much as possible because biglaw is a short gig by nature, yet others say if you plan to stay for a while then pay off your debt. So should I really wait a certain amount of time, assess whether I'm going to be in it long-term, then take action (refi, etc.)?

Thanks, and sorry for the gigantic post.

Okay, that's enough for now. I'll add or answer anything missing if need be.

[BrittaBot]

I applied in March, I think. (Well, really January but they screwed shit up). My REPAYE amount finally got calculated starting with my July payment. The thing I don't get is that I paid a total of three $5 payment amounts. The last one was "due" June 12th. Somehow on Friday I checked and it said "current payment due $0". I just checked again and it says "current payment due $902" which is my standard amount. I had received a "bill" for that amount a month ago but when I called the supervisor said to just ignore that bill and I'd get another one for $5 which I did. But then why is it still showing up on my account FOR ONE DAY as $902 due? I believe her but it's still not fun to see that. I don't know whether to call again today or wait till tomorrow because I'm sure I'll see PAST DUE on the account starting tomorrow...

I called because I panic easily about having to pay $900. Guy was very nice and he just took it off my account so it says $0 due again and the next payment I have to worry about is my REPAYE amount starting in July.

[bk1]

You may want to look into whether PAYE is a better plan for you than refinancing (discussed thoroughly in this and other threads on TLS). I'll advise on the assumption that you intend to refinance your loans.

(Question 1: do I deposit and save the bonus until after the clawback date so that I don't have to scramble to pay it back if I leave?).

Breaking down my debt a bit:
Loan 1: Stafford, $95.4k at avg. 6.07%. PAYE.
Loan 2: Grad PLUS, 117.6k at avg. 7.21%. PAYE.
Loan 3: Perkins, 22.4k at 5.0%. Standard.
Loan 4: Sallie Mae bar loan, 10.6k at 8.75% variable. Standard obviously.
Our credit card debt is fairly healthy at least.

I basically have to refinance because these rates are ludicrous. The Sallie Mae one is on me, and that's what I get for clerking (and having lower credit when I applied) I guess. Our first priority is the small amt of CC debt plus the highest loans first. We also really want to save some money in a retirement fund, an emergency fund, and regular savings/investments (especially for if I leave biglaw, which I'd prefer not happen for maybe 4-5 years at least, but burnout is always a distinct possibility).

Do you think you'll leave early enough for the clawback? It is highly unlikely. In any case, you should have an emergency fund (ideal minimum of ~3 months' expenses) and so I'd keep the bonus as that. Moreover, if you refinance to a reasonable rate it may not make sense to dump the bonus into your loans. The only amount of credit debt that is "healthy" is not carrying a balance. That should be fixed ASAP.

Question 2: When do I refinance, and does that include all my loans? I figure I should either refi when I start work, or I wait a few months to pay off the higher-interest loans and get my credit up some more. But if that isn't going to help me, maybe it's better to refi earlier? And I leave out the Sallie Mae loan because it's the highest one? I just want to make sure I'm not doing it too early and locking in a higher rate than I otherwise would have after having paid off a couple and raised my credit (which isn't bad---like 715 recently, about 50 pts lower a year ago). I thought they just took the average rate of loans but people seem to say they get a much lower rate than I thought was possible. Sorry if this is a simple question.

You can refinance whenever you want (assuming the bank approves you) and you can refinance all your loans if the bank approves it (presumably a student loan refinancing company would be willing to refinance all of the loans you listed, the only exception might be the bar loan). The refinancing company isn't going to care about the rates because the interest you would have paid is irrelevant to them so leaving out the Sallie Mae loan makes no sense.

Ideally you should refinance ASAP. You are potentially losing around hundreds of dollars per week that you don't refinance (the difference between your current rates and the refinanced rate). I don't know whether you'll get a much better rate by waiting a few months (I suspect not) so I would suggest you look into refinancing as soon as you can. If your credit score improves such that you can get better rate, you can always refinance a second time.

Again, paying off the loans with higher interest rates is not relevant for the reason you think it is. While it might help because the total amount you'd be refinancing would be lower, the fact that you've changed the weighted interest rate on the amount you intend to refinance is not going to matter.

Question 3: is it true that although we are filing taxes separately, my wife can somehow put a household of 2 and have lower payments? Is that actually allowed or just a shady loophole/trick? Where/how do we take advantage of that (assuming it's legal)?

It is not shady to reduce your IBR/PAYE/etc payments via legal methods. This article should answer your questions. Though I will note that filing separately is the main way to reduce IBR/PAYE/etc payments and other things aren't going to have as much of an impact.

Question 4: General advice? I've seen people on here tell others just to save as much as possible because biglaw is a short gig by nature, yet others say if you plan to stay for a while then pay off your debt. So should I really wait a certain amount of time, assess whether I'm going to be in it long-term, then take action (refi, etc.)?

You can always refinance again if your situation changes. Waiting to refi will cost you thousands of dollars. You can always plan (even with months or years of experience in biglaw) but you can't be sure that you won't burn out (or be pushed out) earlier than you expect.

[imalreadyamember?]

You may want to look into whether PAYE is a better plan for you than refinancing (discussed thoroughly in this and other threads on TLS). I'll advise on the assumption that you intend to refinance your loans.

(Question 1: do I deposit and save the bonus until after the clawback date so that I don't have to scramble to pay it back if I leave?).

Breaking down my debt a bit:
Loan 1: Stafford, $95.4k at avg. 6.07%. PAYE.
Loan 2: Grad PLUS, 117.6k at avg. 7.21%. PAYE.
Loan 3: Perkins, 22.4k at 5.0%. Standard.
Loan 4: Sallie Mae bar loan, 10.6k at 8.75% variable. Standard obviously.
Our credit card debt is fairly healthy at least.

I basically have to refinance because these rates are ludicrous. The Sallie Mae one is on me, and that's what I get for clerking (and having lower credit when I applied) I guess. Our first priority is the small amt of CC debt plus the highest loans first. We also really want to save some money in a retirement fund, an emergency fund, and regular savings/investments (especially for if I leave biglaw, which I'd prefer not happen for maybe 4-5 years at least, but burnout is always a distinct possibility).

Do you think you'll leave early enough for the clawback? It is highly unlikely. In any case, you should have an emergency fund (ideal minimum of ~3 months' expenses) and so I'd keep the bonus as that. Moreover, if you refinance to a reasonable rate it may not make sense to dump the bonus into your loans. The only amount of credit debt that is "healthy" is not carrying a balance. That should be fixed ASAP.

Question 2: When do I refinance, and does that include all my loans? I figure I should either refi when I start work, or I wait a few months to pay off the higher-interest loans and get my credit up some more. But if that isn't going to help me, maybe it's better to refi earlier? And I leave out the Sallie Mae loan because it's the highest one? I just want to make sure I'm not doing it too early and locking in a higher rate than I otherwise would have after having paid off a couple and raised my credit (which isn't bad---like 715 recently, about 50 pts lower a year ago). I thought they just took the average rate of loans but people seem to say they get a much lower rate than I thought was possible. Sorry if this is a simple question.

You can refinance whenever you want (assuming the bank approves you) and you can refinance all your loans if the bank approves it (presumably a student loan refinancing company would be willing to refinance all of the loans you listed, the only exception might be the bar loan). The refinancing company isn't going to care about the rates because the interest you would have paid is irrelevant to them so leaving out the Sallie Mae loan makes no sense.

Ideally you should refinance ASAP. You are potentially losing around hundreds of dollars per week that you don't refinance (the difference between your current rates and the refinanced rate). I don't know whether you'll get a much better rate by waiting a few months (I suspect not) so I would suggest you look into refinancing as soon as you can. If your credit score improves such that you can get better rate, you can always refinance a second time.

Again, paying off the loans with higher interest rates is not relevant for the reason you think it is. While it might help because the total amount you'd be refinancing would be lower, the fact that you've changed the weighted interest rate on the amount you intend to refinance is not going to matter.

Question 3: is it true that although we are filing taxes separately, my wife can somehow put a household of 2 and have lower payments? Is that actually allowed or just a shady loophole/trick? Where/how do we take advantage of that (assuming it's legal)?

It is not shady to reduce your IBR/PAYE/etc payments via legal methods. This article should answer your questions. Though I will note that filing separately is the main way to reduce IBR/PAYE/etc payments and other things aren't going to have as much of an impact.

Question 4: General advice? I've seen people on here tell others just to save as much as possible because biglaw is a short gig by nature, yet others say if you plan to stay for a while then pay off your debt. So should I really wait a certain amount of time, assess whether I'm going to be in it long-term, then take action (refi, etc.)?

You can always refinance again if your situation changes. Waiting to refi will cost you thousands of dollars. You can always plan (even with months or years of experience in biglaw) but you can't be sure that you won't burn out (or be pushed out) earlier than you expect.

This is insanely helpful. Thank you so much. Follow-up questions/notes:

1) When would PAYE be better than refinancing? The interest rate will still be really high, so the loans aren't really going away. Is this only desirable if I see myself going to govt/PI sooner/longer than expected? Although I can refi again, I can't gain back the govt benefits (e.g. PSLF), and that's really the only hesitation with the decision. Maybe irrational but it's uncomfortable to wait even while making low payments (or even at a low rate honestly).
2) Turns out I don't think my firm has a clawback on its clerkship bonus. I checked my offer letter and it didn't have any such language. So I guess I get the 50k free and clear. I agree that it's a good idea to put it in savings.
3) The "healthy" credit card debt is on a card still in the 0% APR period. It has to be paid eventually, but it's not accruing interest.
4) Most important: I see what you mean about my current interest rates not mattering for the refi rate. But doesn't it matter what my income is? Aren't they going to give me a lower rate if I say "I make 190k" vs. "I make 58k"? That's the main reason I thought I would wait until I start---being able to report my income as much higher. On that note, since my salary raises automatically every year, does that make any difference to them?
5) How do I know that the bank is going to approve me for a certain set of loans? I don't want to mix and match to see what gets approved if it means my credit is pulled each time. And if I understand you correctly, I wouldn't get a lower rate by leaving out Sallie Mae? That makes sense yet I always thought the opposite. I guess I'm mixing up consolidation (all loans grouped together at their average interest rate) with refi.

Again, thank you so much.

[Tiago Splitter]

1) When would PAYE be better than refinancing? The interest rate will still be really high, so the loans aren't really going away. Is this only desirable if I see myself going to govt/PI sooner/longer than expected? Although I can refi again, I can't gain back the govt benefits (e.g. PSLF), and that's really the only hesitation with the decision. Maybe irrational but it's uncomfortable to wait even while making low payments (or even at a low rate honestly).

PAYE is better than refinancing if you want to build savings. It also can be much better if you end up getting something forgiven at the end of 20 years. It's obviously hard to know whether this will happen but when thinking about interest rates you have to factor in the value of forgiveness. Paying 250k over 5 years is not nearly as good as paying 300k over 20 years.

Also, as long as there's a chance you'll do government work for ten years refinancing is a poor choice IMO.

[JenDarby]

1) When would PAYE be better than refinancing? The interest rate will still be really high, so the loans aren't really going away. Is this only desirable if I see myself going to govt/PI sooner/longer than expected? Although I can refi again, I can't gain back the govt benefits (e.g. PSLF), and that's really the only hesitation with the decision. Maybe irrational but it's uncomfortable to wait even while making low payments (or even at a low rate honestly).

PAYE is better than refinancing if you want to build savings. It also can be much better if you end up getting something forgiven at the end of 20 years. It's obviously hard to know whether this will happen but when thinking about interest rates you have to factor in the value of forgiveness. Paying 250k over 5 years is not nearly as good as paying 300k over 20 years.

Also, as long as there's a chance you'll do government work for ten years refinancing is a poor choice IMO.

Once your debt approached or exceeds 200k I think PAYE generally becomes more and more worth strongly considering. The income level to service 250k in loans needs to remain consistently high.

For my story - I had around 190k and refinanced to bring my average interest rate down from over 7% to under 4%. My loan payments are $1800 a month and I don't have a problem paying this down with sub big law salary. I was fairly confident that one way or another I would be paying it all off before 20 years, so refinancing made sense for me.

[imalreadyamember?]

1) When would PAYE be better than refinancing? The interest rate will still be really high, so the loans aren't really going away. Is this only desirable if I see myself going to govt/PI sooner/longer than expected? Although I can refi again, I can't gain back the govt benefits (e.g. PSLF), and that's really the only hesitation with the decision. Maybe irrational but it's uncomfortable to wait even while making low payments (or even at a low rate honestly).

PAYE is better than refinancing if you want to build savings. It also can be much better if you end up getting something forgiven at the end of 20 years. It's obviously hard to know whether this will happen but when thinking about interest rates you have to factor in the value of forgiveness. Paying 250k over 5 years is not nearly as good as paying 300k over 20 years.

Also, as long as there's a chance you'll do government work for ten years refinancing is a poor choice IMO.

Once your debt approached or exceeds 200k I think PAYE generally becomes more and more worth strongly considering. The income level to service 250k in loans needs to remain consistently high.

For my story - I had around 190k and refinanced to bring my average interest rate down from over 7% to under 4%. My loan payments are $1800 a month and I don't have a problem paying this down with sub big law salary. I was fairly confident that one way or another I would be paying it all off before 20 years, so refinancing made sense for me.

This makes a lot of sense (ditto @Tiago Splitter). On the other hand, I'm not eligible for PAYE with the Perkins or Sallie Mae loans, so my monthly payment wouldn't be the PAYE 10%, it would be that plus those other two. So on a monthly basis I'm not saving as much as it seems until those are paid off. Also the prospect of having it over my head is a lot, even if irrational.

[LaLiLuLeLo]

When do y'all refinance? I'm an incoming first year and I feel it may be premature.

[jess]

.

[imalreadyamember?]

1) When would PAYE be better than refinancing? The interest rate will still be really high, so the loans aren't really going away. Is this only desirable if I see myself going to govt/PI sooner/longer than expected? Although I can refi again, I can't gain back the govt benefits (e.g. PSLF), and that's really the only hesitation with the decision. Maybe irrational but it's uncomfortable to wait even while making low payments (or even at a low rate honestly).

PAYE is better than refinancing if you want to build savings. It also can be much better if you end up getting something forgiven at the end of 20 years. It's obviously hard to know whether this will happen but when thinking about interest rates you have to factor in the value of forgiveness. Paying 250k over 5 years is not nearly as good as paying 300k over 20 years.

Also, as long as there's a chance you'll do government work for ten years refinancing is a poor choice IMO.

Given that my wife is going for PSLF on PAYE, we can also save with her income (albeit not as much I guess). Do we know if the tax bomb is a real thing? Because maybe the savings would be wiped out anyway. Lastly, idk if banking on both of us getting forgiveness is a good idea. I mean what if the program gets cut? I dunno, I think it might be better to just refi. Ugh.

[JenDarby]

^ I wasn't at all suggesting you shouldn't refi, I was just stressing that there are serious pros and cons each way once you pass a certain debt threshold. 20 years of ballooning law school debt might drive me mad. I'd rather live in the cheapest (while still comfortable) apartment that I could find and never run my AC etc (probably not necessary, but I'm also saving money while aggressively paying down debt) than have extra spending money now if it means that in a mere 9 years I will be law school debt free.